Business
Biden Administration Adopts Rules to Guide A.I.’s Global Spread
The Biden administration issued sweeping rules on Monday governing how A.I. chips and models can be shared with foreign countries, in an attempt to set up a global framework that will guide how artificial intelligence spreads around the world in the years to come.
With the power of A.I. rapidly growing, the Biden administration said the rules were necessary to keep a transformational technology under the control of the United States and its allies, and out of the hands of adversaries that could use it to augment their militaries, carry out cyberattacks and otherwise threaten the United States.
Tech companies have protested the new rules, saying they threaten their sales and the future prospects of the American tech industry.
The rules put various limitations on the number of A.I. chips that companies can send to different countries, essentially dividing the world into three categories. The United States and 18 of its closest partners — including Britain, Canada, Germany, Japan, South Korea and Taiwan — are exempted from any restrictions and can buy A.I. chips freely.
Countries that are already subject to U.S. arms embargoes, like China and Russia, will continue to face a previously existing ban on A.I. chip purchases.
All other nations — most of the world — will be subject to caps restricting the number of A.I. chips that can be imported, though countries and companies are able to increase that number by entering into special agreements with the U.S. government. The rules could rankle some foreign governments: Even countries that are close trading partners or military allies of the United States, such as Mexico, Switzerland, Poland or Israel, will face restrictions on their ability to purchase larger amounts of American A.I. products.
The rules are aimed at stopping China from obtaining from other countries the technology it needs to produce artificial intelligence, after the United States banned such sales to China in recent years.
But the regulations also have broader goals: having allied countries be the location of choice for companies to build the world’s biggest data centers, in an effort to keep the most advanced A.I. models within the borders of the United States and its partners.
Governments around the world, particularly in the Middle East, have been pumping money into attracting and building enormous data centers, in a bid to become the next center for A.I. development.
Jake Sullivan, President Biden’s national security adviser, told reporters on Sunday that the rule would ensure that the infrastructure for training the most advanced artificial intelligence would be in the United States or in the jurisdiction of close allies, and “that capacity does not get offshored like chips and batteries and other industries that we’ve had to invest hundreds of billion dollars to bring back onshore.”
Mr. Sullivan said the rule would provide “greater clarity to our international partners and to industry,” while countering national security threats from malicious actors that could use “American technologies against us.”
It will be up to the Trump administration to decide whether to keep the new rules or how to enforce them. In a call with reporters on Sunday, Biden administration officials said that the rules had bipartisan support and that they had been in consultations with the incoming administration about them.
Though companies in China have begun to develop their own A.I. chips, the global market for such semiconductors is dominated by U.S. companies, particularly Nvidia. That dominance has given the U.S. government the ability to regulate the flow of A.I. technology worldwide, by restricting U.S. company exports.
Companies have protested those limitations, saying the restrictions could hamper innocuous or even beneficial types of computing, anger U.S. allies and ultimately push global buyers into buying non-American products, like those made by China.
In a statement, Ned Finkle, Nvidia’s vice president for government affairs, called the rule “unprecedented and misguided” and said it “threatens to derail innovation and economic growth worldwide.”
“Rather than mitigate any threat, the new Biden rules would only weaken America’s global competitiveness, undermining the innovation that has kept the U.S. ahead,” he said. Nvidia’s stock dipped nearly 3 percent in premarket trading on Monday.
Brad Smith, the president of Microsoft, said in a statement that the company was confident it could “comply fully with this rule’s high security standards and meet the technology needs of countries and customers around the world that rely on us.”
In a letter to Congressional leadership on Sunday that was viewed by The New York Times, Jason Oxman, the president of the Information Technology Industry Council, a group representing tech companies, asked Congress to step in and use its authority to overturn the action if the Trump administration did not.
John Neuffer, the president of the Semiconductor Industry Association, said his group was “deeply disappointed that a policy shift of this magnitude and impact is being rushed out the door days before a presidential transition and without any meaningful input from industry.”
“The stakes are high, and the timing is fraught,” Mr. Neuffer added.
The rules, which run more than 200 pages, also set up a system in which companies that operate data centers, like Microsoft and Google, can apply for special government accreditations.
In return for following certain security standards, these companies can then trade in A.I. chips more freely around the globe. The companies will still have to agree to keep 75 percent of their total A.I. computing power within the United States or allied countries, and to locate no more than 7 percent of their computing power in any single other nation.
The rules also set up the first controls on weights for A.I. models, the parameters unique to each model that determine how artificial intelligence makes its predictions. Companies setting up data centers abroad will be required to adopt security standards to protect this intellectual property and prevent adversaries from gaining access to them.
Governments facing restrictions can raise the number of A.I. chips they can import freely by signing agreements with the U.S. government, in which they would agree to align with U.S. goals for protecting A.I.
Under the guidance of the U.S. government, Microsoft struck an agreement to partner with an Emirati firm, G42, last year, in return for G42 eliminating Huawei equipment from its systems and taking other steps.
