The One Big Beautiful Bill Act’s Implications for AI

This Ropes & Gray memo highlights the One Big Beautiful Bill Act’s implications for AI & the tech sector.  Here’s an excerpt addressing some of the new restrictions on foreign involvement in federally supported AI and tech-related projects:

The bill establishes sweeping restrictions on the involvement of “prohibited foreign entities” in federally supported AI, clean energy, and advanced manufacturing projects. Companies cannot claim credits if they engage in sourcing or licensing from, or significant payments to, a “prohibited foreign entity.” Among the key elements of the new limitations are:

– Broad Definition of Prohibited Foreign Entities: The bill defines “prohibited foreign entities” expansively to include not only companies owned or controlled by foreign governments or nationals from countries of concern, but also entities with significant foreign debt, contractual rights, or other forms of influence—such as through minority ownership, contractual rights, beneficial ownership, or supply chain relationships.

– Material Assistance and Indirect Involvement: The restrictions apply to both direct and indirect participation by prohibited foreign entities, including material assistance, ownership stakes, licensing agreements, and any contractual arrangements that could confer effective control or influence. The bill prohibits not only direct licensing or technology transfer to prohibited foreign entities, but also indirect arrangements—such as sublicensing, joint ventures, or supply chain relationships—if they result in material assistance or effective control by a prohibited foreign entity.

– Certification and Rigorous Documentation: Companies must obtain and retain detailed certifications from all suppliers and partners attesting that no prohibited foreign entity has material involvement in the production, development, or commercialization of the relevant technology or components. These certifications must be signed under penalty of perjury and are subject to federal audit.

The memo notes that the bill’s definitions and compliance requirements have a de facto broader reach than just the company receiving federal benefits.  Other companies may face pressure to comply from customers, partners or investors who need to maintain their own eligibility for federal programs.