By Doug Kelly
The stakes couldn’t be higher in the race for artificial intelligence (AI) leadership. With the global AI market projected to reach $15.7 trillion by 2030, the nation that leads in AI will not just dominate the economy but also set the tone for global security and values. Today, the American Edge Project released a detailed new issue brief that underscores how America’s AI leadership has been fueled by a dynamic, competitive private sector. But now, facing fierce competition from China and growing regulatory challenges at home and abroad, the time to act is now. That requires forward-thinking policymaking that will help accelerate innovation and counter China’s tech ambitions.
By any metric, America’s robust private sector is driving our technological edge. In terms of the number and diversity of firms, consumers have more AI options than ever, with the ability to choose from established companies, newer firms, and startups, and to switch among them seamlessly. In 2023 alone, more than 897 new U.S. AI companies entered the marketplace.
Low barriers to entry for software-based AI firms, thanks in part to open-source providers and platforms that lower capital requirements, have led to even more options in the pipeline. Since 2018, 94 different companies have developed more than 250 foundational models, with more than half available with an open license. Venture capital funding is plentiful, with $67.2 billion invested in U.S. AI in 2023. Much of this investment flows from established tech companies, who are spending tens of billions of dollars on AI and who are helping to provide startups with the necessary resources to innovate and compete.
Together, these companies are generating outstanding results for consumers and for the U.S. economy. AI output has skyrocketed even as many products remain available at zero cost to consumers. In the past few years, the percentage of individuals and organizations using AI has more than tripled, while in just the last year, the use of generative AI has doubled. In terms of innovation, the U.S. AI industry produced a 621 percent increase in patents from 2018 to 2022. The United States also leads all countries in the number of notable machine learning models.
Nevertheless, challenges remain that we must meet head on.
Abroad, China plans to lead the world in AI, particularly in open-source AI, by 2030. China is investing $1.4 trillion to achieve technological leadership and has already surpassed the United States in global AI patent origins. China also leads the world in AI research publications, top-tier AI researchers, and the adoption of generative AI technologies.
China supports this AI growth with state subsidies and intellectual property theft in the range of $500 billion annually. If China’s AI capabilities ever surpass our own, the Chinese Communist Party (CCP) could use AI to spread authoritarian values and surveillance technologies around the globe. Indeed, our own National Security Commission on Artificial Intelligence acknowledges that China could surpass the United States in AI in the next few years.
Among our allies, Europe’s protectionist impulses and burdensome regulations are hindering innovation. Europe and the United Kingdom have targeted American technology companies for tens of billions of dollars in fines and blocked routine transactions that have almost no nexus to the continent, all while giving European and Chinese companies much more favorable treatment. These policies hamper American innovation by chilling investment, discouraging new products, and transferring productive capital from American innovators to European bureaucrats. For open-source projects, including those originating among European companies, the European Union’s new AI Act’s arbitrary lines and sweeping scope are likely to hinder AI’s development.
At home, both the federal and state governments have sharply increased the number and burden of AI regulations, with little regard for need or cost. Moreover, even though AI competition is thriving, the Federal Trade Commission (FTC) recently launched an extensive study of AI markets and signaled a predisposition to find competitive problems.
Similarly, even though both the FTC and the National Telecommunications and Information Administration (NTIA) have recognized that open-source models can decentralize market control, the FTC declared open-source AI models problematic because, at some future point, companies could choose to close those models. Aside from regulations, America’s energy grid and infrastructure are ill-prepared to support the growing demands of AI development.
American policymakers need to get it right. The global AI race is about more than just technology – it’s a battle of values and vision. While China uses AI to expand censorship and control, pushing its model of “digital authoritarianism,” the United States champions a different path – one that protects freedom, promotes prosperity, and treats AI as a force for good.
Here’s how policymakers can help:
- Encourage Light-Touch AI and Tech Regulation: Avoid burdensome regulation that stifles innovation; existing laws can address most concerns.
- Ground Antitrust Enforcement in Evidence: Ensure antitrust actions are based on proven consumer harm, not agenda-based ideology, to avoid slowing AI growth.
- Invest in Critical AI Inputs: Urgently invest in advanced chips, infrastructure, and talent to maintain U.S. AI leadership. Ensure America leads in multiple AI approaches – both closed- and open-source.
- Collaborate with Allies: Partner with global allies to ensure even-handed enforcement and prevent protectionism that discriminates against U.S. companies and products.
- Counter Authoritarian Threats: Work with allies to counter China’s influence, especially in AI, by protecting IP, leading in innovation, and exporting U.S. tech across globe.
The country that leads in AI will shape the global landscape for decades. By recognizing the value of innovation and investment, and by working hand in hand with the private sector, policymakers can ensure that the 21st Century remains an American century.