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Matthew F. Ferraro, partner at Crowell & Moring’s Privacy and Cybersecurity Group, joined "Forbes Newsroom" to discuss President Donald Trump's recently unveiled AI action plan.
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00:00Hi, everybody. I'm Brittany Lewis, a reporter here at Forbes. Joining me now is Matthew F.
00:08Ferraro, a partner at Crowell & Mooring's Privacy and Cybersecurity Group. Matthew,
00:13thank you so much for joining me. My great pleasure. Great to be with you.
00:16President Trump on Wednesday unveiled his administration's sweeping artificial
00:21intelligence plan. And I want to talk about some of the highlights here because they include what
00:25the White House describes as removing bureaucratic red tape and banning what they describe as woke
00:31AI from the federal government. So to start off the conversation, what are some of your takeaways
00:35from what the administration highlighted? I would say, Brittany, this is certainly the
00:40most significant piece of AI policymaking released by the Trump administration to date. And you're
00:46right, it's sweeping. It includes over 90 federal policy items that the federal government is
00:52supposed to look at over the next year. It's focused around innovation, competitiveness,
00:57and accelerating deployment of AI data centers. And I think all of those are very much for the good.
01:03I do think that the mentioning of woke AI, there's a bit more smoke than fire, if that makes any sense.
01:11Two thoughts on that. One is the way they define woke AI is to include AI that expresses an ideology.
01:19And the problems with that are, one, any kind of regulation around ideology is really the
01:26regulation of speech. And so you're going to have constitutional issues depending on how that is
01:30interpreted, how the restrictions are interpreted. And second, technically, it's quite difficult as
01:35well, since most AI is simply the product of the data on which it is trained. And so actually figuring
01:40out what it is that causes an outcome that one party might find objectionable for political reasons
01:45is actually quite difficult. And let's talk about that woke AI factor first, because there have been
01:52concerns, longstanding concerns, that AI could be biased. Do you think in this sense of banning from
01:59the federal government this what they call woke AI, do you think that removes some of the guardrails
02:04for AI that could potentially discriminate or could be prejudiced in any way?
02:09Well, you have an interesting question, which is that in some ways, this is a longstanding concern
02:14expressed by both the political left and the political right, sort of around on the same
02:19issue. And I suppose to summarize and paint in a broad brush, the left is usually concerned
02:26that AI is based on data that is itself biased or reflects social biases, and therefore the outcomes
02:33tend to be biased. And, you know, ergo, it used to be that if you asked an image generator for an image
02:38of a doctor, you would get a white man, right? Because I was trained on imagery that was historically
02:45what doctors look like, but that is, you know, reinforces race and gender stereotypes.
02:50On the other hand, you have the right that is concerned that because of efforts to limit the kinds
02:55of outputs that one might think of as furthering gender or race stereotypes, you get AI that is
03:00political or ideological, which says things like it's, you know, wrong to misgender someone even
03:05to avoid a catastrophe, which is something that was cited in the Trump executive order.
03:11And so they're both kind of revolving around the same issue. But it's, as I mentioned, very difficult
03:16to resolve actually as a technical matter. And the more the government truly does to actually try to
03:22bar government contractors from creating AI that it views as expressing speech that it finds
03:28objectionable, that really does run into the teeth of some pretty serious constitutional questions.
03:33And so if I'm a company that deals with AI and LLMs, what am I thinking of when I see that woke AI
03:41executive order?
03:43I think what you're thinking of is that this is just this restatement of a concern that the Trump
03:47administration has stated in other policies where they're concerned about what it terms as DEI and
03:54other sorts of anti-discrimination views. And I will say that AI companies are not new to this. I mean,
04:02I think that they've been trying to strike the right balance on building AI models that both reflect the
04:08data on which they're developed accurately without creating outcomes that are suboptimal, let's say,
04:16in one way or the other.
04:18And if I'm an AI company, it's music to my ears if I hear the Trump administration saying,
04:24we're going to cut this bureaucratic red tape. We want AI companies to build baby build right here
04:30in America. What exactly does that mean and look like, do you think?
04:36You know, it's really important because I think if you're taking the executive orders and the AI
04:41action plan in sum, they certainly express a laissez-faire approach to AI regulation.
04:46My point is that the proof is very much going to be in the pudding. And a lot of that is still
04:51outstanding. The jury is still out, you might say, because the AI action plan says that regulation
04:57is bad and that we need to promote innovation. But what does it actually do? Well, it doesn't call
05:02for a moratorium of state laws, which was something that was considered in the Congress only recently.
