EU kicks off landmark AI law enforcement as first batch of restrictions enter into force

Published

3 months ago

February 3, 2025

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The European Union is so far the only jurisdiction globally to drive forward comprehensive rules for artificial intelligence with its AI Act.

Jaque Silva | Nurphoto | Getty Images

The European Union formally kicked off enforcement of its landmark artificial intelligence law Sunday, paving the way for tough restrictions and potential large fines for violations.

The EU AI Act, a first-of-its-kind regulatory framework for the technology, formally entered into force in August 2024.

On Sunday, the deadline for prohibitions on certain artificial intelligence systems and requirements to ensure sufficient technology literacy among staff officially lapsed.

That means companies must now comply with the restrictions and can face penalties if they fail to do so.

The AI Act bans certain applications of AI which it deems as posing “unacceptable risk” to citizens.

Those include social scoring systems, real-time facial recognition and other forms of biometric identification that categorize people by race, sex life, sexual orientation and other attributes, and “manipulative” AI tools.

Companies face fines of as much as 35 million euros ($35.8 million) or 7% of their global annual revenues — whichever amount is higher — for breaches of the EU AI Act.

The size of the penalties will depend on the infringement and size of the company fined.

That’s higher than the fines possible under the GDPR, Europe’s strict digital privacy law. Companies face fines of up to 20 million euros or 4% of annual global turnover for GDPR breaches.

‘Not perfect’ but ‘very much needed’

It’s worth stressing that the AI Act still isn’t in full force — this is just the first step in a series of many upcoming developments.

Tasos Stampelos, head of EU public policy and government relations at Mozilla, told CNBC previously that while it’s “not perfect,” the EU’s AI Act is “very much needed.”

“It’s quite important to recognize that the AI Act is predominantly a product safety legislation,” Stampelos said in a CNBC-moderated panel in November.

“With product safety rules, the moment you have it in place, it’s not a done deal. There are a lot of things coming and following after the adoption of an act,” he said.

“Right now, compliance will depend on how standards, guidelines, secondary legislation or derivative instruments that follow the AI Act, that will actually stipulate what compliance looks like,” Stampelos added.

In December, the EU AI Office, a newly created body regulating the use of models in accordance with the AI Act, published a second-draft code of practice for general-purpose AI (GPAI) models, which refers to systems like OpenAI’s GPT family of large language models, or LLMs.

The second draft contained exemptions for providers of certain open-source AI models while including the requirement for developers of “systemic” GPAI models to undergo rigorous risk assessments.

Setting the global standard?

Several technology executives and investors are unhappy with some of the more burdensome aspects of the AI Act and worry it might strangle innovation.

In June 2024, Prince Constantijn of the Netherlands told CNBC in an interview that he’s “really concerned” about Europe’s focus on regulating AI.

“Our ambition seems to be limited to being good regulators,” Constantijn said. “It’s good to have guardrails. We want to bring clarity to the market, predictability and all that. But it’s very hard to do that in such a fast-moving space.”

Still, some think that having clear rules for AI could give Europe leadership advantage.

“While the U.S. and China compete to build the biggest AI models, Europe is showing leadership in building the most trustworthy ones,” Diyan Bogdanov, director of engineering intelligence and growth at Bulgarian fintech firm Payhawk, said via email.

“The EU AI Act’s requirements around bias detection, regular risk assessments, and human oversight aren’t limiting innovation — they’re defining what good looks like,” he added.

Technology

Tesla short sellers have made $11.5 billion from this year’s selloff

Published

3 hours ago

April 22, 2025

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Tesla short sellers have made .5 billion from this year's selloff

It’s been a brutal year for Tesla shareholders so far, and a hugely profitable one for short sellers, who bet on a decline in the company’s stock price.

Tesla shorts have generated $11.5 billion in mark-to-market profits in 2025, according to data from S3 Partners. The data reflected Monday’s closing price of $227.50, at which point Tesla shares were down 44% for the year.

The stock rallied about 4% on Tuesday, along with gains in the broader market, heading into Tesla’s first-quarter earnings report after the close of trading. Tesla didn’t immediately respond to a request for comment.

The electric vehicle maker is expected to report a slight decline in year-over-year revenue weeks after announcing a 13% drop in vehicle deliveries for the quarter. With CEO Elon Musk playing a central role in President Donald Trump’s administration, responsible for dramatically cutting the size and capacity of the federal government, Tesla has faced widespread protests in the U.S. and Europe, where Musk has actively supported Germany’s far-right AfD party.

Tesla shares plummeted 36% in the first quarter, their worst performance for any period since 2022, and have continued to drop in April, largely on concerns that President Trump’s sweeping tariffs on top trade partners will increase the cost of parts and materials crucial for EV production, including manufacturing equipment, automotive glass, printed circuit boards and battery cells.

The company is also struggling to keep pace with lower-cost competitors in China, and is a laggard in the robotaxi market, which is currently dominated in the U.S. by Alphabet’s Waymo. Tesla has promised to launch its first driverless ride-hailing offering in Austin, Texas, in June.

Tesla has been the biggest stock decliner among tech megacaps this year, followed by Nvidia, which was down about 28% as of Monday’s close. The chipmaker has been the second-best profit generator for short sellers, generating returns of $9.4 billion, according to S3.

