Tech sector in the US is criticizing an eleventh-hour decision by the Biden Administration that would regulate how American AI technologies are shared with the rest of the world.
The White House stated that the Interim Final Rule on Artificial Intelligence Diffusion streamlines licensing hurdles, both for large and small orders of chips, bolsters U.S. AI Leadership, and clarifies to partner and allied nations how they can take advantage of AI. The rule also said that it built on previous chip control by thwarting the smuggling of chips, closing other loopholes and raising AI standards.
“The new rule was necessary, the report said.[t]To enhance U.S. economic and national security strength.”
“[I]”It is crucial that we don’t off-shore this critical technology, that the world’s AI operates on American rails,” said the report. “It’s important to work closely with AI companies and other governments to develop critical security standards and to build trust as they expand their AI ecosystems.”
Stephen Kowski is the field CTO for SlashNext The rule is intended to strike a balance between maintaining technology leadership and protecting advanced AI capabilities.
He told TechNewsWorld that, “Given cyberthreats’ increasing sophistication and the potential misuse of AI systems,” it is vital to secure AI infrastructure and computing resources. “Strong controls over AI chip exports will help prevent advanced capabilities being used to compromise security or enable malign activities.”
Jeff Le, Vice President for Global Government Affairs and Public Policy at SecurityScorecard New York City-based cybersecurity ratings company.
TechNewsWorld quoted him as saying that the global competition for sourcing and computation is vital to a sustained AI race, and crucial in surpassing China’s ambitions. “There are links with concerns over the Chinese backend as well as digital vulnerabilities for American IP and data. The reduction of interdependence has a significant impact on national security and allows us the opportunity to strengthen our supply chain, which is vulnerable as China’s threats against Taiwan have shown.
Economic Growth is Under Threat
The rule is expected to come into effect in 120 days.
In a blog post, Ned Finkle wrote that “Today, businesses, startups, universities, and other institutions around the globe are leveraging mainstream AI in order to advance health care and agriculture, manufacturing, educational, and many other fields. This is driving economic growth, unlocking the potential for nations.”
“Powered by American technology, AI adoption in the world drives growth and creates opportunities for industries domestically and abroad,” he said. This global progress is in danger. The Biden Administration now seeks to restrict access to mainstream computing applications with its unprecedented and misguided ‘AI Diffusion’ rule, which threatens to derail innovation and economic growth worldwide.”
“In its final days in office, Biden’s Administration is trying to undermine America’s leadership by creating a 200-plus pages regulatory morass that was drafted secretly and without the proper review of legislators,” he said. This would be a massive overreach that would put bureaucratic control on the design and marketing of America’s leading semiconductors and computers.
“And by attempting to rig market outcomes and stifle competition — the lifeblood of innovation — the Biden Administration’s new rule threatens to squander America’s hard-won technological advantage,” he argued.
“While cloaked in the guise of an ‘anti-China’ measure, these rules would do nothing to enhance U.S. security,” he added. “The new rules are designed to control technology globally, including the technology that is already widely available on mainstream gaming computers and consumer hardware. Biden’s new rules, rather than reducing any threat, would only erode America’s global competition, undermining innovation that has kept America ahead. ahead.”
US AI Leadership at Risk from Policy Gaps
Daniel Castro, vice president at the Information Technology and Innovation Foundation, Washington, D.C., which is a research and policy organization, said that the IFR raised serious concerns regarding its impact on U.S. Competitiveness, AI Leadership in the world, and international alliances.
In a press release, he stated that “by pressuring other countries to choose between the United States or China, the Administration risks alienating key allies and inadvertently enhancing China’s role in the global AI eco-system.”
“Confronted with such an ultimatum, many countries may opt for the side offering them uninterrupted access to the AI technologies vital for their economic growth and digital futures — and currently, only one country is threatening to cut them off from these technologies.”
Castro also added that the IFR’s focus on closed-weight AI model regulation while leaving open weight equivalents unaddressed, creates an obvious and counterproductive imbalance.
He said that U.S. companies creating proprietary AI models would face a stringent regulatory burden, while foreign competitors could avoid it by using open source alternatives. “This policy undercuts American companies in the global marketplace and fails meaningfully to mitigate the risk the regulation purports be addressed.”
“Instead of strengthening national security or protecting U.S. technology leadership, the Administration’s approach risk enabling rivals accelerate their advances and surpass the United States,” he contended.
He added that “the administration’s first restrictions on chip imports were misguided and the IFR compounded this misstep.” “Instead of changing course, the Administration persists in counterproductive policies which undermine U.S. AI leadership while giving rivals an easier path to dominate.” The United States needs to work on solidifying its position as global leader in AI, by encouraging innovation, strengthening alliances, ensuring that U.S. technologies are widely available worldwide, and by strengthening its alliances.
“A strategy rooted in competitiveness — not containment — will best serve America’s interests in the digital economy of the future,” Castro maintained.
Short-Term Gains, Long-Term Losses
University of Pennsylvania Professor of Engineering Benjamin Lee The approach used to achieve these goals is not acceptable. “Sustaining U.S. leadership in artificial intelligence — both the hardware architectures and the software models — is essential for national security and economic strength,” he told TechNewsWorld.
Lee emphasized that U.S. leaders build an ecosystem of hardware and software that is the basis for global AI computation. “Although export controls and rulings by the administration produce a narrow short-term gain, they can produce a wider, long-term disadvantage to American technological lead,” said Lee.
He explained that export controls would slow down the deployment of advanced GPUs in some countries and their largest AI data centres. Export controls may cause some countries to create their own software or hardware models, but they will also force other countries to do so in the future.
“Much is based on publicly available code or resources, which makes it easier to build alternatives to American technology if necessary,” he added. “Export controls can also reduce the visibility of technology state-of-the art in other countries for the United States.”
He said that similar export controls imposed on Intel CPUs to slow the growth of high-performance scientific computing in China ten years earlier led to an explosion of computer engineering inside China. “U.S. Experts now have less visibility in the state of Chinese Supercomputing.”
Unintended Consequences AI Lock-in Policies
Rob Enderle is the president and principal analyst at the Enderle Group The firm is a consulting services company in Bend, Ore.
“While lock-in — the practice of forcing customers to use only your technology — can work over a short period, as IBM showcased for several decades, it can also create a trend away from your technology, which is also what happened to IBM and could now happen to the U.S.,” he told TechNewsWorld. This move is tactically sound but long-term, it’s suicidal to AI technology in the U.S.
“I believe that the rule is well-intentioned, but poorly thought out. It was created by people with no understanding of the technology and the market where it operates,” he said. It will hurt U.S. AI and safety over the long run in exchange for short-term benefits that are questionable. This will make U.S. businesses unable to compete against their foreign counterparts at a time when U.S. technology is superior.
Enderle explained that China’s tech capabilities were increasing much faster than those of the U.S., largely because China’s government was taking a more aggressive approach to assisting in technological advancements. “If the U.S. fails to respond, the technology market will move away from the U.S. and most likely to China.”
Kris Bondi is the CEO and co-founder at Mimoto A threat detection and response firm in San Francisco said that the tendency for decrees to be either all-or-nothing is frustrating. She told TechNewsWorld that regulations are necessary, but should focus on AI usage, access and monitoring.
“While I accept that AI use and protection is crucial for U.S. economic and national security strength, this type of isolationism undermines innovation,” she said. Not every technological advancement is made in the United States. This rule creates a bubble that will not protect, but rather limit the U.S.’ ability to innovate and compete globally.