Microsoft Calls on U.S. to Ease AI Export Restrictions

Microsoft has asked the White House to ease the U.S. government’s restrictions on AI chip exports, especially to allies. The argument is simple enough: If it doesn’t do so, it risks giving China a strategic advantage.

“The AI Diffusion Rule caps the export of essential American AI components to many fast-growing and strategically vital markets,” Microsoft vice chair and president Brad Smith explains. “As drafted, the rule undermines two administration priorities: Strengthening U.S. AI leadership and reducing the nation’s near trillion-dollar trade deficit. Left unchanged, the rule will give China a strategic advantage in spreading over time its own AI technology, echoing its rapid ascent in 5G telecommunications a decade ago.”

As Smith says, the AI Diffusion Rule creates a multi-tier system that restricts U.S. technology firms from building and expanding AI datacenter operations in some countries that are U.S. allies and partners, like Switzerland, Poland, Greece, Singapore, India, Indonesia, Israel, the UAE, and Saudi Arabia. This, he says, undermines the confidence of potential customers in those countries, as they “worry that an insufficient supply of critical American AI technology will restrict their opportunities for economic growth.”

“The unintended consequence of this approach is to encourage Tier Two countries to look elsewhere for AI infrastructure and services,” he continues. “And it’s obvious where they will be forced to turn. If left unchanged, the Diffusion Rule will become a gift to China’s rapidly expanding AI sector.”

To make his case, Smith uses the overly simplistic and patriotic language the current administration understands and will readily agree with. And he reminds that administration that more than half the $80 billion it will spend on AI infrastructure in the current fiscal year will remain “on U.S. soil.” He calls on the administration to “take an overly complex rule that requires 41 pages in the Federal Register and right-size it, make it simpler.”

“Ironically, the Diffusion Rule discourages what should be regarded as an American economic opportunity—the export of world-leading chips and technology services,” he writes. “At the very moment when the administration is pressing Europe to buy more American goods, the Diffusion Rule leaves the leaders of partners like Poland asking why they have been relegated to Tier Two status and an uncertain ability to buy more American AI chips in the future.”

“America’s AI race with China begins at home,” he concludes. “It’s founded on the ability of innovative American firms to bring manufactured goods and technology services to like-minded countries around the world. We’re prepared to invest. What we need now is an AI diffusion rule that gives us the ability to do so.”