TECH
Why are big tech companies rushing to thwart Chile's plans to regulate AI?
A government attempt to impose ethical limits on the use of artificial intelligence in Chile is meeting resistance from global tech giants, a debate that could set a precedent as countries around the world try to regulate the rapidly growing industry.
Chile attracts tech companies with its economic and political stability, robust fiber optic infrastructure, submarine data cables, and abundant green energy to operate energy-intensive data centers.
If the legislation passes, the country would position itself at the regulatory forefront of developing economies. Regulation elsewhere, with the exception of the European Union and China, is uneven.
There is a lot of money at stake for the Andean nation. Cloud giant Amazon Web Services (AWS) is investing $4 billion in three data centers that will open simultaneously in Santiago next year. Alphabet, Google's parent company, plans a second data center in the country and is installing a new 14,000 km data cable from Chile to Australia.
The AI bill, which now heads to the Senate after being approved by the House in October, classifies AI systems according to risk: the greater the potential for harm to people or society, the more stringent the rules and oversight.
Systems with limited risk must meet transparency and security requirements, while those deemed unacceptable are prohibited. Violators can be fined up to 20,000 UTM (US$1.5 million).
The bill would complement Chile's cybersecurity law, which came into effect this year, and the data protection law, which will fully come into force in December 2026.
"This bill does not prohibit the technology; it establishes safeguards proportionate to the risks," said the Chilean Ministry of Science in response to written questions. "Well-crafted regulation fosters responsible innovation because it generates trust, legal certainty, and stable conditions for investment and creation."
In a speech to lawmakers in October, Science Minister Aldo Valle stated that the bill protects fundamental rights and the freedom to innovate without prior state approval. The question is not whether Chile will have AI, but under what rules, Valle said.
In contrast, technology executives argue that the proposal is too rigid, pointing to Europe's technological lag behind the United States as evidence that Chile is on the wrong track. And there is no clarity on the timelines.
"We are not against regulation," said Felipe Ramírez, country manager for AWS Chile, in an interview. "What we don't like to see are processes that take too long."
"Some companies might say, 'You know what, it's better to wait until the law is published before we decide what to do, because we don't want to end up working on an initiative and then realize it was illegal,'" he said.
Professor of Law Matías Aránguiz, director of the Law, Science and Technology Program at the Pontificia Universidad Católica de Chile in Santiago, stated that Chile is “exponentially increasing the technological regulatory burden” by leaning too heavily in one direction.
“I think we are somewhat neglecting the pro-investment approach because we are too focused on a pro-ethical regulatory approach,” he said, adding that Chile risks alienating technological capital.
Led by US-aligned libertarian Javier Milei, Argentina was recently chosen by OpenAI for a letter of intent to build a $25 billion data center complex.
In Brazil, President Luiz Inácio Lula da Silva signed a provisional measure granting tax benefits for the import of AI-related equipment. Google is eyeing a vast data center complex in the Rio de Janeiro region.
A government attempt to impose ethical limits on the use of artificial intelligence in Chile is meeting resistance from global tech giants, a debate that could set a precedent as countries around the world try to regulate the rapidly growing industry.
Chile attracts tech companies with economic and political stability, robust fiber optics, submarine data cables, and abundant green energy to operate energy-intensive data centers.
If the legislation passes, the country would position itself at the regulatory forefront of developing economies. Regulation elsewhere, with the exception of the European Union and China, is uneven.
There is a lot of money at stake for the Andean nation. Cloud giant Amazon Web Services (AWS) is investing $4 billion in three data centers that will open simultaneously in Santiago next year. Alphabet, Google's parent company, plans a second data center in the country and is installing a new 14,000 km data cable from Chile to Australia.
The AI bill, which now heads to the Senate after being approved by the House in October, classifies AI systems according to risk: the greater the potential for harm to people or society, the more stringent the rules and oversight.
Systems with limited risk must meet transparency and security requirements, while those deemed unacceptable are prohibited. Violators can be fined up to 20,000 UTM (US$1.5 million).
The bill would complement Chile's cybersecurity law, which came into effect this year, and the data protection law, which will fully come into force in December 2026.
"This bill does not prohibit the technology; it establishes safeguards proportionate to the risks," said the Chilean Ministry of Science in response to written questions. "Well-crafted regulation fosters responsible innovation because it generates trust, legal certainty, and stable conditions for investment and creation."
In a speech to lawmakers in October, Science Minister Aldo Valle stated that the bill protects fundamental rights and the freedom to innovate without prior state approval. The question is not whether Chile will have AI, but under what rules, Valle said.
In contrast, technology executives argue that the proposal is too rigid, pointing to Europe's technological lag behind the United States as evidence that Chile is on the wrong track. And there is no clarity on the timelines.
"We are not against regulation," said Felipe Ramírez, country manager for AWS Chile, in an interview. "What we don't like to see are processes that take too long."