05:08It doesn't call for a federal law calling for the preemption of state laws. And it really only says
05:15that the federal government should not invest discretionary dollars in states where the laws
05:21are onerous. That's not a defined term. It's open to a lot of different interpretations. So we'll have
05:26to see how this plays out. And I think the observation that I would make is that the White House is really
05:33only one player among many in this very competitive regulatory space. You have the White House, you have,
05:39of course, federal agencies, you have Congress, you have states, you have state regulators like state
05:45attorneys general, you have international regulatory bodies like the European Union, and you also have
05:50the plaintiff's bar, you have lawsuits, dozens of lawsuits pending now in federal courts, all of which
05:55pose various regulatory burdens in after fashion on companies. So this is, in some ways, a very strong
06:02rhetorical gesture towards a deregulatory approach. But again, the details really aren't there, at least
06:08not yet. And so they want to fast track permitting domestic data centers. What exactly does that mean?
06:15Because I mean, a data center can't be built in a day. So how long until we see those data centers
06:21really crop up? Is this more of a five year plan, a two year plan, a 10 year plan? What does that look
06:26like? Well, I certainly think the administration wants to see it happen sooner rather than later. So
06:30more like the two year plan. And I will say that if this, if this comes to pass, if everything that
06:35they say, like finding exceptions to environmental protections, which is something that's expressed in
06:41the plans so that they can build data centers, using federal land on which they can build data
06:46centers, if they actually do execute on those visions, I think that will have a significant
06:51impact. And, and so yes, I think that that is an area in which I would both say, I would say notice
06:57whether the Biden administration was aggressive as well, in terms of courting large scale investment
07:01to build data centers in the United States and doing more to abridge the environmental protection
07:08regime would in fact expedite that perhaps in a very significant way.
07:13And AI is still a very new technology. How do you think the Biden administration's approach to AI
07:20versus the Trump administration's approach to AI is different? Is it night and day? What does that
07:25really look like?
07:25Oh, you know, I might be controversial here, Brittany, and I'm going to say that while the
07:31Trump administration differs for sure in some of its rhetoric and its emphasis, in many ways,
07:36there's great greater similarity than I think the Trump administration would like to acknowledge.
07:40I can just tick off a couple of things. The focus on energy, I mentioned that that was a major
07:44concern of the Biden administration as well. And I should say that I don't know if you always know
07:48this. I was a senior official in the Biden administration in the Department of Homeland Security.
07:52So I was there for this. And I guess you could say that maybe I have a biased point of view,
07:56but I think it's true. In fact, the Biden administration favored in all of the above
07:59energy strategy to support the development of AI, not just minerals and coal and nuclear,
08:05but also solar and wind, which is not something that the Trump administration emphasizes.
08:10The Biden administration was also very concerned about synthetic media and deepfakes. That makes an
08:14appearance in the AI action plan. The Biden administration pioneered something called secure by design,
08:20which is a way of building software to make it resisted the cyber attacks. That gets a couple
08:25of shout outs in the AI action plan as well. So I think there's a bit more similarities here
08:31than people notice. And I would just note that the Trump's rhetoric sometimes outstrips the reach of
08:37the plan. And I want to talk about where the United States is in relation to the rest of the world when
08:44it comes to AI because President Trump said that he wants the United States to be number one in this
08:49AI space race. And one of the executive orders he signed on Wednesday vows to, quote, support the
08:55American AI industry by promoting the export of full stack American AI technology packages to allies and
09:01partners worldwide. And it goes on to say this, quote, by exporting American AI, the U.S. will strengthen
09:07ties with allies, promote U.S. standards and governance models, and maintain technological dominance.
09:12What do you think of that? And B, could this have the opposite effect where competitors
09:18look at our AI and then try to build off of that and make it better? What do you think?
09:24I would certainly say that the export issue is a critical concern of both government and industry.
09:30And the emphasis on exporting the tech stack, which is the software hardware, the whole shebang,
09:36if you will, is an issue that is going to be welcomed by a lot of tech industry players.
09:41But let me make two points. One is that the AI action plan kind of moves in two directions. It is true that
09:49the president signed that executive order, and if it comes to pass, that will be very significant for
09:52industry. But it's also true that the action plan calls on the Commerce Department and others to impose
09:57more export restrictions on various kinds of AI. And I think that will have actually a mitigating effect on
10:05exports. So it's not as an unalloyed success, you might say, for the exporters, as one might think.