The Biden administration could issue more rules related to chips and A.I. in the coming days, including an executive order to encourage domestic energy generation for data centers, and new rules that aim to keep the most cutting-edge chips out of China, people familiar with the deliberations said.
The latter rule comes in response to an incident last year in which U.S. officials discovered that Huawei, the sanctioned Chinese telecom firm, had been obtaining components for its A.I. chips that were manufactured by a leading Taiwanese chip firm, in violation of U.S. export controls.
The announcements are among a flurry of new regulations that the Biden administration is rushing to issue ahead of the presidential turnover as it tries to close loopholes and cement its legacy on countering China’s technological development. The administration has issued new limits on exports of chip-making equipment to China and other countries, proposed new restrictions on Chinese drones, added new Chinese companies to a military blacklist, and hurried to finalize new subsidies for U.S. chip manufacturing.
But the A.I. regulations issued Monday appear to be among the most sweeping and consequential of these actions. Artificial intelligence is quickly transforming how scientists carry out research, how companies allocate tasks between their employees and how militaries operate. While A.I. has many beneficial uses, U.S. officials have grown more concerned that it could enable the development of new weapons, help countries surveil dissidents and otherwise upend the global balance of power.
Jimmy Goodrich, a senior adviser for technology analysis at the RAND Corporation, said the rules would create a framework for protecting U.S. security interests while still allowing firms to compete abroad. “They are also forward-looking, trying to preserve U.S. and allied-led supply chains before they are offshored to the highest subsidy bidder,” he said.
Ranch dressing is having a moment thanks to the World Cup and Kraft is ready to meet it.
The company said Thursday that it is working on a “TSA Compliant Ranch” for those looking to travel with the quintessentially American condiment. The announcement follows the influx of social media videos showing international soccer fans sampling the dressing for the first time.
“Some visitors leave with souvenirs. Others leave with America’s favorite dressing,” Kraft wrote in a caption accompanying an AI image of a TSA-approved clear bag packed with ranch dressing packets posted to social media. The image showed the bag — complete with a luggage tag resembling a ranch dressing bottle — placed in an airport security screening bin along with other travel essentials.
Additional details will be announced later, the company said.
TSA has also leaned into ranch’s apparent newfound popularity among international travelers, providing some helpful tips (and warnings) on social media.
“If you’re visiting for a very large sporting event & you happen to discover RANCH while you’re here… pls pack it in your CHECKED BAG on your way home,” the agency posted on Instagram Tuesday. It also asked travelers to “avoid chugging your ranch outside security” lines.
“Who knew dip-lomacy could be achieved through addressing the obvious: ranch is the king of condiments,” TSA wrote in the caption accompanying its carousel of humorous ranch-related quips. “If you’re traveling within the U.S., make sure to keep your carry-on sauces to 3.4 oz or less and place any larger containers in your checked bags.”
“Some heroes wear capes. Others bring ranch,” it added.
According to 1987 Times reports, ranch dressing was invented by Steve Henson, who opened the Hidden Valley Guest Ranch in Santa Barbara in the mid-1950s with his wife, Gayle. The unnamed condiment originally mixed herbs and spices with buttermilk and mayonnaise and its popularity with guests led to it being jarred so they could take some home. The more travel-friendly powdered form followed.
A landmarked downtown Los Angeles apartment building designed by famed Los Angeles architect John Parkinson is on the market as its owners face foreclosure.
Residences in the Metropolitan, a 10-story tower built in 1913, are nearly filled with tenants but its ground floor retail spaces on Broadway and 5th Street are unoccupied, as are other street-level stores in downtown’s Historic Core.
The historic building was once considered one of the best in the city and is owned by the Fallas family, which operated a chain of value-priced clothing stores based in Gardena including one called Fallas Paredes in the Metropolitan.
Fallas-Paredes at 449 S. Broadway, Los Angeles, CA 90013.
(Google Maps)
Around 2011, Michael Fallas, who once worked in family’s downtown store as a stock boy, converted the upstairs floors from offices to apartments while continuing to operate Fallas Paredes. The store closed more than five years ago in the wake of a 2018 filing by its parent company for Chapter 11 bankruptcy protection.
Earlier this month in state Superior Court, a special servicer representing Fallas’ lender asked for a judicial foreclosure of the property, alleging that Fallas had stopped making payments on a $32 million loan dating to 2017. After leasing the property for years, Fallas bought the building in the 1990s.
Fallas didn’t respond to requests for comment.
The location of the Metropolitan where the buildings stands was hailed in a Times story in 1912, saying “it is regarded by many realty men as the most valuable piece of real estate in Los Angeles.”
The building today is recognized as a city historic-cultural monument because “Broadway became the commercial center of the Southland, a title it retained until well after World War II,” with its development, the city said. One of the architects who designed the Metropolitan in the Beaux-Arts style was John Parkinson, who is credited with designing such well-known local structures as City Hall, the Los Angeles Memorial Coliseum and Union Station.
Notable tenants in the Metropolitan have included the Los Angeles Public Library, Owl Drug Co., variety store J.J. Newberry and real estate company Janns Investment Co., which sold the land where UCLA is built and developed Westwood Village, among other Los Angeles neighborhoods.
