The U.S. government has issued a call to cloud service providers to disclose the foreign clients that are using their platforms for artificial intelligence development. This move is likely to heighten the tech tension between the U.S. and China.
What Happened: The Joe Biden administration has proposed that companies such as Amazon.com, Inc. (NASDAQ:AMZN) and Microsoft Corp. (NASDAQ:MSFT) be required to reveal the names and IP addresses of their foreign customers.
Google, a subsidiary of Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL), along with other companies, is expected to set aside a budget for collecting this information and report any suspicious activity, reported Bloomberg citing draft rule published on Sunday.
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The proposal, if enacted, could hinder Chinese companies’ access to data centers and servers crucial for AI training and hosting. It places the responsibility of data collection, storage, and analysis on cloud service providers, similar to the strict “know-your-customer” rules in the finance industry.
This move is part of the Biden administration’s larger endeavor to mitigate potential national security threats posed by AI development, particularly by Chinese firms.
Meanwhile, U.S. companies are concerned that restrictions on their activities with overseas users, without similar measures by allied nations, could put American firms at a disadvantage, the report noted.
The U.S. administration has welcomed feedback on the proposed rule until April 29 before finalizing the regulation. According to the Commerce Department, exceptions may be granted for foreign subsidiaries of U.S. cloud providers.
Alphabet, Microsoft and Amazon did not immediately respond to Benzinga’s request for comments.
Why It Matters: The proposed disclosure rule comes in the wake of ongoing concerns about China’s potential misuse of AI for espionage. In December last year, it was reported that U.S. intelligence agencies are worried about China collecting American data on a never-seen-before-scale.
The US government scrutinized Nvidia’s AI accelerators intended for the Chinese market in December, to ensure no breach of export controls. U.S. Commerce Secretary Gina Raimondo has earlier said that the country intends to tighten controls further to curtail any technological advantage to Beijing.
Previously, in November 2023, strategy and management consulting firm, McKinsey predicted that China would make significant investments in AI over the next decade, potentially resulting in trillions of dollars in returns annually.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
