Shares of Amazon.com, Inc. (NASDAQ: AMZN) and Microsoft Corporation (NASDAQ: MSFT) are witnessing a slight decline during pre-market trading on Wednesday. This comes after the Wall Street Journal released a report about the United States taking steps to limit Chinese companies access to cloud-computing services, including those offered by Amazon and Microsoft.
According to the report, the US government is contemplating the requirement for cloud providers to obtain official permission before providing their services to Chinese firms using the platforms for AI model training.
Microsoft Azure and Amazon Web Services, the leading providers of internet computing worldwide, have been facing competition in China from local companies like Alibaba Group Holding Limited (NYSE: BABA) through datacenter partners affiliated with the state.
The Biden administration aims to tighten export controls that were initially announced in October, restricting the sales of certain AI chips to China. This move seeks to curb China’s progress in technology, which is crucial to its geopolitical and economic future. As part of these measures, discussions have included the limitation of cloud access for Chinese AI developers, as reported by the Journal last week.
In July, the US is expected to present a broader Commerce Department proposal that would revise export controls, making it more difficult to sell specific chips to China without a license. One of the chips targeted by this move is Nvidia Corp.’s A800 chip, which the company designed following the earlier controls. The configuration of this product falls just within the defined limits.
The technological conflict between the United States and China is escalating rapidly. On Monday, Beijing imposed export controls on crucial metals used in chip manufacturing, electric vehicles, and defense industries. This move demonstrates China’s ability to retaliate against measures taken by the US, Japan, and Europe to restrict its access to advanced technology.