The formal adoption of the European Union's Artificial Intelligence Act marked a new threshold in the global regulatory landscape, ending the era of unregulated AI use and laying the foundations of a risk-based legal order.

It is argued that with this regulation the EU is pursuing the same "Brussels Effect" it achieved with the General Data Protection Regulation (GDPR).

What Is the Brussels Effect?

Anu Bradford coined the term "Brussels Effect" to describe the mechanism by which the EU projects its internal standards onto the global market through unilateral regulatory power. According to Bradford, the effect has two dimensions:

  • De facto: multinational companies voluntarily apply EU rules across their operations in order to avoid the cost of maintaining separate compliance regimes.
  • De jure: foreign governments incorporate EU regulations into their own laws to facilitate trade and/or as a result of corporate lobbying.

The principal driver behind the Brussels Effect is the EU's vast internal market of 450 million consumers. The EU's competence in regulating complex matters, together with the assumption that stricter rules will encompass more permissive ones, are further critical factors explaining the effect.

Why Companies Outside the EU Fall Within Scope

Beyond the doctrinal debate around the Brussels Effect lies another important reality: dense commercial, legal and political ties bind neighbouring economies to the European Union. This means companies can be subject to AI Act provisions even where they are not established in the EU.

Indeed, Article 2, which delimits the scope of the regulation, envisages a broad field of application covering not only market actors within the EU, but all global actors whose outputs or effects arise within EU borders.

For this reason, companies seeking to export AI-based products or services to the EU must design their systems according to EU safety and fundamental rights standards. Rather than manufacturing separately for different markets, basing production on the strictest EU rules is both less costly and more practical.

ISO 42001: The Voluntary Standard That Became a De Facto Norm

Another important consideration under the risk-based AI Act is ISO 42001:2023 — a standard that is voluntary in principle but accepted as a de facto norm. While the AI Act sets out broad legal requirements for high-risk AI systems, it leaves the technical detail to standards.

ISO 42001 is a technical and operational instrument demonstrating that AI systems are managed compliantly and safely. It is a critical governance tool particularly in sectors such as finance, healthcare, insurance and fintech, imposing obligations around risk management, data governance, documentation and human oversight.

Companies conforming to this standard gain both a legal advantage in demonstrating alignment with EU law and a significant competitive edge over peers in terms of safety, trustworthiness and ethics. Many major technology players and public bodies now require their suppliers to conform to standards such as ISO 42001 as proof of AI Act compliance, in order to minimise their own risk.

ISO 42001 is recognised not only in Europe but from the United States to Japan as the gold standard evidencing that a company is a "trustworthy AI" provider and has exercised due diligence. Organisations that integrate the standard into their corporate structures eliminate or reduce potential AI risks.

Conclusion

The AI Act, and the ISO 42001:2023 standard that gives it technical form, constitute a new global currency of trust in the AI ecosystem.

For companies, conforming to these standards is not merely a passport guaranteeing access to the European market; it is a strategic brand investment demonstrating that they are ethical, transparent and accountable technology producers.

In the future, competition between companies will be won not by algorithmic speed alone, but by those who govern their algorithms safely and in alignment with universal values. Organisations that implement ISO 42001 will therefore secure a legal shield in this era of uncertainty while positioning themselves among the pioneers of a global "trustworthy AI" vision.