10:11That's point one. Point two, I would note, is that there is very serious concern, national security
10:16concern about the export of these chips. Just the other week, the president said that he was going to
10:21change course and allow NVIDIA to export H20 chips to China. That was in contravention of a position that
10:28the Trump administration had previously taken. And there's, I think, some significant concern within
10:33national security circles in which I run, that that is giving away the golden goose to the Chinese.
10:39And industry obviously has a different view, but we're going to have to see how this shakes that for
10:45our national security. And do you think this action plan adequately addresses national security concerns
10:50or after reading it, after hearing President Trump, after seeing him sign the executive orders,
10:56you have more questions now as they relate to national security?
10:59You know, I think that there are some parts of the plan that haven't been given a lot of daylight
11:05that are important for national security. Let me highlight two. One is in the cybersecurity space.
11:11As I mentioned, the plan really doubles down on an initiative in the Biden administration to promote
11:16secure by design and software as a way of countering cybersecurity threats that are promoted by AI.
11:21And there are some good ideas in the plan about federal government leading the way
11:26to include AI-enabled attack vectors, ways in which attackers can attack systems in their scenario
11:33planning. And that's something that industry would do well to replicate as well.
11:38And second, there's an emphasis towards the back of the report. You've got to read the whole thing
11:42on WMD or chemical, biological, radiological, nuclear, and explosives, and how those threats can be
11:49advanced and increased by AI. And again, that too follows on some efforts by the Biden administration
11:55to focus on the WMD threat, sort of the worst of the worst case scenarios. So I was pleased to see
12:01that. And I hope the administration keeps up that focus. It's really no secret that China isn't our
12:07ally and China perhaps is our most serious competitor in this space, in the AI space race. So I'm curious
12:14how you think that this plan, if at all, better positions the United States to compete with China
12:20when it comes to AI.
12:22I think the plan could well help us position us to compete with China well. I will note a few things.
12:28To do AI well, you need really good software, you need really good computer chips, and you need
12:33really good data. And it talks a lot about, say the last first, about increasing supplies of data,
12:39good data on which companies and government entities can train. I think that is very well taken.
12:44A second, I think it talks about investing in chips and the development of a homegrown,
12:52high-end semiconductor manufacturing. I think that's a very good point. And again, I would note
12:56something that is an extension of the CHIPS Act that President Biden signed and not too long ago
13:01President Trump called for the repeal of. I guess that was yesterday's news. And the third thing is
13:05software. And I think that this is giving a shot in the arm to the industry to continue to develop
13:13really strong, excellent AI software and algorithms that can power these models and compete with China.
13:18And I know that you said this is President Trump's biggest AI policy to date in his second term.
13:23How do you think that this impacts what AI in this country looks like in the long term?
13:28I'm thinking two years, perhaps after his term as president, five years, a decade. I mean,
13:34what does this really do for the United States when it comes to AI long term?
13:38You have to say, Brittany, that the jury is still out. I mean, we're going to have to see
13:41this plan is very hortatory, right? It exhorts us to take certain actions. We have to see
13:47what follows from the plan, what is codified in federal law, what do the agencies actually do,
13:54how does industry respond? But I will say that the trend lines are very clear. AI is booming.
14:01Every company is a technology company today, whether it knows it or not. And you and I have the great
14:07privilege to live in a revolutionary age. And technology is going to vastly change the products
14:12that you and I buy, the places where you and I work, the kind of lives that you and I lead. And I
14:19think it could be for the very, very good. And there are some very dangerous downsides against which we
14:24need to guard. And overall, would you say that the AI industry in this country is excited about this
14:31plan, apprehensive about this plan? What's the sentiment?
14:33I think overall, they are excited in the sense that, as I mentioned, it does express a kind of
14:39laissez-faire regulatory approach and sort of the ideas that lets the horses out of the barn.
14:44But I would say that I think the devil will be in the details. We'll have to just see how this all
14:49shakes out. As I've mentioned, the White House is not the only game in town. There remain a lot of
14:54concerns in the marketplace, in other governing bodies and other policymaking bodies that will have
15:01significant say over the shape and structure of the industry going forward.
15:06Well, there is certainly, as you noted, a lot to look out for next. And as this develops,
15:10as we see this shake out, I hope you can come back on and join me and we can discuss those
15:15developments. Matthew Ferraro, thank you so much for joining me. You're welcome back anytime.
15:19Thank you. It's been a great pleasure.