The EU’s Digital Omnibus on AI delays key AI Act deadlines, but American companies still face high compliance costs, shifting rules, and penalties that fall hardest on startups.

This summer the European Union’s Digital Omnibus on artificial intelligence (AI) became law, revising the implementation timeline for the EU AI Act. The measure postpones requirements for stand-alone high-risk systems until December 2027 and for high-risk systems embedded in regulated products until August 2028. For US firms serving European customers, however, the delay does little to resolve the underlying problem: substantial compliance costs remain, while key legal and regulatory obligations continue to evolve.

While the Omnibus eases compliance deadlines, it leaves the underlying regulatory architecture intact, forcing firms to make investment and market-entry decisions before the European Commission’s final specifications are issued. 

What the EU AI Act Will Cost American Companies

A startup in California might ask why a regulatory body halfway around the world should now be of concern. The answer is that the Digital Omnibus on AI covers virtually any US software company with EU enterprise or consumer customers using AI-powered products.

Compliance costs are high, as are potential fines. 

In April 2026, the European Commission estimated €23,850–€40,400 in incremental compliance costs for certain high-risk systems already subject to existing product-safety and quality-management requirements. 

At today’s conversion rate of one euro equaling approximately 1.12 US dollars, this translates to $26,797 to $45,391. Those costs include determining an AI system’s regulatory classification and applicable obligations, or onerously adapting existing quality-management processes. 

Technical documentation requirements also impose continuing costs. These files require firms to extensively and continuously document information about a high-risk AI system’s design, training data, risk controls, and post-market monitoring. SQ Magazine, an independent technology publication, estimates annual compliance costs at approximately €29,300 ($33,000) per AI system. 

Consulting firms such as PwC have begun building specialized AI Act regulatory practices, reflecting a rapidly expanding market for compliance services. Auditry, an AI risk and compliance platform that automates regulatory evidence, estimates that the broader market for EU AI Act compliance services could reach as much as €38 billion (roughly $42.5 billion), by 2030.

Why EU AI Rules Hit Small Tech Firms Hardest

The AI Act also makes it much more difficult to serve critical sectors whose AI applications are designated as “high-risk systems.” A company developing a system potentially classified as high-risk must determine its regulatory status, construct technical documentation, and establish risk-management and monitoring procedures before knowing whether the product will succeed commercially. 

These obligations function largely as fixed costs and arrive before the firm has the customers and revenue necessary to spread them across a large sales base. Large firms will be able to absorb additional costs, but newer, smaller firms will struggle to justify high upfront capital expenditure on what seems like a peripheral regulatory concern, again stifling aggressive, innovative tech companies that rely on bootstrapped funding. 

That opportunity cost is especially significant for the AI sector, where product cycles are short. A dollar directed toward regulatory adaptation cannot simultaneously be directed toward research, testing, or commercialization. Potential negative impacts will include higher prices, slower product releases, reduced product variety, or greater market concentration as smaller competitors find international expansion harder to finance.

Why the EU AI Act Hurts Europe Too

Many of the systems receiving the greatest regulatory scrutiny are also among AI’s potentially most economically valuable applications. These high-risk systems cover any AI developments in biometrics, critical infrastructure, education, employment, and access to essential services. 

They represent the applications where AI promises the largest gains in productivity, safety, and human welfare. “High-risk,” in other words, is very nearly synonymous with “high-value.” From a European perspective, these are the systems the EU critically needs to encourage if it hopes to create and maintain a flourishing startup community, regain its advantage in technological development and deployment, and compete with world powers including the United States and China. 

Instead, the EU keeps making the same mistake, choosing caution over competitiveness in a modern economy that is constantly evolving. The Omnibus only delays the challenges and raises the costs for American and European businesses.

About the Author: Lily Haak

Lily Haak is a nonresident fellow with the Lexington Institute. She is an MA candidate in economics at the University of Florida and the student director of the Digital Markets Initiative, a research group dedicated to competitive technological studies. Her work has also appeared in the Stanford Economic Review, the Florida Undergraduate Law Review, and Harvard’s Undergraduate Foreign Policy Review. Paul Steidler, senior fellow with the Lexington Institute, provided guidance and editorial support.

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