The next big race for offshoring is happening in Washington, and this time it’s about 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 are in control of how artificial intelligence is developed in the coming years.
The rules have sparked a fierce battle between tech companies and the government, as well as among executives.
The regulations, which could be issued as early as Friday, would dictate where American-made chips critical to artificial intelligence could be shipped. Those rules would then help determine where the data centers that create the 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 US allies to make unlimited purchases of artificial intelligence chips, while preventing two dozen rivals such as China and Russia from buying them. More than 100 other countries would face different quotas on the amount of AI chips they could get from US companies.
The regulations would also make it easier to ship AI chips to trusted American companies that run data centers, such as Google and Microsoft, rather than to their foreign competitors. The rules will establish security procedures that data centers must follow to keep AI systems safe from cyber theft.
The Biden administration’s plan has drawn swift backlash from U.S. tech companies, which say global regulations could slow their businesses and create costly compliance requirements. These companies also question whether President Biden should be setting rules with such far-reaching economic consequences in his final days in office.
While some of the details remain unclear, the new rules may force tech companies pouring tens of billions of dollars into building 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 deliver scientific discoveries. Because of their potential power, U.S. officials want AI systems to be built in the United States or in allied countries — where they will have more of a say in what the systems do — than in countries that might share that technology with China or act in other ways contrary to US national security.
Peter Harrell, a former White House finance official and fellow at the Carnegie Endowment for International Peace, said the United States currently has a significant 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 spread around the world,” he said.
The rules are largely about national security: Given how AI can transform military conflict, the regulations are designed to keep the most powerful technology in the hands of allies and prevent China from circumventing restrictions of the US by 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 places like the Middle East, which offers money to attract tech companies.
Some labor unions have supported the Biden administration’s plan. This is because data centers are huge consumers of electricity and steel. Each creates work for construction companies, electricians and HVAC technicians, as well as power generation workers.
“Labor has a huge interest in the future of artificial intelligence and technology, not only in terms of its implementation but also the infrastructure that supports it,” said Michael R. Wessel, counsel for the United Steelworkers union.
But U.S. tech companies and their supporters argue the rules could block technological advances, strain international alliances, hurt U.S. companies and prompt countries to buy alternative technologies from China, which is struggling to develop its own artificial intelligence chips.
“The danger 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 this threat that the U.S. government is going to face. take it away from us,” said Geoffrey Gertz, senior fellow at the Center for a New American Security.
California-based Nvidia, which controls 90 percent of the artificial intelligence chip market, has lobbied against the rules in meetings with Congress and the White House, as have 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 “push the world to alternative technologies.”
“We would encourage President Biden not to prejudge the incoming President Trump by enacting a policy that will only hurt the US economy, set America back and play into the hands of America’s adversaries,” added Mr. Finkle.
Tech companies have also tried to soften the impact by appealing to the incoming administration of President-elect Donald J. Trump, which may decide whether to uphold or enforce the rules, tech executives and others familiar with the exchanges said.
Microsoft and Oracle declined to comment.
It is not clear what Mr. Trump on the issue, although he has recently expressed his support for building data centers in the United States. His advisers include some China skeptics who are likely to 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 rival countries and to require special licenses to ship AI chips to countries in the Middle East and Southeast Asia.
These controls 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 stop using technology made by Huawei, a Chinese telecommunications company under US sanctions.
But U.S. concerns have grown that Chinese companies are obtaining critical technology by smuggling chips or through remote access to data centers in other countries.
Also, companies have 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. So officials began working last year on a more transparent distribution system.
Tech companies say the requirements are too onerous and could make data centers too expensive for some nations, preventing some from using artificial intelligence to benefit the health, transportation and hospitality industries. Among the countries that will face caps and other restrictions are traditional US allies such as Israel, Mexico and NATO member Poland.
“We can all agree that none of these workloads or the uses of AI technology and the GPUs they rely on are national security concerns,” Ken Glueck, Oracle’s executive vice president, said in a company blog post which refers to graphics processing units or AI chips. .
Nvidia and other tech companies have also argued that the rules could fail by driving buyers in the Middle East, Southeast Asia and elsewhere to Chinese companies like Huawei.
Some US officials have tried to counter that narrative. An analysis compiled by US officials, including in consultation with private industry, argued that Chinese chipmakers faced significant barriers and would not be able to export enough chips to train cutting-edge artificial intelligence models. The analysis was featured by the New York Times.
“Huawei is struggling to make chips advanced enough to train artificial intelligence models in China, much less export chips,” said Matt Pottinger, a former deputy national security adviser to Mr. Trump and CEO of Garnaut Global, a China-focused research firm. .
