TL;DR:
- US government to introduce regulations to block Chinese access to AI cloud services.
- Cloud providers like AWS and Microsoft Azure may need explicit approval to offer services for training AI models to Chinese customers.
- Proposed rules aim to close the loophole of Chinese companies renting access to advanced compute hardware through cloud services.
- Biden administration shifted focus from restricting exports of advanced chips to targeting cloud services.
- Uncertain impact due to the dominance of local Chinese cloud providers like Alibaba Cloud.
- Restrictions may prevent unauthorized replication of US-developed AI models in China.
- Escalation of trade restrictions between the US and China.
- China’s retaliatory measures include bans on US chipmaker Micron and export restrictions on materials used in semiconductors and electronics.
Main AI News:
In the ongoing trade war between the United States and China, the US government is now setting its sights on restricting Chinese access to artificial intelligence (AI) through cloud services. As part of this effort, Washington is considering introducing new regulations that would require American cloud providers, including industry giants AWS and Microsoft Azure, to seek explicit approval before granting access to their AI training services to customers in China.
Sources from the Wall Street Journal revealed that the US Department of Commerce is diligently working on unveiling these proposed rules in the upcoming weeks. While the department has yet to provide an official comment, it is important to note that their response has been delayed due to the recent Independence Day holiday celebrations.
If implemented, these regulations would subject cloud services to export restrictions similar to those already imposed on AI processing technologies, such as the GPU hardware used to accelerate AI model training. The intent behind these measures is to plug a loophole that has allowed Chinese entities to bypass restrictions on purchasing advanced compute hardware by renting access to cloud services instead, as reported by The Register earlier this year.
This latest move by the Biden administration follows recent reports of potential additional restrictions on the export of advanced chips used in AI processing to China. While it was initially anticipated that these restrictions would target less powerful AMD and Nvidia GPUs, the focus appears to have shifted toward imposing limitations on cloud services instead or possibly in conjunction with the expected GPU-related measures.
It is worth noting that the effectiveness of these proposed regulations remains uncertain. China’s cloud market is predominantly controlled by domestic companies, with Alibaba Cloud leading the pack, accounting for 36 percent of total customer spending on cloud infrastructure services in 2022, as indicated by Canalys. Huawei Cloud follows closely behind with 19 percent, while Tencent Cloud and Baidu AI Cloud claim 16 percent and 9 percent, respectively. The remaining 21 percent is divided among other service providers.
While both AWS and Azure operate cloud regions within China, these services are managed by local partner companies, as mandated by the Chinese government. Consequently, they function as separate entities, isolated from the global infrastructure of their parent companies.
Roy Illsley, Chief Analyst at Omdia, shared his insights on the potential impact of these restrictions. He suggests that, despite the limitations, China’s significant investment in AI may offset any substantial setbacks. While the infrastructure available on US clouds within China may not match the advanced capabilities and speed of their American counterparts, it is still adequate for AI model training purposes.
However, Illsley acknowledges that these restrictions could serve as a preventive measure, guarding against the unauthorized replication or cloning of foundational AI models developed in the United States by Chinese agencies. This could mark a significant escalation in the ongoing tit-for-tat exchange of trade restrictions between the two nations.
China has already taken its own steps to retaliate against the US, including a ban on memory products from American chipmaker Micron, citing security concerns. Furthermore, just this week, China announced export restrictions on gallium and germanium, materials crucial in semiconductor manufacturing and other electronic applications.
Conclusion:
The US government’s plans to restrict Chinese access to AI cloud services represent a significant development in the ongoing trade war between the two nations. The proposed regulations, if enacted, would require explicit approval for American cloud providers to offer AI training services to Chinese customers. While the effectiveness of these restrictions remains uncertain, they aim to close a loophole that allowed Chinese companies to rent access to advanced compute hardware.
This shift in focus from restricting exports of advanced chips to targeting cloud services signifies a strategic adjustment in the US approach. However, the dominance of local Chinese cloud providers like Alibaba Cloud may limit the impact of these regulations. Nonetheless, the restrictions could serve as a preventive measure against the unauthorized replication of US-developed AI models in China. The escalating trade restrictions between the US and China highlight the deepening tensions and uncertainty in the market.
