Weekly Roundup: Giving Away The Farm
How America revolutionized R&D and is giving it away to the highest bidder
On the face of it, President Trump’s recent Middle East business-diplomacy tour seems pretty straightforward: The U.S. administration is continuing its foreign affairs reshuffling and driving bilateral trade deals around emerging technology, and the Gulf States are continuing to shift their economy to something other than oil.
Yet the simplicity is only surface-level. This administration has redefined what “friends and allied nations” mean to America, and is re-shaping how critical AI know-how and semiconductors move around the globe. The dealmaking kicked off with the Trump Administration scrapping the previous administration’s “AI Diffusion Rule,” a rule meant to protect American interests, security, and allies:
The Department of Commerce announced plans to rescind the Biden administration’s AI Diffusion Rule on Tuesday, just days before the new rules were set to take effect. The January regulation would have created a three-tiered system for AI chip exports: unrestricted access for 18 close allies, limited shipments for most countries, and complete restrictions for nations like China and Russia.
The trip began with a U.S.-Saudi Arabia deal:
Donald Trump lauds Saudi Arabia as he unveils AI and defence deals. “US president highlights enduring ‘bonds’ with the kingdom as White House hails pacts worth about $600bn.”
Which was followed by a whole slew of private-sector deals:
Among the biggest deals, Nvidia said it will sell hundreds of thousands of AI chips in Saudi Arabia, with a first tranche of 18,000 of its newest "Blackwell" chips going to Humain, an AI startup just launched by Saudi Arabia's sovereign wealth fund.
Chip designer Advanced Micro Devices also announced a deal with Humain, saying it has formed a $10 billion collaboration.
Qualcomm Inc, which said it signed a memo of understanding to develop and build a data centre central processor (CPU).
Saudi Arabian firm DataVolt will invest $20 billion in AI data centres and energy infrastructure in the United States.
Alphabet's Google, DataVolt, Oracle Corp, Salesforce Inc, Advanced Micro Devices and Uber will invest $80 billion in cutting-edge transformative technologies in both countries, the White House said, without giving details.
The UAE received similar deals:
OpenAI to join US-UAE plan to build vast data centre in Abu Dhabi. “Deal on third leg of Trump Gulf tour hailed as ‘major milestone’ on road to American ‘dominance’ in the field.”
But everybody everywhere is hedging their bets, a sign that “American dominance” of AI will be harder to achieve:
UAE partners with Italian startup for AI supercomputer, AT THE SAME TIME, EU Commission opens door for ‘targeted changes’ to AI Act. “Brussels is reviewing a swathe of laws in a deregulation push,” understanding that its regulations hamper investment. Case in point, this past week: “Intel [spared] with EU regulators over $421.4 million antitrust fine this past week.”
Taiwan’s “GlobalWafers Plans Additional $4 Billion Investment in U.S.” AT THE SAME TIME these investments in semiconductor plants and AI data centers are being met with more and more “NIMBYism” across the United States.
The United States is expanding controls on Huawei chips, telling companies that using Huawei’s artificial intelligence chips “anywhere in the world” could incur criminal penalties because they violate US export controls.” The U.S. is also considering adding more PRC companies to the export control “black list” AT THE SAME TIME “Nvidia plans Shanghai research centre in new commitment to China.”
The long-term security risks and strategic value are in question. The ease with which critical technology can flow out of the country, AT THE SAME TIME the U.S. is proposing to control essentially every good, service, and data packet entering the U.S. solely through Executive Branch prerogative, is befuddling.
Jordan Schneider has a pretty succinct wrap-up on the U.S.-Saudi-UAE deal and the seemingly non-sequitorness of our new foreign affairs posture:
These deals hurt even more, given that we may no longer have the R&D infrastructure to recreate this amazing innovation.
For the last century, America has built an impressive public-private R&D ecosystem. This ChinaTalk podcast gives a historical overview of the ecosystem, what it means to our competitive advantage, and what is happening now that we are gutting it.
With seemingly loyal-less large, private corporations OK moving critical technology manufacturing to every nation other than our democratic allies, and an administration content on doing the same, the answer may lie in private sector companies and research institutes that are still true-believers in democratic alliances—after all it is democratic tax dollars and democratic governments that subsidized and protected this phenomenal R&D ecosystem. The world is privatizing, and the great thing about private capital is its immense flexibility. Authoritarian capture of capital and emerging technology does not have to be a fait accompli.
Copyright shifts
Part 3 of the U.S. Copyright Office’s “Copyright and AI” guidance came out last week. The pre-publication report is 113 pages (a good chunk of it is technical background). Here are some key parts that you can jump to that will probably have the most significant impact:
Section IV.A.2.c (Analysis of Transformativeness) - Pages 45-48: This provides a legal analysis of when AI training is “transformative.”
Section IV.D (Factor Four - Market Effect) - Pages 61-74: This section examines potential market harms, including evidence of a growing licensing market.
Section IV.E (Weighing the Factors) - Pages 74-75: This section shows how the Office balances competing considerations, offering useful guideposts without predetermining outcomes.
Section V.C (Analysis and Recommendations on Licensing) - Pages 103-106: This provides practical guidance on how licensing might work, acknowledging that solutions may vary by context.
Section VI (Conclusion) - Pages 107-108: The final assessment and policy recommendations aim to provide a balanced approach, trying to support both AI innovation and creative industries.
In other news
The latest version (as of May 18) of the House’s budget bill has a section that would “preempt” state regulation of AI. It is unclear if it would “preempt”, “eliminate”, or “pause” state-level regulation, if the section would be allowed under Congressional budget rules, or if it is even legal (The federal government can’t generally “delete” state laws). For an excellent summary of robust AI legislation states have passed, read this.
In what would be a clear violation of U.S. law, terrorists have been paying for and receiving blue check marks on X, including:
An advisor to al-Qaida. One of the founders of Hezbollah. The head of an Iraqi militia group known for attacks on U.S. troops. And a top official with the Houthi rebels who recently lashed out at the “criminal Trump.”
“Right to try” laws are gaining steam across the country. These laws would allow people who are terminally ill to try treatments not approved by the FDA. Once the Montana Governor signs the right-to-try legislation, the first “experimental treatment hub” may be in Montana.
