The European Commission proposed the draft rules nearly two years ago in a bid to protect citizens from the dangers of the emerging technology, which underwent a boom in investment and popularity following the release of OpenAI's AI-powered chatbot ChatGPT.

In a vote held on Thursday, MEPs agreed to push the draft through to the next stage, the trilogue, during which EU lawmakers and member states will thrash out the final details of the bill.

Under the proposals, AI tools will be classified according to their perceived risk level: from minimal through to limited, high, and unacceptable. While high-risk tools won’t be banned, those using them will need to be highly transparent in their operations.

Companies deploying generative AI tools, such as ChatGPT or image generator Midjourney, will have to disclose whether copyrighted material was used to develop their systems.

"Against conservative wishes for more surveillance and leftist fantasies of over-regulation, parliament found a solid compromise that would regulate AI proportionately, protect citizens' rights, as well as foster innovation and boost the economy," said Svenja Hahn, a European Parliament deputy.

Microsoft-backed (MSFT.O) OpenAI provoked awe and anxiety around the world when it unveiled ChatGPT late last year. The chatbot became the fastest-growing consumer application in history, reaching 100 million monthly active users in a matter of weeks.

The ensuing race among tech companies big and small to bring generative AI products to market concerned some onlookers, with Twitter-owner Elon Musk backing a proposal to halt development of such systems for six months.

Reporting by Supantha Mukherjee in Stockholm and Foo Yun Chee in Brussels
REUTERS