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Extraterritoriality of AI regulation

Extraterritorialità della regolamentazione AI

Extraterritoriality of AI regulation is the feature whereby a law adopted by a specific jurisdiction, such as the European Union, also applies to entities established outside that territory, when their AI systems produce effects within it. There is no need to have a legal seat within the rule's area of application to be bound by it: it is enough that the system's output is used by, or has effects on, people located there.

Definition

How it works

In the case of the EU AI Act, this means a company based, for example, in the United States or Asia must comply with the European regulation if it places an AI system on the Union market or if its system's output is used by people within the Union, regardless of where the system was developed or where the technical infrastructure running it resides. This mechanism mirrors the approach already adopted by the GDPR regarding personal data protection.

Applications

For global companies, extraterritoriality means it is not possible to opt out of a regulatory framework simply by avoiding a legal seat in that jurisdiction: if the product reaches users in that territory, the obligations still apply, often making it simpler and cheaper to design a single global compliance standard aligned with the most demanding regime, rather than maintaining different product versions for each market.

History & etymology

This phenomenon, often informally called the "Brussels effect", describes the European Union's ability to influence global standards through the extraterritorial reach of its regulations, a pattern already observed with the GDPR and now repeating with the EU AI Act in setting reference practices even for companies operating mainly outside the Union.

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