AI Legal Watch: May 20, 2025

U.S. Commerce Department Reverses Course on Biden AI Diffusion Rule
Jason Wilcox
On May 13, the U.S. Commerce Department officially declared its intent to rescind and replace the AI Diffusion Rule issued during the final weeks of the Biden administration. Slated to go into effect on May 15, the rule had drawn considerable criticism from both domestic and international stakeholders.

Commerce argued that the AI Diffusion Rule would have hampered American innovation by creating unnecessary regulatory hurdles for companies. It also expressed concern that the rule's approach would have negatively impacted U.S. diplomatic relations by effectively categorizing dozens of countries, including key allies in the EU, Saudi Arabia, and the UAE, as "second tier" for AI technology access. These nations had voiced their own concerns about the rule's proposed limitations on AI chips.