The next big battle over offshoring is taking place in Washington, and this time it involves artificial intelligence.
The Biden administration, in its final weeks in office, is rushing to issue new regulations to try to ensure that the United States and its close allies have control over the development of artificial intelligence in the years to come.
The rules have triggered an intense battle between tech companies and the government, as well as administration officials.
The regulations, which could be issued as early as Friday, would dictate where American-made chips critical to artificial intelligence could be shipped. Such rules would then help determine where data centers that create AI would be built, with a preference for the United States and its allies.
The rules would allow most European countries, Japan and other close U.S. allies to make unrestricted purchases of AI chips, while preventing two dozen adversaries, such as China and Russia, from purchasing them. More than 100 other countries would face different quotas on how many AI chips they could receive from U.S. companies.
The regulations would also make it easier to send AI chips to trusted American companies that operate data centers, such as Google and Microsoft, rather than to their foreign competitors. The rules would establish security procedures that data centers would have to follow to keep AI systems safe from cyber theft.
The Biden administration’s plan has sparked a swift reaction from American tech companies, who say global regulations could slow their businesses and create costly compliance requirements. These companies also question whether President Biden should make rules with such far-reaching economic consequences in his final days in office.
While some details remain unclear, the new rules could force tech companies that are investing tens of billions of dollars building data centers around the world to rethink some of those locations.
Artificial intelligence, capable of answering questions, writing code and creating images, is expected to revolutionize the way countries fight wars, develop medicines and make scientific discoveries. Because of its potential power, U.S. officials want AI systems built in the United States or allied countries — where they will have more say in what the systems do — rather than in countries that could share that technology with China or act in other countries. ways contrary to the national security of the United States.
Peter Harrell, a former White House economic official and fellow at the Carnegie Endowment for International Peace, said the United States currently has a substantial advantage in artificial intelligence and the leverage to decide which countries could benefit from it.
“It’s important to think about how we want these transformative developments to be spread around the world,” he said.
The rules are largely about national security: Given how AI could transform military conflicts, the rules are designed to keep the most powerful technology 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 important sources of new economic activity for American communities. They want to encourage companies to build as many data centers as possible in the United States rather than in regions like the Middle East, which offers money to attract tech companies.
Some unions have come out in support of the Biden administration’s plan. This is because data centers are large consumers of electricity and steel. Each creates jobs for construction companies, electricians and HVAC technicians, as well as workers involved in energy production.
“Labor has a huge stake in the future of artificial intelligence and technology, not just in terms of the application but in terms of the infrastructure that supports it,” said Michael R. Wessel, counsel for the United Steelworkers union.
But U.S. technology companies and their supporters say the rules could curb technological developments, strain international alliances and motivate countries to buy alternative technologies from China, which is racing to develop its own artificial intelligence chips.
“The risk is that, in the long term, 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 the threat that the American government could take it away 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. They fear 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 “push the world toward alternative technologies.”
“We encourage President Biden not to get ahead of incoming President Trump by implementing a policy that will only harm the US economy, set America back, and play into the hands of US adversaries,” Finkle added.
Technology companies have also sought to blunt the impact by appealing to the incoming administration of President-elect Donald J. Trump, who will be able to decide whether to maintain or enforce the rules, technology executives and other people familiar with the exchanges said.
Microsoft and Oracle declined to comment.
Biden officials also clashed over the regulations. According to three officials and others familiar with the discussions, Commerce Secretary Gina M. Raimondo, who is more sympathetic to industry complaints and has concerns about how the Trump administration would enforce the rules, disagreed with the White House and other agencies. , who declined to be named to discuss private deliberations.
Some U.S. allies have expressed concern about the rules, officials said. And in a Dec. 19 letter to the Biden administration, bipartisan lawmakers on the Senate Commerce Committee criticized the restrictions as “draconian” and said they would “severely impede the sale of U.S. 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 can be sold without a license and delaying the start of the rule by 120 days for allow the Trump administration to make any changes. , two officials said.
It’s unclear what Trump would do about the issue, although he recently expressed support for building data centers in the United States. His advisers include some China skeptics who would likely favor tighter restrictions. Others, including the president’s son-in-law Jared Kushner, have business ties to Middle Eastern countries that are likely to 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 adversary countries and to require special licenses to send AI chips to countries, including the Middle East and the Southeast. Asia.
Such controls have allowed the United States to exert some global influence. To gain access to Nvidia chips last year, G42, a leading artificial intelligence company in the United Arab Emirates, promised to renounce the use of technology made by Huawei, a Chinese telecommunications company under U.S. sanctions.
But concerns have grown in the United States that Chinese companies are obtaining critical technology by smuggling chips or through remote access to other countries’ data centers.
Companies have also faced long waits to obtain licenses for even small numbers of chips, and foreign officials have appealed directly to the Biden administration to try to obtain them. Therefore, last year officials began working on a more transparent distribution system.
Technology companies say the requirements could make data centers too expensive for some nations, preventing some from using artificial intelligence to benefit the healthcare, transportation and hospitality sectors. Among the countries expected to face limits and other restrictions are traditional American allies such as Israel, Mexico and NATO member Poland.
“We all agree that none of these workloads or uses of the AI and GPU technology they rely on pose a national security concern,” said Ken Glueck, executive vice president of Oracle, in a blog post corporate that refers to graphics processing units or AI chips.
Nvidia and other technology companies have also argued that the rules could backfire, pushing buyers in the Middle East, Southeast Asia and elsewhere to Chinese companies like Huawei.
Some US officials disagree. An analysis drawn up by US officials, including in consultations with private industry, argued that Chinese chipmakers faced significant hurdles and would not be able to export enough chips to train cutting-edge artificial intelligence models. The analysis was seen by The New York Times.
“Huawei is struggling to produce chips advanced enough to train AI models in China, much less chips for export,” said Matt Pottinger, Trump’s former deputy national security adviser and CEO of Garnaut Global, a of research focused on China. .