Microsoft could be fined up to 1% of its annual revenue in the European Union if it doesn’t respond to a request for information by May 27. The potential fine arises from a request made under the EU’s Digital Services Act concerning the company’s Bing search engine and its associated generative artificial intelligence (AI) services.
EU Commission’s Concerns
In a May 17 post on X, the European Commission stated it wants Microsoft to “provide information under the Digital Services Act on generative AI risks on Bing.” The Commission highlighted concerns that “Bing may pose risks linked to generative AI, such as so-called ‘hallucinations,’ deepfakes, as well as the automated manipulation of services that can mislead voters.”
The initial request, sent on May 14, specifically addresses risks stemming from Bing’s generative AI features, notably “Copilot in Bing” and “Image Creator by Designer.”
We compel Microsoft to provide information under the Digital Services Act on generative AI risks on Bing.
Bing may pose risks linked to generative AI, such as so-called ‘hallucinations’, deepfakes, as well as the automated manipulation of services that can mislead voters.#DSA
— European Commission (@EU_Commission) May 17, 2024
Consequences of Non-Compliance
Microsoft has until May 27 to provide the requested information to the Commission. The EU has warned that failure to comply could result in fines up to 1% of the provider’s total annual income and periodic penalties up to 5% of the provider’s average daily income.
While a 1% revenue fine might not sound catastrophic, for Microsoft, it could amount to well over $2 billion. The company’s self-reported revenue for 2023 was $211 billion, and if market trends hold, it’s conceivable that Microsoft could surpass this figure in 2024. Therefore, a 1% fine would equate to approximately $2.1 billion.
No Immediate Guilt, But Significant Risks
Microsoft hasn’t been found guilty of violating any EU laws specific to this notice. Instead, this appears to be a public-facing courtesy notice indicating that the company has been served with a request for further information, with significant consequences for non-compliance.
The European Commission’s move underscores the increasing scrutiny on AI technologies and the potential risks they pose. It also reflects the EU’s proactive stance on regulating digital services to safeguard users against potential manipulations and misinformation.
As AI continues to evolve, regulatory bodies worldwide are likely to impose more stringent requirements on tech companies to ensure the safe and ethical use of AI technologies. Microsoft’s response to the EU’s request will not only impact its financial standing but could also set a precedent for how other tech giants address regulatory demands concerning AI.
Moving Forward
The situation highlights the balancing act that tech companies must perform between innovation and regulatory compliance. Microsoft’s handling of this issue will be closely watched by industry peers, regulators, and the public, as it could influence future regulatory frameworks and industry practices related to AI.
As the deadline approaches, all eyes will be on Microsoft to see how it navigates this regulatory challenge and what implications it might have for the broader tech industry.
