Microsoft, a major technology company, is at the center of regulatory scrutiny by the European Commission under the EU’s Digital Services Act.
The European Commission has threatened to impose a fine of up to 1% of Microsoft’s annual revenue if it fails to comply with a request for information regarding the risks associated with its Bing search engine and its generative artificial intelligence (AI) services. The request focuses on potential risks like AI-generated misinformation (hallucinations), deepfakes, and the automated manipulation of services that could mislead voters.
Microsoft has been given a deadline of May 27 to respond to the European Commission’s inquiry. The initial request was made on May 14, and the threat of fines was articulated shortly afterward.
This issue concerns Microsoft’s operations within the European Union, where the Digital Services Act regulates digital service providers.
The European Commission is utilizing its regulatory powers under the Digital Services Act to enforce transparency and accountability in the use of generative AI technologies. By potentially imposing a fine of up to 1% of Microsoft’s total annual revenue, which could amount to more than $2 billion based on the company’s 2023 revenue of $211 billion, the Commission aims to underscore the seriousness of its regulatory demands. Additionally, Microsoft could face periodic penalties up to 5% of its average daily income if it fails to comply with the EU’s request by the set deadline.
The European Union’s Digital Services Act is designed to ensure safer digital spaces where the rights of all users are protected and to establish a level playing field for businesses. With the rapid advancement and integration of generative AI technologies like those used by Microsoft’s Bing, the EU is particularly vigilant about potential risks that could undermine public trust and the integrity of information. This action against Microsoft is part of broader efforts to regulate and monitor digital service providers within the EU, ensuring they adhere to strict standards that prevent the spread of misinformation and protect user data.
