The European Union Artificial Intelligence Act (Regulation (EU) 2024/1689), coming into force on 1 August 2024, has carved a niche as the first holistic legislation covering the realm of AI the landmark in AI law worldwide. With AI technologies guiding online education, the Act, by employing its risk-based approach to genuinely affect the sector, assures safety, transparency, and fairness in applications from one-on-one instruction to automated evaluations. Even though the Act operates in the European Union itself, non-EU countries like Britain face its extraterritorial operation, especially in EdTech, after Brexit. This article aims to map and provide an overview of the EU AI Act, the impacts on online education in Europe, and the repercussions on Britain’s EdTech industry, contemplating issues of regulatory divergence and potential collaboration therein.
Following a risk-based approach, the EU AI Act classifies AI systems into four levels in respect of their possible implication on safety and rights and the norms and values of the EU:
It also controls generality AI (GPAI) models, which requires transparency, compliance with the copyright, and monitoring of systemic risks (e.g., models whose computational power is higher than 1025 FLOPs). Compliance is ensured by the European AI Office, together with national authorities, and penalties of up to 35 million euros or 7 percent of worldwide turnover are available to those who violate it. Regulatory sandboxes facilitate SMEs, encouraging innovation whilst enabling compliance.
The European online education market, projected to achieve the values of 229.94, billion by 2033 (10.4 % annual growth rate) and currently estimated at 94.07 billion in 2024, continues to integrate AI, boosting the personalization, accessibility, and efficiency of learning course. The EU AI Act has a direct impact on this sector, especially where the application is of high risk and limited risk.
Artificial intelligence tools that are utilized in education or vocational education and affect the availability of education or the performance are considered high-risk within the scope of the Act. Examples include:
The needs outlined in the Act are created to defend the rights of students, thereby guaranteeing equitable access and non-algorithms against discrimination. As an example, an AI that disproportionately harms some demographics would be infringing the Act and would receive hefty fines.
Chatbots (e.g., Duolingo conversational AI) or virtual tutors that use AI should reveal the artificially programmed identity so that students and instructors understand that they communicate with AI. The same applies to AI-driven learning materials, including automated lesson plans or quizzes, which will have to be tagged to ensure trust. This is in line with the increased popularity of gamification and edutainment, where such features can be found on platforms such as Kahoot! (which 64 percent of EU students use in group learning).
The Act leads to innovation, as they can conduct sandbox control and test AI solutions under the control of startups in EdTech. It is essential to EdTech market in Europe, which is estimated to grow up to 142.44 billion USD by 2033 (12.85% CAGR). Furthermore, the Act encourages accessibility through safeguarding ethical principles that inform the use of AI systems, which will benefit underrepresented people. Similarly, AI platforms available in many languages can accommodate different languages spoken in Europe, of which 18 percent of the EU online users take online courses by 2024.
Compliance with high-risk requirements increases costs for EdTech providers, potentially raising barriers for SMEs. The digital skills gap—75% of EU firms lack ICT specialists—also complicates implementation, as institutions may struggle to deploy compliant AI systems. Furthermore, ensuring human oversight in automated grading or admissions processes requires significant investment in training and infrastructure.
Britain falls outside the scope of the EU AI Act as a member of a non-EU member state following Brexit. Nevertheless, its effects on their EdTech industry (which is a prominent part of the online education scene in the UK) are already huge because of cross-border business, regulatory differences, and working possibilities.
If UK-based EdTech companies like FutureLearn, Pearson, or Century Tech generate high volumes of data, or intend to develop or use an AI system, they will need to abide by the EU AI Act in case:
As an example, a high-risk platform such as FutureLearn, reaching students in the EU, needs to comply with automated grading or adaptive learning tools. The risk of non-compliance is the loss of access to the EU market which is vital to consider with the online education market size of the $94.07 billion in Europe. This is a reflection of the extraterritorial impact that GDPR had on UK companies, who implemented the EU standards to remain accessible.
The UK pursues a pro-innovation, light-touch approach to AI regulation, relying on existing frameworks like GDPR and the Equality Act 2010, with oversight from regulators like Ofsted for education. The Artificial Intelligence (Regulation) Bill, reintroduced on March 4, 2025, proposes an AI Authority and principles like transparency and fairness but lacks government support and binding force. In contrast, the EU AI Act’s prescriptive rules set a global benchmark, potentially pressuring UK firms to align voluntarily to compete in the EU or enhance credibility.
This divergence creates challenges and opportunities:
A UK-EU agreement announced in May 2025 facilitates AI collaboration, granting UK researchers and EdTech startups access to Europe’s AI Factories (supercomputing hubs). This supports the development of AI-driven educational tools, such as virtual labs or simulations, but requires compliance with EU standards for joint projects. Additionally, the UK’s signing of the Council of Europe’s AI Convention on September 5, 2024, aligns it with EU values on human rights and rule-of-law in AI, indirectly supporting educational applications.
The EU AI Act’s focus on high-risk educational AI directly affects UK firms operating in Europe. For example:
The UK’s Ofsted guidance on AI in schools, issued recently, reflects awareness of these issues but lacks the EU’s comprehensive framework. This regulatory gap could disadvantage UK firms unless they proactively align with EU standards.
The EU AI Act’s global influence could reshape the EdTech landscape. As Europe leads in AI governance, the UK risks falling behind if it fails to adopt comparable standards. However, the UK’s participation in AI Factories and the Council of Europe’s AI Convention offers pathways for collaboration, potentially harmonizing EdTech innovation. For instance, joint development of AI-driven micro-credentials could enhance cross-border education offerings.
The EU AI Act is transforming online education in Europe by enforcing safety, transparency, and fairness in AI-driven platforms, particularly for high-risk applications like admissions and grading. While not directly applicable to Britain, the Act significantly impacts UK EdTech firms operating in the EU, requiring compliance to access the $94.07 billion market. Regulatory divergence poses challenges, but opportunities for collaboration through AI Factories and shared values under the AI Convention could bridge the gap. As the Act sets a global standard, UK firms may adopt EU-compliant practices to remain competitive, shaping the future of online education across both regions. The interplay of innovation and regulation will define the next phase of EdTech development, with Europe’s proactive stance positioning it as a leader.