Software Is Now a Product Under EU Law. If It Harms You, the Developer May Owe You Compensation.

Added: 2026-06-03

[00:00:00]For four decades, software was not legally a product. If it failed, if it harmed you, if an AI system made a decision that damaged your life, the law did not treat it as a defective product.

[00:00:13]In December 2024, the European Union closed that gap and the consequences are global. Directive EU 2024/2853, the new EU product liability directive, it explicitly extends strict product liability to software, AI systems, and digital manufacturing files. Under the previous framework in force since 1985, product meant a physical movable object.

[00:00:42]Software sat outside the liability regime entirely. Under the new directive, if a software product, including an AI system, is defective and causes damage to a person, the manufacturer faces strict liability. No proof of fault required. The defect plus the damage is sufficient. Three provisions in this directive reshape AI liability globally. First, AI system providers, as defined under the EU AI Act, are expressly treated as manufacturers under the directive.

[00:01:20]Meaning, they bear strict liability for defective AI outputs causing damage.

[00:01:26]Second, the directive introduces a rebuttable presumption of defectiveness when a claimant faces excessive difficulty in proving it. A significant evidential shift in [clears throat] favor of harmed individuals. Third, it imposes disclosure obligations on defendants to provide relevant evidence in their possession, addressing the fundamental opacity problem in AI liability, where the person harmed cannot access the system data needed to prove their case. The global implication is the same as GDPR and the AI Act. Any AI developer or software company that sells into the EU market must now build to a standard where defective outputs causing personal harm create strict liability exposure. Product liability law was built on one principle. Those who profit from placing a product on the market bear responsibility for the damage it causes when it is defective.

[00:02:36]For 40 years, software escaped that principle by not being classified as a product. AI capabilities advanced during those 40 years in a legal vacuum. The new directive closes the vacuum for the EU.

[00:02:53]This is the AI law, global security, AI risks, and liability my channel, and I'll see you there.