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South Korea took a major step in global artificial intelligence (AI) governance on Thursday by enforcing one of the world’s most comprehensive legal frameworks regulating AI . Known as the AI Basic Act, the legislation aims to prioritize safety, transparency, and ethical standards in AI use, while raising concerns among technology startups that the compliance burden could weaken innovation dynamics.
With the introduction of the AI Basic Act, South Korea has become one of the first countries to mandate human oversight for “high-impact” artificial intelligence systems. The law covers AI applications across critical areas of daily life, including nuclear safety, drinking water management, transportation, credit assessments, and health care recommendations. Companies operating in these fields are required to ensure meaningful human supervision and clearly inform users when AI systems are involved in decision-making processes.
The legislation also introduces mandatory labeling requirements for AI-generated content, particularly targeting outputs such as deepfakes that may be difficult to distinguish from real material. The measure is intended to curb the spread of misinformation and reduce the risk of manipulation in digital spaces.
In official statements, authorities emphasized that the framework was designed not to restrict technological development but to strengthen public trust while encouraging the responsible adoption of AI. According to South Korea’s Ministry of Science and ICT, the law is a critical foundation for the country’s ambition to position itself as a global leader in artificial intelligence.
Despite the government’s assurances, the new law has triggered mixed reactions within South Korea’s technology ecosystem. Lim Jung-wook, co-head of the Korea Startup Alliance, said many entrepreneurs remain concerned about ambiguous provisions and a lack of detailed guidance on implementation. Some founders have questioned why South Korea is among the first countries to impose such extensive legal obligations on AI developers.
The concerns extend beyond legal clarity. Many small and medium-sized startups argue that they lack the financial and technical resources required to comply with the new rules. Industry representatives note that a growing number of companies are turning to external legal consultants simply to interpret the law and develop compliance strategies, significantly increasing operational costs.
A recent survey by the Startup Alliance found that only 2% of AI-focused startups are actively working on formal compliance plans. Nearly half said they do not fully understand the law and feel unprepared, while the remaining respondents acknowledged awareness of the regulation but admitted they have yet to take sufficient steps. The findings highlight the regulatory pressure facing smaller firms with limited capacity to navigate complex legal frameworks.
As a result, some companies are adopting more cautious development strategies, deliberately slowing innovation to avoid falling under the “high-impact AI” category—an approach that industry observers warn could dampen the pace of technological progress.
To ease the transition, the South Korean government has granted companies a minimum one-year grace period to comply with the new requirements. During this phase, enforcement will focus on guidance rather than penalties. However, violations such as failing to label generative AI content may eventually result in fines of up to 30 million won ($204,25.6).
The Ministry of Science and ICT has announced plans to launch dedicated guidance platforms and support centers to assist companies throughout the compliance process. Officials have also indicated that the transition period could be extended if necessary, a move seen as particularly important for startups with limited resources.
South Korea’s rapid rollout contrasts with the European Union’s AI Act, which is expected to be implemented gradually through 2027. Supporters argue that the accelerated timeline could give South Korea an edge in shaping global AI governance standards. Critics, however, warn that the speed of implementation risks pushing startups to slow innovation or seek opportunities in less-regulated markets abroad.
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