The Future of AI Regulation in the United States: Competition with China and Consumer Safety

Competition between China and the United States, as well as consumer safety, are major issues.

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The disruptive potential of generative artificial intelligence, AI capable of creating new content, has captivated the attention of the public, markets and business leaders. It also ranks high among the technology-related issues that concern policymakers in Washington.

So far, the focus has been on strategic competition with China. National AI policies, meanwhile, are still taking shape, with an initial focus on security and consumer protection.

Investors should be aware of the measures taken by the United States on these two fronts.

Strategic competition with China

Congress increasingly views technological leadership, including advanced AI, as essential to U.S. national security and economic competitiveness against China. The proof is in the policy pursued.

The United States initially went it alone by limiting exports of advanced semiconductors and chipmaking equipment to China. These technologies are essential for advanced learning models and second-generation AI. The United States then convinced Japan and the Netherlands to join this effort.

Chips developed to circumvent these rules could prompt the United States to update its existing limits on semiconductor exports. Similar restrictions could be extended to other AI-enabling technologies. Developments in this regard are worth monitoring.

The AI ​​revolution is only just beginning. The same goes for the regulatory response.

Most recently, the US Treasury Department, in conjunction with an executive order from President Joe Biden, proposed banning certain US investments in China’s AI, chip manufacturing and quantum computing sectors.

The aim does not appear to be to limit access to capital, but rather to curb the transfer of “intangible benefits”, particularly the technical and managerial expertise that can go hand in hand with these investments.

As the United States strives to maintain its lead in key technologies, reactions could cause additional disruption and uncertainty. China’s recently announced restrictions on exports of rare metals, such as gallium and germanium, used in semiconductors and telecommunications equipment, illustrate this point.

The gradual decoupling of the US and China technology sectors is expected to continue. This could lead to uncertainties and risks for companies specializing in the manufacturing of chips and other next-generation AI-related technologies.

Domestic regulation of AI

So far, regulatory developments in the United States have done little to hamper AI adoption and innovation in any significant way, at least in the short term. In July, the Biden administration got seven major AI developers to commit to a set of principles. These commitments relate in particular to:

model testing and security, creating markers to identify AI-generated content, and publicly disclosing a model’s capabilities and limitations.

None of these measures seems excessively restrictive. However, the agreement suggests that safety, security and transparency are becoming key themes in AI regulation in the United States.

What should you expect?

This fall, the Senate will host a series of expert panels on these and other sensitive AI issues, including copyright, privacy, and potential job losses.

The complexity of these issues and the paralysis of Congress are expected to make it difficult to pass meaningful AI legislation in the short to medium term. However, these policy discussions could set the agenda for federal bodies that may design and implement rules regarding the use of advanced AI in the areas they control.

The Federal Trade Commission (FTC), for example, is exploring rules to limit data tracking and prevent discriminatory practices from being incorporated into algorithms. It also launched an investigation into whether a popular generative AI platform harmed people by producing false or misleading information about them.

The Department of Defense, while not involved in technology regulation, is also a stakeholder in the AI ​​policy debate, given its focus on national security.

We will remain attentive to comments from agency leaders and proposed regulations to get a sense of what might happen and to assess how the turf fight among regulators might play out.

To conclude

The AI ​​revolution is only just beginning. The same goes for the regulatory response. The principles guiding the US approach to China’s efforts in AI and enabling technologies are better understood at this stage, although tensions between these two powers generate uncertainty.

Domestic policy, meanwhile, is still taking shape. We will be very attentive to the evolution of the situation as well as its consequences for Big Tech and other companies developing and deploying generative AI.

2023-10-13 05:00:00


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