The term AI system means:

1. (a) A machine-based system that can, for a given set of human-defined objectives, make predictions, recommendations, or decisions influencing real or virtual environments—i.e., a system that:

   1. (1) Uses data inputs to perceive real and virtual environments;
   2. (2) Abstracts such perceptions into models through automated or algorithmic statistical analysis; and
   3. (3) Uses model inference to make a classification, prediction, recommendation, or decision.
2. (b) Any data system, software, hardware, application, tool, or utility that operates in whole or in part using a system described in paragraph (a) of this section.