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EU’s AI Code of Practice for Firms Likely Delayed Until End of 2025

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The European Commission announced on Thursday that the Code of Practice designed to help companies comply with the EU’s Artificial Intelligence Act (AI Act) may only come into effect by late 2025. This code aims to guide thousands of businesses on meeting the new AI regulations, especially for general-purpose AI (GPAI) models like OpenAI’s ChatGPT, Google’s, and Mistral’s AI systems.

Background and Delay Calls

  • The Code of Practice was originally slated for publication on May 2, 2025, but its release has been delayed.

  • Major tech companies, including Alphabet (Google), Meta, and European firms such as Mistral and ASML, alongside some EU governments, have requested postponements due to the lack of clear compliance guidelines.

  • The European AI Board is currently debating the timeline, with end of 2025 under consideration for full implementation.

Voluntary but Important

  • Signing up for the Code is voluntary, but companies that refuse will not gain the legal certainty given to signatories.

  • The Code will clarify the expected quality standards AI service users can demand, reducing risks of misleading claims by providers, according to Nick Moës, Executive Director of AI advocacy group The Future Society.

  • The Code also involves oversight by legally mandated authorities to assess AI service quality.

EU’s Position and Industry Reaction

  • Despite calls for delay, the Commission insists it remains committed to the AI Act’s goals of harmonized, risk-based AI regulations and market safety.

  • Critics, such as campaign group Corporate Europe Observatory, accuse Big Tech of using delay tactics to weaken crucial AI safeguards.

Enforcement Timeline

  • The AI Act’s rules on GPAI models become legally binding on August 2, 2025, but enforcement will begin only a year later, on August 2, 2026, for new models entering the market.

  • Existing AI models have until August 2, 2027, to comply fully with the regulations.

Microsoft May Walk Away from OpenAI Negotiations Amid Stake Disputes

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Microsoft is reportedly prepared to abandon high-stakes negotiations with OpenAI over the future of their strategic alliance, according to a report by the Financial Times published Wednesday. The talks have hit a stalemate over key disagreements, particularly regarding the size and structure of Microsoft’s future equity stake in the artificial intelligence company.

Sources familiar with the matter told the FT that Microsoft may pause or terminate discussions if no breakthrough is reached. In the meantime, Microsoft plans to lean on its existing commercial agreement, which guarantees access to OpenAI’s technologies, including its ChatGPT models, through 2030.

The situation comes amid increased tension between the two AI powerhouses. A separate Wall Street Journal report earlier this week revealed that OpenAI executives have considered accusing Microsoft of anticompetitive practices related to their ongoing partnership. Both companies are reportedly negotiating changes to Microsoft’s investment terms, including its future stake in OpenAI.

Despite the friction, both sides released a joint statement earlier this week affirming their intention to collaborate:

“Talks are ongoing, and we are optimistic we will continue to build together for years to come.”

Microsoft’s multi-billion dollar investment into OpenAI has positioned it as a central player in the AI boom, helping the company compete aggressively with rivals like Google and Amazon. The partnership has powered Microsoft’s integration of OpenAI models into products like Copilot in Microsoft 365 and Azure OpenAI Service.

Meanwhile, OpenAI is seeking approval from Microsoft—its dominant backer—to convert into a public-benefit corporation, a structural change the startup believes would facilitate greater capital raising flexibility.

The evolving rift highlights the complex interdependence between Big Tech firms and rapidly-scaling AI startups, raising questions about governance, control, and long-term alignment in the sector.

OpenAI Awarded $200 Million U.S. Defense Contract for AI Development

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OpenAI, the creator of ChatGPT, has secured a $200 million contract to develop advanced artificial intelligence tools for the U.S. Department of Defense, the Pentagon announced on Monday.

The contract involves creating prototype frontier AI capabilities aimed at tackling critical national security challenges across both warfighting and enterprise domains. The work will mainly take place in and around Washington, with an expected completion date set for July 2026.

OpenAI recently reported a surge in its annualized revenue run rate to $10 billion as of June, fueled by widespread AI adoption. Earlier this year, in March, OpenAI revealed plans to raise up to $40 billion in a funding round led by SoftBank Group, valuing the company at around $300 billion. The firm also reported having 500 million weekly active users by the end of March.

Separately, the White House’s Office of Management and Budget issued new guidance in April encouraging federal agencies to foster a competitive American AI marketplace, while exempting national security and defense systems from some regulations.