Microsoft warns AI export controls threaten US leadership

Microsoft’s President Brad Smith has warned that export restrictions on AI technology, imposed in the last days of the Biden administration, risk undermining US competitiveness and could inadvertently benefit China.

‘The Biden administration’s interim final AI Diffusion Rule caps the export of essential American AI components to many fast-growing and strategically vital markets,’ Smith wrote in a company blog post published on 27 February. ‘As drafted, the rule undermines two Trump administration priorities: strengthening U.S. AI leadership and reducing the nation’s near trillion-dollar trade deficit.’

The Microsoft executive criticised the rule for placing several US allies in a ‘Tier Two’ category with quantitative limits on American tech companies’ ability to build and expand AI datacentres in their countries, including ‘many American friends, such as Switzerland, Poland, Greece, Singapore, India, Indonesia, Israel, the UAE, and Saudi Arabia.’

‘The unintended consequence of this approach is to encourage Tier Two countries to look elsewhere for AI infrastructure and services. 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,’ Smith warned.

While supporting national security protections against adversaries acquiring advanced AI technology, Smith urged the Trump administration to simplify the rule, eliminate quantitative caps and retain qualitative security standards that protect national security.

‘America’s AI race with China begins at home. It’s founded on the ability of innovative American firms to bring manufactured goods and technology services to like-minded countries around the world,’ Smith stated, noting Microsoft plans to spend $80 billion this year on AI infrastructure globally, with more than half in the United States.

https://blogs.microsoft.com/on-the-issues/2025/02/27/trump-administration-ai-global-race/