"Some companies might say, 'You know what, it's better to wait until the law is published before we decide what to do, because we don't want to end up working on an initiative and then realize it was illegal,'" he said.
Professor of Law Matías Aránguiz, director of the Law, Science and Technology Program at the Pontificia Universidad Católica de Chile in Santiago, stated that Chile is “exponentially increasing the technological regulatory burden” by leaning too heavily in one direction.
— I think we are somewhat neglecting the pro-investment approach because we are too focused on a pro-ethical regulatory approach — he said, adding that Chile risks alienating technological capital.
Led by US-aligned libertarian Javier Milei, Argentina was recently chosen by OpenAI for a letter of intent to build a $25 billion data center complex.
In Brazil, President Luiz Inácio Lula da Silva signed a provisional measure granting tax benefits for the import of AI-related equipment. Google is eyeing a vast data center complex in the Rio de Janeiro region.
Passion for AI...Chile has more than 40 data centers, mainly in the Santiago region. Francisco Basoalto, managing director of Equinix in Chile and Peru, said that the country ranks second in Latin America in terms of installed capacity, behind only Brazil.
He chairs a local data center trade association, representing dozens of technology companies, equipment suppliers, contractors, and service providers who have a keen interest in the pending legislation.
The installed capacity of data centers in Chile has almost tripled, reaching 240 megawatts since 2015, and could exceed 500 megawatts by 2030, according to the real estate company Colliers, which attributes the growth to the expansion of AI, the digitization of services, and the arrival of tech giants like Google.
The growth of data centers in Chile is due “primarily to the energy matrix, which is a key factor, and secondly to connectivity,” said Basoalto. The country is likely among the top five with the fastest broadband internet, in addition to the cables that connect it internationally. By 2030, data center capacity is expected to double, he stated.
Chilean President Gabriel Boric, a tech-savvy individual who inherited a digital agenda from his predecessor Sebastián Piñera, launched a national data center plan last year to attract technology investors, as AI adoption among Chilean companies skyrocketed.
According to a study conducted for AWS, approximately 171,000 companies began using AI last year, roughly one every five minutes. Today, 35% of all companies in the country use AI, up from 26% the previous year, and nearly nine out of ten report increased revenue as a result.
Chile ranked first in a regional AI readiness index last year, followed by Brazil and Uruguay. Local universities offer advanced AI courses to cultivate future talent.
In a speech in August, Boric praised efforts to develop a Latin American Large-Scale Language Model to combat the threat of “cultural hegemony” from countries where major LLMs originate. He joked that he has both ChatGPT and Chinese competitor DeepSeek installed on his cell phone.
— AI shouldn’t generate fear — Boric said, adding that AI can convey a poem, but not the passion it conveys. — We have to regulate it, of course, we have to think ethically. But it’s a tremendous opportunity. — he added.
Boric is not alone in trying to moderate AI. OpenAI CEO Sam Altman has urged US senators to regulate it.
“If this technology goes wrong, it can go very wrong,” he said in 2023.
Despite these reservations, industry experts say Chile cannot afford to drive away tech capital through restrictive regulations. By increasing development and compliance costs, the bill could even limit the ambitions of Boric's beloved LatamGPT.
According to Rodrigo Durán, who manages CENIA, Chile's national artificial intelligence center, the country's state apparatus still lacks the tools—and the political will—to lead a coordinated digital strategy. He points to the data center plan, which he describes as a "good statement of intent," but "lacking concrete measures."
Chile's Ministry of Science disagrees..."To claim that there is a lack of government interest is to ignore the effort made to position Chile as the digital hub of the Southern Cone," the ministry said in response to written questions. Even if senators approve the AI bill, implementation will likely require regulations and other measures that may take time to develop. A law regulating app-based work, known as the "Uber law," was passed in 2023 but has not yet come into effect.
Permits and bureaucracy...Bureaucracy and unpredictability chronically hinder investment in Chile, and the technology sector is no exception. Last year, Google withdrew a license application for a $200 million data center project after an environmental court partially annulled it, mainly due to water concerns. The company stated that it is redesigning the project and will reapply for the license at an undisclosed date.
Durán highlights a disconnect between public perception and technological reality:
— There is a belief that the data center industry still operates as it did 20 years ago, when a data center could consume as much water as a copper mine. That's not how it works today.
Since Chile has a surplus of renewable energy, the challenge of powering the technological infrastructure is less about supply and more about transmission. A project aimed at bringing solar power from the northern desert to Santiago is taking longer to be approved than the data centers themselves.
"Companies need legal certainty, regulatory consistency, and a long-term vision that allows them to invest in and scale technological solutions without fear of disproportionate restrictions," said Sergio Correa, real estate manager at Colliers, in an email.
As Boric prepares to leave office in March, investors have largely given up hope for significant incentives before next year.
"I don't see any real interest from the current government in promoting technology," said Aránguiz. "They are more focused on regulating, on establishing safeguards, which is reasonable, but it's not the whole part of the job."
--O Globo, Brazil--
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