Product and AI Liability: Updating EU Rules for Digital Age Requires Balanced Approach

September 28, 2022

Brussels, BELGIUM — Today, the European Commission presented its new Artificial Intelligence (AI) Liability Directive and proposed a revision of the EU Product Liability Directive (PLD). With these initiatives the Commission wants to bring Europe’s product liability regime and consumer protection into the digital era.

The Computer & Communications Industry Association (CCIA Europe) commends the Commission for taking into account progress made on the new AI Act, which will address many potential issues related to harmful AI applications. Nevertheless, the Association reiterates that AI-powered innovations only have a chance to achieve their huge potential if they are not curtailed by excessive regulation.

The revision of the existing PLD, on the other hand, brings about several changes that risk inadvertently hampering innovation and Europe’s digitalisation to the detriment of consumers. In particular, the proposal to extend the definition of products, the scope of damages, and the strict liability of the PLD to online marketplaces could have detrimental consequences, CCIA Europe cautions.

This update of Europe’s product liability framework could help improve consumer compensation for defective products. Yet, the changes proposed by the Commission do not accurately reflect the challenges faced by consumers today, but rather isolated cases.

It is wrong, for example, to consider software as a tangible product in this context. Indeed, software inherently continues to be further developed over time and has never done any physical harm in itself. Loss of data, psychological harm, and other non-material issues should not be part of the PLD’s strict liability regime – it is not the right tool for such complex topics.

Neither should online marketplaces be liable in cases where no other economic operator can be identified for a defective product. Recent EU legislation explicitly recognised that marketplaces do not have to vet all products listed by traders, so they cannot be held liable for products they have never seen.

The following can be attributed to CCIA Europe’s Policy Manager, Mathilde Adjutor:

“Updating the EU’s product liability rules for the digital age will require a balanced approach. We need to preserve the horizontal and technology-neutral principles of the Product Liability Directive (PLD), which provide legal certainty to European businesses. CCIA looks forward to constructively working with EU lawmakers to help ensure the rules improve consumer protection and are truly fit for the future.”

“However, the changes to the PLD proposed by the Commission today could unintentionally have an adverse impact on software development. Developers not only risk becoming liable for software bugs, but also for software’s potential impact on the mental health of users.”

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