Nvidia is currently the most-shorted stock in terms of value, with $24.6 billion worth sold short, S3 said. Apple is second at $22.2 billion, and Tesla is third at $17.6 billion.

Musk has a long and antagonistic history with short sellers, who have made plenty of money at times during Tesla’s 15 years on the stock market, but have also been burned badly for extended stretches.

In 2020, Tesla publicly mocked short sellers, promoting red satin shorts for sale.

“Limited edition shorts now available at Tesla.com/shortshorts” Musk wrote in a social media post in July of that year, as the stock was in the midst of a steep rally.

Two years earlier, hedge fund manager David Einhorn of Greenlight Capital posted a tweet that he received the pairs of short shorts that Musk had promised him.

“I want to thank @elonmusk for the shorts. He is a man of his word!” Einhorn wrote. Einhorn had previously disclosed that his firm’s bet against Tesla “was our second biggest loser” in the most recent quarter.

In February 2022, after reports surfaced that the Department of Justice was investigating two investors who had shorted Tesla’s stock, Musk told CNBC that he was “greatly encouraged” by the action and said “hedge funds have used short selling and complex derivatives to take advantage of small investors.”

PlainSite founder Aaron Greenspan, a former Tesla short seller and outspoken critic of Musk, sued the Tesla CEO alleging he engaged in stock price manipulation for years through a variety of schemes.

The case was removed to federal court last year. In 2023, Musk’s social network X banned Greenspan and PlainSite, which publishes legal and other public and company records, from the platform.

— CNBC’s Tom Rotunno contributed to this report.

WATCH: Here’s what to watch for in Tesla’s earnings report

Technology

Instagram launches Edits app for video, rivaling TikTok

Published

4 hours ago

April 22, 2025

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Instagram Edits app.

Courtesy: Instagram

Instagram on Tuesday launched its standalone Edits video creation app that offers features similar to those already available from TikTok parent Bytedance.

The new app allows creators to organize project ideas, shoot and edit video, and access insights about content. Edits includes background replacement, automatic captioning and artificial intelligence tools that can turn images into video.

“There’s a lot going on in the world right now and no matter what happens, we think it’s our job to create the most compelling creative tools for those of you who make videos for not just Instagram but for platforms out there,” said Adam Mosseri, the head of Instagram, in a Reel posted in January announcing the app.

Edits appears to be Meta‘s answer to CapCut, TikTok’s sister app that is also owned by China-based parent company ByteDance, which allows users to create and edit video on their phone or computer.

Instagram Edits app.

Courtesy: Instagram

Tesla set to report first-quarter results after the bell

Published

4 hours ago

April 22, 2025

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Tesla set to report first-quarter results after the bell

Tesla CEO Elon Musk wears a ‘Trump Was Right About Everything!’ hat, as he, U.S. Trade Representative Jamieson Greer and Central Intelligence Agency Director John Ratcliffe attend a cabinet meeting at the White House, in Washington, D.C., U.S., March 24, 2025.

Carlos Barria | Reuters

Tesla is set to report first-quarter earnings on Tuesday after market close.

Here’s what Wall Street is expecting, based on a survey of analysts by LSEG:

Earnings per share: 39 cents
Revenue: $21.11 billion

Tesla is expected to report a slight revenue decline from $21.3 billion in the same quarter a year earlier. However, investors are going to be more focused on what the future holds after concerns about tariffs and CEO Elon Musk’s close ties to the White House pushed the stock price down 44% so far this year as of Monday’s close.

Earlier this month, Tesla reported a 13% decline in deliveries to 336,681. Tesla blamed the lower deliveries, in part, on the need to suspend production temporarily at its factories while it upgraded lines to start manufacturing a refreshed version of its popular Model Y electric SUVs.

Deliveries are the closest approximation of vehicle sales reported by Tesla but are not precisely defined in the company’s shareholder communications.

At an all-hands meeting with employees last month, Musk tried to reassure staffers that they were still in good hands, and to “hang onto your stock.” He pointed to the popularity of the Model Y, and Tesla’s potential in robotics, artificial intelligence and autonomous vehicle technology.

At the meeting, Musk also made light of the backlash against Tesla elicited by his work for President Donald Trump to reduce the size of the federal government, and his endorsements of Germany’s anti-immigrant AfD party, along with other political rhetoric and antics.

“If you read the news it feels like, you know, Armageddon,” Musk said on a livestream of the employees meeting. “It’s like, I can’t walk past the TV without seeing a Tesla on fire.” He followed up saying, “This is psycho, stop being psycho!”

That was before Trump’s announcement earlier this month of widespread tariffs, the one area where Musk has publicly broken with the Trump administration. On X, he called Peter Navarro, Trump’s top trade advisor and tariff proponent, a “moron” and “dumber than a sack of bricks.”

Tesla stands to take a significant hit from the president’s proposed tariffs, assuming they don’t get rolled back. Tesla manufactures cars in the U.S. for domestic sales so it’s not subject to the 25% tariff on imported autos, but the hefty levies on other components and materials could be severe.

Tesla relies on suppliers in Mexico and China for items like automotive glass, printed circuit boards and battery cells, among other parts essential for the production of its cars. The company has sought an exemption from the U.S. trade representative for equipment imported from China that it uses in its factories.

WATCH: Tariff fallout hits automakers