The company is British. It sells a tool that marks written assignments and gives each pupil feedback, and schools and universities in the Netherlands, Belgium and Germany have become a real share of its customers. It has no office in the European Union. The product sends each essay to a model provider's online interface, and the general counsel has so far treated the European Union Artificial Intelligence Act as something for the customers to worry about.
Article 2 of the Act, Regulation (European Union) 2024/1689, reads differently. The regulation applies to providers that place systems on the Union market, irrespective of whether they are established in the Union or in a third country. It also applies to providers and deployers in a third country where the output produced by the system is used in the Union. A mark and a paragraph of feedback read by a teacher in Utrecht is output used in the Union, and the United Kingdom is a third country.
The second step is classification. Annex III lists education as a high risk area. Point 3 names systems intended to be used to evaluate learning outcomes, including when those outcomes steer the learning process, next to systems for admission and for detecting prohibited behaviour during tests. A marking tool belongs to the first kind. The requirements apply from 2 December 2027. One prohibition has applied since 2 February 2025 and is easy to walk into with a classroom product: inferring the emotions of a person in an education institution, other than for medical or safety reasons.
As provider the company carries the list in Article 16. It has to meet the technical requirements, run a quality management system, keep documentation and logs, complete a conformity assessment before the system goes on the market, draw up a declaration of conformity and register the system in the Union database. For a system under point 3 the assessment is one of internal control, without a notified body. Because the company is outside the Union, Article 22 also requires it to appoint an authorised representative established in the Union, by written mandate, before the system is made available there. The representative keeps the documentation at the disposal of the authorities for ten years and can be addressed by them in place of the provider. It has to end the mandate and inform the authority when it has reason to think the provider is acting contrary to its obligations. The Act sets the maximum fine for breaching the obligations of providers and representatives at 15 million euros or 3 percent of worldwide annual turnover, whichever is higher, and for small and medium sized enterprises whichever is lower.
The usual response from outside the Union comes in two forms. One is to wait, because December 2027 feels distant. The other is to add a clause to the terms of service that declares customers responsible for compliance. Neither holds up in a serious tender. A school board will itself be a deployer under Article 26, with duties to oversee the system, keep logs and inform pupils, and it cannot fulfil them without the provider's instructions for use. A procurement team that knows this will ask for them now. Article 6 offers an exit for systems that only perform a narrow procedural or preparatory task, but a provider that relies on it still has to document its assessment and register, and the exit is closed for a system that profiles individuals.
Then there is the data. Pupils' essays are personal data, often of minors. Personal data may flow from the Union to the United Kingdom on the basis of the adequacy decision that the European Commission renewed on 19 December 2025. The step that follows is the one European customers ask about: the essay leaves the company's servers for a model provider. One large model maker states in its own documentation that its interface offers inference only in the United States or on global routing. A large cloud provider offers a European data zone next to a global option that may process in any geography where the model is deployed. So the route decision is a product decision. For each function the company chooses between the provider's online interface under contract, a private deployment in a European region, and a version that a university can run on its own premises. The company's role as provider stays the same on all of them.
The governance travels with every route. It consists of an inventory of models and versions, the model provider's terms checked against the promises in customer contracts, an evaluation on real scripts marked by teachers in each language the company sells in, logs, an oversight design that lets a teacher overrule a mark, staff training, and an incident route that reaches both the representative and the customer.
The AI Guys works on this file with companies outside the Union, from the classification to the build. Next month the chief technology officer and the general counsel should have in hand a written classification of each product function against Annex III, a shortlist of candidates for authorised representative with a draft mandate, the route table by function with the provider's region settings verified in the code, and a dated plan for the technical documentation.