EU Rewrites AI Rules to Shield German Industry

Germany secured a machinery exemption from the EU AI Act, according to five EU diplomats who spoke to Politico. The deal, which could have been confirmed Wednesday, also delays restrictions on high-risk AI uses by more than a year and grants a grace period for AI content watermarking rules.

The original AI Act was designed to cover all sectors without exception. This rollback marks the first significant regulatory retreat in the EU's digital rulebook, driven by Chancellor Friedrich Merz personally lobbying German CEOs' interests at the EU level. Industrial heavyweights Siemens and Bosch are direct beneficiaries.

The EU is under pressure from U.S. tech competition and its own industry, which warned that strict rules would disadvantage Europe in the global AI race. Regulators and operators alike should watch whether this exemption logic spreads to other sectors. A carve-out for machinery today is a template for the next industry asking tomorrow.