The EU AI Act Newsletter #96: Simplification or Deregulation?

Welcome to the EU AI Act Newsletter, a brief biweekly newsletter by the Future of Life Institute providing you with up-to-date developments and analyses of the EU artificial intelligence law.

Council spells out possible new powers for AI Office: A second Council compromise text for the AI simplification package details enhanced inspection powers for the AI Office under the AI Act, according to Maximilian Henning from Euractiv. The Commission’s November omnibus proposal sought to centralise AI market inspection powers within the AI Office, moving them away from national bodies. The Office would oversee AI systems built by companies on top of their own general-purpose AI models. Member states are now specifying that this should also apply within the same “undertaking” – a broad term covering organisations acting economically together – potentially encompassing corporate structures like Alphabet, Meta or xAI. The second draft clarifies enforcement powers, permitting the Office to examine company books and relevant data, take copies, and question staff about documents, though legally privileged information and journalists’ sources remain protected. The Office could also request national watchdogs investigate on its behalf.

Signatory Taskforce of the General-Purpose AI Code of Practice: The EU AI Office has launched The Signatory Taskforce, which facilitates exchanges and compliance, helping signatories implement EU rules for general-purpose AI models through the General-Purpose AI Code of Practice. The taskforce was established on 30 January 2026 to ensure coherent application and is chaired by the EU AI Office. The AI Act’s rules for GPAI model providers have applied since 2 August 2025, enhancing transparency, safety and accountability. Providers can demonstrate compliance through the code, prepared by independent experts via a multi-stakeholder process and endorsed by the Commission and AI Board. The taskforce enables members to exchange views on the code's implementation, provide input on guidance documents, discuss technological developments, and gather insights from stakeholders. It meets at least yearly, convened by the AI Office. The AI Office maintains transparency by publishing the taskforce Vademecum, including participants, and registering meetings with high-level summaries whilst respecting commercially confidential information.

Digital omnibus on AI backgrounder: Niestadt Maria from the European Parliament Research Service published a briefing of the digital omnibus on AI. On 19 November 2025, the Commission published the Digital Omnibus on AI, proposing amendments to the AI Act and civil aviation regulation to address implementation issues and reduce regulatory burden. Implementation of the AI Act has faced delays regarding the designation of national competent authorities and the publication of harmonised standards. The Digital Omnibus forms part of a broader digital package including data and cybersecurity amendments, the European data union strategy, and European business wallets regulation, aiming to simplify and enhance EU digital laws and help businesses innovate whilst reducing costs. The Parliament has recognised the need for easier business compliance whilst emphasising that simplification must not compromise core policy objectives, digital rights or consumer protection. The European Council has also urged further simplification and improvement of EU laws to maintain the EU’s competitiveness. Stakeholder views diverge sharply. Industry groups welcome the proposals but ask them to go even further alongside the postponement of AI Act provisions. Civil society organisations warn against rolling back fundamental rights. Significant time pressure exists as the Omnibus seeks to amend application dates, including high-risk AI rules applying from 2 August 2026.

Reject the call to delete transparency safeguard: In a letter led by Access Now, the undersigned organisations and individuals urge the strongest possible rejection of the proposed deletion of the Article 49(2) transparency safeguard for high-risk AI systems in the AI Omnibus. This safeguard ensures that providers cannot circumvent core AI Act obligations. Removing it will create complication rather than simplification, drastically undermine enforceability, harm the functioning of the Single Market, and create unacceptable risks for health, safety and fundamental rights. Removing transparency would have three key negative consequences: 1) market surveillance authorities would lack oversight of exemptions and cross-member-state discrepancies; 2) providers gain opaque, unaccountable opt-outs, creating perverse incentives that disadvantage responsible providers in the market; and 3) the public, including civil society, would be unable to identify which providers have exempted themselves despite falling under high-risk categories, undermining transparency, public trust, and the ability to challenge exemptions.

AI Act delay is not enough: DIGITALEUROPE urges the European Parliament and Council not to sacrifice structural reform in the rush to adopt the AI omnibus, warning that Europe risks locking unresolved flaws into its most important digital law for years. European machinery manufacturers, medical technology firms and industrial software developers already struggle with high-risk classifications and overlapping conformity requirements. A delay to the AI Act high-risk obligations is urgent: standards are not ready, enforcement structures remain incomplete, and businesses cannot comply without missing pieces. However, using urgency to force through a lightly amended text would be a historic mistake. Cecilia Bonefeld-Dahl, DIGITALEUROPE Director General, stated that Europe needs a serious political conversation about whether the AI Act will strengthen or constrain the economy, impossible if lawmakers must rush the omnibus through. Rushing may secure delay but freeze unresolved problems for years at a decisive moment for competitiveness.

AI omnibus recommendations: Catelijne Muller, Alice Teilhard De Chardin and Lucrezia Geraldi from ALLAI argue that the AI Omnibus introduces significant structural changes amounting to deregulation and weakening of the AI Act’s protective goals, arriving when much of the Act has not yet entered into force. Key concerns include the following: 1) simplification contradicts the principle that clear and enforceable rules enable innovation; 2) linking obligations to standards risks discouraging proactive compliance and delaying safety-by-design; and 3) extending SME-style privileges to Small Mid-Caps applies lighter obligations to nearly 99% of EU companies, tying compliance to size rather than risk – flawed because high-risk AI harms citizens equally regardless of provider. Some further issues include downgrading AI literacy from binding requirement to policy objective creates accountability gaps; framing bias mitigation as a privacy trade-off presents a false dichotomy; removing fundamental rights authorities’ direct documentation access threatens their independence; and eliminating registration for self-assessed non-high-risk systems weakens scrutiny of potential misclassification.