In recent years, the buildings around the Metropolitan have struggled to keep retail tenants after a spurt of residential conversions of historic buildings starting in the early 2000s brought commerce to the neighborhood. Many downtown businesses have struggled since the pandemic reduced occupancy in offices downtown and reduced the flow of visitors.
“The lack of bodies on the street is generally hurting downtown, and that’s one of the reasons that has building has problems,” said downtown real estate broker Hal Bastian, who lives in the Historic Core.
There are close to 1,000 residential units in historic buildings at the intersection of Broadway and 5th Street, Bastian said, but all the ground floor stores are closed. Drug stores there suffered substantial losses from shoplifting he said, and now, “our challenge on Broadway is leasing.”
The 88 apartments in the Metropolitan are 91% rented, according to a listing for the property by the Zacuto Group, which also touts its roof deck with pool, fitness center and barbecue grills. No sale price is set.
Business
January 2025 wildfire victims seek tougher penalties against State Farm over claims handling
A fire survivors’ group announced Thursday it was seeking tougher penalties against State Farm over its handling of January 2025 wildfire claims.
The Every Fire Survivor’s Network said it was petitioning to join a state enforcement action announced this year against the company to make sure the case results in meaningful changes at California’s largest home insurer.
“We’re seeking a systematic review of all their claims and penalties calibrated to the actual scale of the harm — and we’re seeking the payouts that families are owed,” said Joy Chen, executive director of the group, at a Pacific Palisades news conference joined by victims of the fires.
The Department of Insurance in May filed an administrative action against State Farm General — the subsidiary of the giant Bloomington, Ill., insurer that handles California home insurance — after completing a “market conduct” exam.
The Jan. 7, 2025, fire damaged or destroyed more than 18,000 structures and killed 31 people.
State Farm has received more January 2025 claims than any other insurer — more than 13,700 auto and homeowners claims as of May 4, with payouts totaling $5.7 billion, according to the company.
The market conduct exam looked at 220 sample claims filed by the victims and found 398 violations of state law in about half of them.
Among other alleged violations, it found that the company failed in numerous cases to pursue a “thorough, fair and objective investigation” into claims, failed to come to “prompt, fair, and equitable settlements” and made settlement offers that were “unreasonably low.”
In announcing the action, Insurance Commissioner Ricardo Lara called the company’s claims handling “unacceptable” and said his department was taking “decisive action to hold them accountable.”
The state is seeking a “cease and desist” order to stop the insurer from engaging in unfair or deceptive practices.
It also has threatened to suspend State Farm’s license over the alleged violations, which each carry a penalty of up to $5,000 — or twice that figure if found to be willful. That could amount to a penalty of $2 million or more.
The threat to actually suspend State Farm’s license and its authority to write policies has been viewed skeptically by some, given its roughly 20% market share of the state’s home insurance market.
The company, which had an opportunity to include its responses in the exam report, denied fault in some cases and admitted fault in others. It often blamed problems on individual adjusters and denied systemic issues with its claims handling.
The petition filed by the wildfire survivor’s group criticizes the sample size of the market conduct exam as too small to capture all the alleged deficiencies in State Farm’s claims handling, which it claims are a “general business practice” of the company.
The group is seeking to conduct discovery, cross examine witnesses, present testimony from fire victims and bring more that 1,600 firsthand policyholder statements regarding State Farm’s practices into evidence, according to the petition.
It also wants State Farm to reopen cases in which claimants were paid too little, and it is seeking to participate in settlement discussions in order to increase any penalty State Farm would pay.
It calculated that a $2-million penalty would amount to a minute fraction of the assets of the State Farm Group.
“I submit to you that doesn’t defer bad conduct, it just allows you to continue to do it,” said Michelle Meyers, an attorney for Every Fire Survivor’s Network, at the news conference.
Consumer Watchdog, which has been a harsh critic of State Farm, also is providing legal support for victims’ effort.
Sevag Sarkissian, a spokesperson for State Farm, said the company was aware of the petition.
“We recognize that many wildfire survivors, including those that are State Farm General policyholders, continue to face difficult recovery challenges,” he said. “Our focus remains on helping customers recover.”
Michael Soller, a spokesperson for Lara, said the department is “acting with urgency to assist wildfire survivors in their ongoing recovery by investigating formal complaints filed by survivors and conducting the expedited market conduct exam that led to this enforcement action.”
He added that the department’s position is the state’s Administrative Procedure Act does not contemplate the commissioner or department staff authorizing intervention requests in the case.
He said that would be a hearing officer’s or administrative law judge’s decision when one is assigned to the case.
Meyers acknowledged the request was novel but said her reading of the law is that Lara can make the decision because no judge is yet assigned.
In response to the criticism, State Farm pledged earlier this year to improve its claims handling, including by providing single points of contact and improved communication so there are “fewer handoffs, fewer repeated explanations, and seamless support.”
It also named a new vice president of customer relations for State Farm General.
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