US will block Chinese customers from using AI cloud services: report

The Commerce Department is preparing to bar US firms from providing cloud services that use advanced AI processors to Chinese customers, according to a report published this week by the Wall Street Journal.

The Biden administration has already banned the export of advanced chips used in the development and training of AI from export to China, as part of the ongoing trade war between the two countries. In response, China’s government earlier this week banned two rare metals — gallium and germanium — which are used in the manufacture of important semiconductors.

According to the Journal, the potential cloud computing restrictions are viewed by national security experts as the closure of a loophole that would have let Chinese companies obviate export restrictions on the chips themselves by paying for access to them via cloud services. Such a move by the Commerce Department would put some of the biggest technology companies in the world – namely Google, Microsoft and Amazon — squarely in the middle of the international trade dispute.

A separate rules update, the Journal noted, will see the US unify its list of controlled silicon manufacturing equipment with Japan and the Netherlands, two of the increasing number of nations joining the US in restricting the sale of advanced technology as well as the import of Chinese equipment.

The Department of Commerce did not immediately respond to a request for comment. Similar requests sent to Microsoft, Google, and Amazon — the largest three public cloud providers in the US — also went unanswered.

The dispute began during the previous US presidential administration, with a ban on the use of networking hardware from several Chinese companies (most notably Huawei and ZTE) in government networks. Since 2015, however, the scope of the trade war has expanded substantially, with the US imposing increasingly severe measures. Proponents say that these measures are necessary to prevent technology theft and preserve the security of critical infrastructure from potential cyberattacks, as well as to preserve a technological edge.

China, for its part, views these policies as protectionism and an unfair restraint on trade and development, though it has also begun to take similar measures in response. Beyond its recent ban on rare metal exports, the country has also banned products made by US memory chip manufacturer Micron from use in its networking infrastructure.