The next big battle over offshoring is happening in Washington, and this time it's about artificial intelligence.
The Biden administration is rushing to issue new regulations in its final weeks in office to ensure the United States and its closest allies have control over how artificial intelligence evolves in the coming years.
The rules have led to an intense battle between technology companies and the government, as well as between government officials.
The regulations, which could be issued as early as Friday, would dictate where American-made chips crucial to AI could be shipped. Those rules would then help determine where the 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 US allies to buy AI chips unhindered, while blocking 20 adversaries such as China and Russia from buying them. More than a hundred other countries would face different quotas on the amount of AI chips they could receive from U.S. companies.
The regulations would also make it easier for AI chips to be sent to trusted U.S. 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 must follow to protect AI systems from cyber theft.
The Biden administration's plan has drawn swift backlash from U.S. tech companies, which say global regulations could slow their operations and create costly compliance requirements. Those companies also wonder whether President Biden should adopt rules with such far-reaching economic consequences in his final days as president.
While some details remain unclear, the new rules could force tech companies that are 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 achieve scientific breakthroughs. Because of the potential power, U.S. officials want AI systems to be built in the United States or in allied countries — where they will have more control over what the systems do — rather than in countries that could share that technology with China or in other countries could act. ways that conflict with U.S. national security.
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 lead in AI and the power to decide which countries can benefit from it.
“It is important to think about how we want these transformational developments to be rolled out across the world,” he said.
The rules are largely about national security: Given how AI could transform military conflicts, the rules are intended to keep the most powerful technology in the hands of allies and prevent China from circumventing US restrictions by gaining access to AI chips via 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 is offering money to attract technology companies.
Some unions have spoken out in support of the Biden administration's plan. This is because data centers are major consumers of electricity and steel. Each and every one of them creates work for construction companies, electricians and HVAC technicians, as well as for workers involved in energy production.
“Labor has a huge stake in the future of AI and technology, not just in its application, but also in the infrastructure that supports it,” said Michael R. Wessel, adviser to the United Steelworkers union.
But U.S. tech companies and their supporters say the rules could hold back technological developments, strain international alliances, hurt U.S. companies and motivate countries to buy alternative technologies from China, which is racing 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, we can't import our advanced technology from the United States, because there's always the threat that the American government is going to do that.' Take it away from us,” said Geoffrey Gertz, a senior fellow at the Center for a New American Security.
California-based Nvidia, which controls 90 percent 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 would encourage President Biden not to pre-empt incoming President Trump by implementing policies that will only harm the American economy, set America back and play into the hands of America's adversaries,” Mr. Finkle added.
Technology companies have also tried to soften the impact by appealing to the incoming administration of President Donald J. Trump, who can decide whether to maintain or enforce the rules, technology executives and other people familiar with the exchanges said.
Microsoft and Oracle declined to comment.
It is unclear what Mr. Trump would do about the issue, although he has recently expressed support for having data centers built in the United States. Among his advisers are some Chinese skeptics who are likely to favor stricter 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 introduced in recent years to ban shipments of advanced AI chips to China and other hostile countries and to require special licenses to ship AI chips to countries in the Middle East and Southeast Asia.
These controls have allowed the United States to exert some global influence. To gain access to Nvidia chips, G42, a leading AI company in the United Arab Emirates, pledged last year to renounce the use of technology from Huawei, a Chinese telecommunications company under US sanctions.
But U.S. concerns have grown that Chinese companies are getting their hands on crucial technology by smuggling in chips or through remote access to data centers in other countries.
Companies have also had to wait a long time to obtain licenses for even small numbers of chips, and foreign officials have appealed directly to the Biden administration to try to obtain them. That's why officials started working on a more transparent distribution system last year.
Technology companies say the requirements are too onerous and could make data centers too expensive for some countries, preventing some countries from using AI to benefit their healthcare, transportation and hospitality needs. Among the countries facing caps and other restrictions are traditional U.S. allies such as Israel, Mexico and Poland, a member of NATO.
“We all agree that none of these workloads or the use of AI technology and the GPUs they rely on pose a national security concern,” said Ken Glueck, Oracle's executive vice president, in a blog post. company in which he refers to graphics processing units or AI chips. .
Nvidia and other tech companies have also argued that the rules could backfire by driving buyers in the Middle East, Southeast Asia and elsewhere to Chinese companies like Huawei.
Some U.S. officials have tried to combat this narrative. One analysis that U.S. officials prepared, including for consultation with the private sector, said Chinese chipmakers faced significant hurdles and would not be able to export enough chips to train advanced AI models. The analysis was reviewed by The New York Times.
“Huawei is struggling to make enough advanced chips to train AI models in China, let alone export chips,” said Matt Pottinger, Mr Trump's former deputy national security adviser and the CEO of Garnaut Global, a China-focused research agency. .
