Brookings investigates: Will US innovation lead or lag in the AI race?

The global artificial intelligence race between the United States and China is intensifying as Congress considers new AI regulations amid growing concerns about safety and competitive advantages.

Current state of AI development: The rapid evolution of AI capabilities has sparked both excitement and concern in the tech industry and government circles.

• AI models have grown exponentially from 1.5 billion parameters to over 100 billion within five years, enabling more sophisticated reasoning tasks
• Notable figures like Geoffrey Hinton and Elon Musk have raised alarms about potential risks of advanced AI systems
• Recent evidence suggests “AI scaling laws” are showing diminishing returns, indicating slower progress in capability improvements

Regulatory landscape: The United States maintains a robust existing framework for addressing immediate AI concerns without requiring extensive new legislation.

• Current laws like Title VII of the Civil Rights Act and the Fair Credit Reporting Act already provide mechanisms for addressing AI-related discrimination
• The Biden administration’s executive order implemented comprehensive AI oversight, which the incoming Trump administration has pledged to repeal
• Local initiatives, such as New York City’s automated hiring system audits, demonstrate how existing principles can adapt to AI challenges

European cautionary tale: The EU’s strict regulatory approach to AI governance has produced concerning economic consequences.

• GDPR compliance reduced company profits by 8% and hampered growth
• The European AI Act’s compliance costs, estimated at €400,000 per company, are projected to reduce AI investment by 20%
• European startups raised less than half the venture capital funding of U.S. companies in 2023

U.S.-China competition: America currently leads in AI development but faces growing pressure from China’s state-driven approach.

• U.S. companies are developing 73% of large language models compared to China’s 15%
• American private AI investment reached $67.2 billion versus China’s $7.8 billion in 2023
• China’s 2017 AI Development Plan aims for global AI supremacy by 2030 through military-civil fusion and state investment

Strategic imperatives: Maintaining U.S. leadership requires a balanced approach to regulation and innovation.

• Industry-led initiatives like the Frontier Model Forum demonstrate potential for responsible self-regulation
• Expanding visa programs and investing in STEM education are crucial for maintaining talent advantages
• Targeted legislation should address specific, urgent risks without hampering broader innovation

Looking ahead: The future of AI leadership hinges on balancing innovation with responsible development while maintaining competitive advantages against China’s state-driven approach. The challenge lies in crafting policies that protect against genuine risks while preserving the dynamic innovation ecosystem that has positioned the United States as the global AI leader.