The notion of AI system should be clearly defined to ensure legal certainty, while providing the flexibility to accommodate future technological developments. The definition should be based on key functional characteristics of artificial intelligence such as its learning, reasoning or modelling capabilities, distinguishing it from simpler software systems and programming approaches. In particular, for the purposes of this Regulation AI systems should have the ability, on the basis of machine and/or human-based data and inputs, to infer the way to achieve a set of final objectives given to them by humans, using machine learning and/or logic- and knowledge based approaches and to produce outputs such as content for generative AI systems (e.g. text, video or images), predictions, recommendations or decisions, influencing the environment with which the system interacts, be it in a physical or digital dimension. A system that uses rules defined solely by natural persons to automatically execute operations should not be considered an AI system. AI systems can be designed to operate with varying levels of autonomy and be used on a stand-alone basis or as a component of a product, irrespective of whether the system is physically integrated into the product (embedded) or serve the functionality of the product without being integrated therein (non-embedded). The concept of the autonomy of an AI system relates to the degree to which such a system functions without human involvement.