The next big fight over offshore outsourcing is happening in Washington, and this time it has to do with artificial intelligence.
The Biden administration, entering its final weeks in office, is rushing to issue new regulations to ensure the U.S. and its allies control how artificial intelligence is developed in the future.
The rule has sparked a bitter fight between tech companies and government and administration officials.
The rules, which could be announced as early as Friday, will dictate where U.S.-made chips critical to AI can be shipped. These rules will then help prioritize the United States and its allies in deciding where to build data centers that generate AI.
The rules allow most European countries, Japan and other close U.S. allies to purchase AI chips freely, while blocking more than two dozen adversaries such as China and Russia from purchasing AI chips. More than 100 other countries face different quotas on how much AI chips they can receive from U.S. companies.
The rule would also make it easier to ship AI chips to trusted U.S. companies that operate data centers, such as Google and Microsoft, rather than to foreign competitors. The rule establishes security procedures that data centers must follow to keep AI systems safe from cyber theft.
The Biden administration’s plan drew swift pushback from U.S. tech companies, which say global regulations could slow their business and impose costly compliance requirements. These companies also question whether President Biden should set rules with such far-reaching economic consequences in his final days in office.
Some details are still unclear, but the new regulations may force tech companies pouring tens of billions of dollars into building data centers around the world to rethink some of those locations.
Artificial intelligence, which can answer questions, write code, and generate images, is expected to revolutionize the way nations fight wars, develop medicines, and achieve scientific breakthroughs. Because of its potential power, U.S. officials want AI systems to be built in the United States or its allies (who might have more say in what the systems do) rather than in countries that might share technology with China or act in other countries. This is a method that runs counter to U.S. national security.
Peter Harrell, a former White House economic official and Carnegie Endowment for International Peace fellow, said the U.S. currently has a significant lead in AI and can determine which countries can benefit from AI. He said he had influence.
“It’s important to think about how we want these innovative developments to unfold globally,” he said.
The rules are primarily about national security. Given the ways in which AI could transform military conflict, these regulations are designed to keep the most powerful technologies in the hands of allies and prevent China from accessing AI chips through international data centers.
But U.S. officials say data centers are also an important source of new economic activity in American communities. They want to encourage companies to build as many data centers as possible in the United States rather than in places like the Middle East, which offer money to attract technology companies.
Some labor unions also voiced support for the Biden administration’s plan. This is because data centers are huge consumers of electricity and steel. Each creates jobs for construction companies, electricians, HVAC technicians, as well as workers involved in energy production.
“Labor is very interested in the future of AI and technology, not only in terms of applications, but also in terms of the infrastructure that supports it,” said Michael R. Wessel, general counsel for the United Steelworkers union.
But U.S. tech companies and their supporters argue that the rule could hinder technology development, strain international alliances and incentivize countries to buy alternative technology from China, which is competing to develop its own AI chips.
“The risk is that in the long run, countries will say, ‘We can’t rely on the United States and import advanced technologies from the United States.’ Because there are always threats from the U.S. government. Take it from us,’ said Geoffrey Gertz, senior fellow at the Center for a New American Security.
California-based Nvidia, which controls 90% of the AI chip market, has lobbied against the rules in meetings with Congress and the White House, as have Microsoft, Oracle and other companies. It happened. They worry the rule could hurt international sales.
Ned Finkle, Nvidia’s vice president of global affairs, said in a statement that the policy would cripple data centers around the world without improving national security and “push the world toward alternative technologies.”
“We will encourage President Biden not to preempt the incoming President Trump by enacting policies that will only harm the American economy, set our country back, and play into the hands of America’s enemies,” Mr. Finkle added. .
Tech companies have also tried to blunt the impact by appealing to President-elect Donald J. Trump, who could decide whether to maintain or enforce the rules, said tech executives and others familiar with the exchanges.
Microsoft and Oracle declined to comment.
Biden officials also clashed over regulations. Commerce Secretary Gina M. Raimondo, who is more sympathetic to industry complaints and concerned about how the Trump administration will enforce the rules, has been at odds with the White House and other agencies, according to three officials and other people familiar with the discussions. , he declined to be named to discuss deliberations behind closed doors.
Some U.S. allies have expressed concerns about the rule, officials said. And in a Dec. 19 letter to the Biden administration, a bipartisan group of lawmakers on the Senate Commerce Committee criticized the restrictions as “harsh” and said they would “severely impede the sale of American technology abroad.”
After the White House decided to move forward, the Commerce Department pushed for additional changes to the rule, including increasing the number of chips that could be sold without a license and delaying implementation of the rule by 120 days to allow the Trump administration to potentially make the chips. Two officials said there is a change.
Although President Trump recently expressed support for building data centers in the United States, it is unclear what action he will take on the issue. Among his advisers are some China skeptics who favor tighter restrictions. Others, including the president’s son-in-law, Jared Kushner, have business ties to Middle Eastern countries that would likely oppose any restrictions.
The new rules build on export controls the Biden administration has put in place in recent years to ban shipments of advanced AI chips to China and other hostile countries and require special permits to send AI chips to countries including the Middle East and Southeast. do. Asia.
This control gave the United States a degree of global influence. G42, a leading AI company in the United Arab Emirates, pledged last year to give up using technology made by Huawei, a Chinese telecom company under U.S. sanctions, to gain access to Nvidia chips.
But concerns have grown in the United States that Chinese companies are obtaining critical technology by smuggling chips or gaining remote access to data centers in other countries.
Companies have had to wait long times to obtain licenses for even a small number of chips, and foreign officials have appealed directly to the Biden administration to obtain licenses. So officials began working last year to create a more transparent distribution system.
Tech companies say these requirements could make the cost of data centers too high in some countries to use AI to benefit the healthcare, transportation and hospitality industries. Among the countries that will face the restrictions and other restrictions are traditional U.S. allies such as NATO members Israel, Mexico and Poland.
“We can all agree that these workloads or the use of AI technologies and GPUs do not pose a national security concern,” Ken Glueck, senior vice president at Oracle, said in a company blog post referring to graphics processing units, or AI chips. “He said. .
Nvidia and other technology companies have also argued that the rule could backfire by driving buyers from the Middle East, Southeast Asia and other regions toward Chinese companies like Huawei.
Some U.S. officials disagree. An analysis put together by U.S. officials, including consultations with private industry, argued that Chinese chipmakers face significant obstacles and will not be able to export enough chips to train cutting-edge AI models. The analysis was confirmed by The New York Times.
“Huawei is struggling to make enough advanced chips to train AI models within China, let alone chips for export,” said Matt Pottinger, Trump’s former national security adviser and CEO of Garnaut Global, a research firm specializing in China. .
