How will the EU AI Act affect businesses operating in or selling into European markets?

The EU AI Act will impose significant compliance obligations on businesses operating in or selling into European markets, particularly for high-risk AI systems and general-purpose AI models, with obligations for high-risk systems applying from August 2026 [7]. Businesses must prepare for tightened value chain duties, including extended cooperation requirements for AI providers, and face sanctions for breaches [1]. Despite a proposed delay in the high-risk regime creating uncertainty and slowing investments, experts recommend proactive preparation to avoid disadvantages from early movers [2]. The Act establishes a harmonized framework with governance provisions, including the creation of the European AI Office to oversee market surveillance and encourage proactive compliance [3][8][9]. Amendments aim to balance innovation and safety, potentially easing rules for industrial applications while banning sexual deepfakes, with revisions focusing on enforcement, high-risk systems, and model criteria set to finalize by April 2026 [5][6]. The European Commission will gain powers to access and inspect AI models, including source code and infrastructure, during probes [10]. Businesses should also navigate interplay with GDPR through forthcoming joint guidance [4], though enforcement faces challenges from fragmented national systems, risking inconsistency [12]. Additionally, antitrust scrutiny on AI ecosystems, such as cloud power and data access, may impact operations [11].