US Wants Cloud Firms to Reveal Foreign Clients

The latest proposal by the Biden administration aims to prevent China from using US technology for artificial intelligence development amid the heated tech conflict between Washington and Beijing.

The new “know-your-customer” program requires cloud service providers such as Microsoft and Amazon to identify and investigate whether foreign clients develop AI on their platforms.

“We can’t have non-state actors or China or folks who we don’t want accessing our cloud to train their models,” US Commerce Secretary Gina Raimondo told Reuters. “We use export controls on chips. Those chips are in American cloud data centers so we also have to think about closing down that avenue for potential malicious activity,” she stressed.

The proposed regulation requires cloud providers to verify the identity of foreign people and entities that use US cloud computing accounts. The draft rule indicates that cloud services will need to collect “at minimum” information like names, contact information, source of payment, and IP addresses and report any suspicious activity.

Concerned that China might use AI technologies developed on US security grounds to strengthen its military, US lawmakers have pressured President Joe Biden’s administration to also restrict chip exports to China. Still, dozens of Chinese military bodies, AI labs, and state universities were able to purchase NVIDIA semiconductors after the ban went into effect.

In late 2023, President Biden signed an executive order demanding AI companies that pose a risk to national security, economy, and public health to report their safety test results to the US government for public release.

Tech trade coalition NetChoice’s general counsel, Carl Szabo, said Biden’s “illegal” executive order is trying “to force industry reporting requirements for AI,” adding that it “could deter international collaboration.” Additionally, Chinese Foreign Ministry spokesman Wang Wenbin criticized the new proposal, asking the US to cooperate on AI “rather than decoupling, breaking chains and building fences.”

If the “know-your-customer” program goes into effect, Washington could cut off Chinese firms’ access to the US data centers and servers essential for training AI. The program also sets the standards for collecting, storing, and analyzing client data. This is a difficult and costly process that could put US tech companies in a disadvantageous position compared to those that don’t deal with such harsh restrictions.