A recent report by Reuters has shed light on cloud service giants Amazon’s AWS and Microsoft’s Azure for their role in providing artificial intelligence (AI) services to China. The report delves into approximately 50 tender documents from the past year, revealing how 11 Chinese entities gained access to U.S. chips and AI software via cloud services.
The U.S. has implemented strict restrictions on exporting high-end chips and AI technology to China due to concerns over potential military applications. This isn’t the first time such circumvention has been reported, as similar instances have been highlighted in the past by Reuters.
While the U.S. government prohibits direct export of software and technology as a commodity, a loophole exists through cloud services. Chinese entities have capitalized on this opening to obtain advanced technologies from the U.S. through Chinese intermediaries rather than directly from AWS or Azure.
Interestingly, four of the tenders specifically named AWS as the cloud service provider. In response, an AWS spokesperson emphasized their compliance with all U.S. laws, including trade regulations, pertaining to the provision of services in and outside China.
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The ban extends to Nvidia’s high-end chips crucial for powering Large Language Models (LLMs) like OpenAI’s ChatGPT. For instance, a March tender reflected Shenzhen University’s payment of $27,996 for an AWS account granting access to cloud servers supported by Nvidia’s A100 and H100 chips. This service was obtained through an intermediary, Yunda Technology Ltd Co. Another tender showcased Sichuan University purchasing 40 million Microsoft Azure OpenAI tokens for constructing a generative AI platform.
Chinese companies rely on American service providers due to the insufficient computing capabilities of domestic players like Alibaba’s Alicloud in running generative AI models. China remains a giant in the technological market, with various firms striving to capture larger shares of the market’s immense demand. According to IDC, AWS currently stands as the sixth-largest cloud computing service provider in China.
The U.S. government is attentive to this cloud services loophole and is making efforts to tighten restrictions to prevent access to AI models. An introduced bill in April aimed at restricting chip access via cloud services is pending approval. A crackdown on this loophole could significantly impact AWS and Azure in the future.
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