The EU AI Act is now a global constraint on any startup whose AI systems or outputs reach EU users — whether they are building in London, Dubai, Bengaluru, or San Francisco. The Act’s extraterritorial scope and fines of up to €35 million (or 7% of worldwide turnover) mean even small, fast-growing ventures that see Europe as a potential market need to build compliance into their operations now.

This is a particular challenge for UK AI startups. UK founders must navigate both evolving UK expectations and the EU AI Act for any EU-facing product. As Farrer & Co have noted, this could encompass any UK business that uses AI where the output ends up in the EU — intentionally or not — a potentially very large, and growing, number of businesses.

What GGH Recommends for AI Startups
Map your exposure. Identify AI-powered products and workflows where outputs reach EU customers, users, or subsidiaries.
Classify your risk. Flag any use that might fall into unacceptable, high- or limited-risk categories, and focus on the riskiest or least clear cases first.
Tighten your contracts. Update customer and partner terms to disclose AI use and, where realistic, limit onward sharing of AI-generated outputs into the EU.
Demand supplier transparency. Require vendors to spell out embedded AI in their tools and the AI Act obligations they assume.

For UK and other startups with dual compliance risk, consider relocating or running dual operations from hubs like Dubai, which pair lighter-touch AI regulation with heavy investment in AI infrastructure and access to later-stage funding.