Biden administration launches new round of battle over rules for global spread of artificial intelligence

The next big battle over offshoring is playing out in Washington, this time involving artificial intelligence.

The Biden administration, in its final weeks in office, is rushing to enact new regulations to try to ensure that the United States and its close allies can control the development of artificial intelligence in the coming years.

The rules have sparked fierce battles between tech companies and governments and government officials.

The regulations, which could be released as early as Friday, will dictate where U.S.-made chips critical to artificial intelligence can be shipped. The rules will help determine where data centers for creating artificial intelligence will be built, with priority given to the United States and its allies.

The rules would allow most European countries, Japan and other close U.S. allies to buy artificial intelligence chips without restrictions, while preventing more than two dozen adversaries such as China and Russia from buying them. More than 100 other countries will face varying quotas on the number of AI chips they can receive from U.S. companies.

The rules would also make it easier for AI chips to be sent to trusted U.S. companies such as Google and Microsoft that run data centers, rather than to foreign competitors. These rules will establish the security procedures that data centers must follow to ensure that AI systems are protected from cyber theft.

The Biden administration’s plan has been met with swift pushback from U.S. technology companies, which say global regulation could slow their business and create costly compliance requirements. The companies also question whether President Biden should enact rules with such far-reaching economic implications in his final days in office.

While some details remain unclear, the new regulations could force technology companies that have invested tens of billions of dollars to build data centers around the world to reconsider some of those locations.

Artificial intelligence, which can answer questions, write code and create images, is expected to revolutionize the way countries fight wars, develop medicines and achieve scientific breakthroughs. Because of its potential power, U.S. officials want artificial intelligence systems built in the United States or in allied countries — where they have more say over how the systems function — rather than in countries where the technology could be shared with China or acted upon in other countries. country.

Peter Harrell, a former White House economic official and fellow at the Carnegie Endowment for International Peace, said the United States currently has a huge advantage in artificial intelligence and has the ability to decide which countries can benefit from it.

“It’s important to think about how we want to promote these transformational developments around the world,” he said.

The rules are primarily related to national security: given the potential of artificial intelligence to transform military conflicts, they are designed to keep the most powerful technologies in the hands of allies and prevent China from circumventing U.S. restrictions by obtaining artificial intelligence chips through international data centers.

But U.S. officials say the data center is also an important source of new economic activity for U.S. communities. They want to encourage companies to build as many data centers as possible in the United States, rather than in regions such as the Middle East, which is providing funding to attract technology companies.

Some unions have come out in support of the Biden administration’s plan. This is because data centers are huge consumers of electricity and steel. Each creates jobs for construction companies, electricians and HVAC technicians, and workers involved in energy production.

“Labor has a huge interest in artificial intelligence and the future of technology, not just in its applications but in the infrastructure that supports it,” said Michael R. Wessel, a consultant to the United Steelworkers union.

But U.S. technology companies and their supporters believe the rules could hinder technology development, put pressure on international alliances, hurt U.S. companies and prompt countries to buy alternative technologies from China, which is racing to develop its own artificial intelligence chips.

“The risk is that in the long run, countries will say, ‘We can’t rely on the United States, we can’t import our advanced technology from the United States, because there’s always going to be that threat from the U.S. government to take it away from us,'” New said Jeffrey Gertz, senior fellow at the Center for American Security.

California-based Nvidia, which controls 90% of the market for artificial intelligence chips, lobbied against the rules in meetings with Congress and the White House, as did Microsoft, Oracle and other companies. They worry the rules could hurt international sales.

Ned Finkle, Nvidia’s vice president of global affairs, said in a statement that the policy would harm data centers around the world without improving national security and would “drive the world to adopt alternative technologies.”

“We encourage President Biden not to preemptively enact policies that will only harm the U.S. economy, set the country back and play into the hands of America’s adversaries,” Finkel added.

Tech companies are also trying to dilute the impact by appealing to the incoming administration of President-elect Donald J. Trump, who could decide whether to retain or Enforce these rules.

Microsoft and Oracle declined to comment.

It’s unclear how Trump will address the issue, although he has recently expressed support for establishing data centers in the United States. His advisers include some China skeptics who may favor tighter restrictions. Others, including the president’s son-in-law Jared Kushner, have business ties to Middle Eastern countries that may oppose any restrictions.

The new rules build on export controls implemented by the Biden administration in recent years to ban the shipment of advanced artificial intelligence chips to China and other hostile countries and require special licenses to ship artificial intelligence chips to countries in the Middle East and Southeast Asia.

These controls allow the United States to exert some global influence. Last year, in order to gain access to Nvidia chips, G42, a leading artificial intelligence company in the United Arab Emirates, pledged to abandon the use of technology made by Chinese telecoms company Huawei, which is subject to U.S. sanctions.

But the United States is increasingly concerned about Chinese companies acquiring critical technologies through smuggling chips or remotely accessing data centers in other countries.

In addition, the company faces a long wait to obtain licenses for even small quantities of wafers, and foreign officials have directly called on the Biden administration to try to obtain those licenses. As a result, officials began working last year to create a more transparent distribution system.

Tech companies say the requirements are too onerous and could make data centers too expensive for some countries, preventing them from using artificial intelligence to benefit their health care, transportation and hotel industries. Countries facing caps and other restrictions include traditional U.S. allies such as Israel, Mexico and NATO member Poland.

“We all agree that these workloads or artificial intelligence technologies and the GPUs they rely on are None of their use constitutes a national security issue.

Nvidia and other technology companies also believe the regulations could be counterproductive by prompting buyers in the Middle East, Southeast Asia and elsewhere to switch to Chinese companies such as Huawei.

Some U.S. officials have tried to dispute that assertion. An analysis summarized by U.S. officials, including consultations with private industry, concluded that Chinese chipmakers face significant obstacles in exporting enough chips to train cutting-edge artificial intelligence models. The analysis was seen by The New York Times.

Matt Pottinger, former Trump deputy national security adviser and CEO of China-focused research firm Garnaut Global, said: “Huawei is struggling to make enough advanced chips to train artificial intelligence models within China, let alone export the chips.