Report Reveals that U.S. AI Industry Faces Growing Threats from China, Regulatory Overreach
WASHINGTON, D.C. – The American Edge Project (AEP), a coalition of two dozen domestic organizations, unveiled a new issue brief, “The Fierce Competition Driving America’s AI Leadership” examining the competitive landscape of the U.S. artificial intelligence (AI) industry. The report identifies key threats to American AI leadership and offers a set of recommendations for policymakers to ensure that the United States retains its global edge in this cutting edge technology.
The United States has been on the forefront of the AI revolution, in large part due to our competitive private sector, entrepreneurial spirit, and exceptional talent pool. However, the issue brief reveals that U.S. AI leadership is under mounting pressure from foreign competitors, particularly China, and increasing regulatory challenges both at home and abroad.
“America’s AI leadership is at a critical crossroads, as mounting regulatory headwinds and China’s $1.4 trillion strategic push for AI dominance threaten our global leadership position.” said AEP CEO Doug Kelly. “That is why American policymakers must come together to support and foster AI innovation. The global AI race will determine far more than market dominance – it will shape the future of American competitiveness, prosperity, and power on the world stage.”
The issue brief in its entirety can be found here. Key findings from the report include:
State of U.S. AI Competition: The U.S. AI industry is booming, and seeing healthy competition, with nearly 900 new AI companies entering the market in 2023 alone. Venture capital soared to $67.2 billion in 2023, while U.S. AI patent filings surged 621 percent from 2018 to 2022. Ease of entry and exit in the U.S. AI market is favorable for startups, particularly in software. The industry is exceedingly healthy with substantial price competition and rapidly expanding consumer choice.
Global Competitive Challenges: China’s aggressive pursuit of AI supremacy, backed by $1.4 trillion in state investment, poses a direct threat to U.S. economic and technological leadership. China aims to dominate AI by 2030 and now leads the world in AI research publications and patent origins. Meanwhile, Europe’s regulatory overreach, particularly through the AI Act and Digital Markets Act, undercuts innovation and disproportionately targets U.S. companies while giving Chinese firms more favorable treatment.
Domestic Regulatory Risks: In 2023, state legislatures enacted 65 tech policy changes, while over 760 AI-related bills were introduced at federal and state levels. Additionally, the Federal Trade Commission (FTC) and Department of Justice (DOJ) have taken an increasingly aggressive stance on antitrust enforcement, often targeting large U.S. technology firms. These investigations frequently lack clear evidence of consumer harm but create uncertainty that deters investment and hinders innovation.
Recommendations for U.S. AI Leadership: To maintain its technological edge, the United States must adopt policies that foster innovation, while protecting against external threats. Key strategies include:
- Encourage Light-Touch Regulation: Avoid burdensome regulations that could stifle innovation, leveraging existing laws to address concerns where possible.
- Ground Antitrust Enforcement in Evidence: Ensure antitrust actions are based on clear evidence of consumer harm to prevent slowing AI growth.
- Invest in Critical AI Inputs: Urgently invest in advanced chips, infrastructure, and talent to maintain U.S. AI leadership across all models, including both closed- and open-source.
- Collaborate with Allies: Work with global partners to ensure fair enforcement of regulations and to prevent protectionist policies that discriminate against U.S. companies.
- Counter Authoritarian Threats: Partner with allies to counter the influence of authoritarian regimes, protect intellectual property, and lead in innovation.
The bottom line: It is critical that U.S. policymakers establish a regulatory environment that fosters innovation, supports risk taking, and protects against foreign threats. By championing policies that support and strengthen the U.S. AI ecosystem, American leaders can safeguard our economic prosperity, fortify our national security, counter China’s technological ambitions, and ensure the United States leads the world in developing this indispensable breakthrough technology.
BACKGROUND:
The American Edge Project is a coalition of domestic organizations representing a cross-section of U.S. innovators who are dedicated to telling the story about technology’s positive influence on America’s economy and the vital role innovation plays in our society. Former New Mexico Governor Susana Martinez, former U.S. Representative Chris Carney, and former Federal Election Commission Chairman Bradley A. Smith are directors of the American Edge Project. AEP’s National Security Advisory Board is comprised of Former White House Counterterrorism and Homeland Security Advisor Frances Townsend; retired four-star General Joseph F. Dunford Jr., United States Marine Corps (USMC), who served as former Chairman of the Joint Chiefs of Staff; and former Acting Director of the Central Intelligence Agency (CIA), Michael J. Morell. Former U.S. Senators Saxby Chambliss (R-GA) and Kent Conrad (D-ND) serve as Co-Chairs of the Project’s Economic Advisory Board. Former U.S. Representative Greg Walden (R-OR) and Former U.S. Representative Loretta Sanchez (D-CA) serve as Co-Chairs of the Project’s Open & Accessible Internet Advisory Board.
Visit AmericanEdgeProject.org for more information.
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