Introduction
On July 4, 2025 [1], the One Big Beautiful Bill Act was enacted, introducing significant legislation that imposes extensive new requirements on AI and technology companies [1], particularly concerning foreign influence in the AI supply chain [1]. This legislation presents both challenges and opportunities for compliance and growth within the industry.
Description
On July 4, 2025 [1], significant legislation known as the One Big Beautiful Bill Act was enacted, introducing extensive new requirements for AI and technology companies [1], particularly concerning foreign influence in the AI supply chain [1]. Key provisions include strict restrictions on foreign entities [1], enhanced domestic sourcing mandates [1], and rigorous supply chain integrity requirements [1], which pose compliance challenges for multinational firms [1]. The law also provides substantial federal funding and tax incentives for US-based AI infrastructure [1], contingent upon adherence to domestic content rules and prohibitions against involvement by designated foreign entities [1].
The definition of “prohibited foreign entities” is broad [1], encompassing not only companies owned by foreign governments but also those with significant foreign debt or influence [1]. Restrictions apply to both direct and indirect participation by these entities [1], affecting licensing agreements [1], joint ventures [1], and supply chain relationships [1]. Companies are required to obtain detailed certifications from suppliers and partners [1], confirming the absence of material involvement by prohibited foreign entities [1], with penalties for noncompliance including loss of federal benefits and potential audits [1].
In addition to these federal requirements, the compliance landscape is further complicated by existing state-level AI regulations enacted by states such as California, Utah [2], Colorado [2], and Texas [2]. This patchwork of laws necessitates that startups navigate varying standards [2], which can detract from their core business activities [2]. As compliance regulations evolve [2], companies must remain vigilant in monitoring both federal and state-level requirements [2].
The compliance requirements extend beyond US entities [1], applying to non-US subsidiaries and partners if their involvement could lead to material assistance or control by prohibited foreign entities [1]. The statute of limitations for related deficiencies has been extended to six years [1], increasing the audit period for companies [1]. Federal agencies have been granted enhanced authority to investigate and penalize noncompliance [1], with significant penalties for misstatements in required certifications [1].
Licensing agreements and technology transfers to prohibited foreign entities are subject to heightened scrutiny [1], necessitating robust internal controls and documentation processes [1]. Companies must establish centralized compliance teams to monitor regulatory developments and regularly update compliance policies to align with evolving requirements [1]. Frameworks such as the National Institute of Standards and Technology’s Cybersecurity Framework (NIST CSF) provide a means for AI companies to manage risk and demonstrate compliance [2], especially to private sector clients [2]. The updated CSF 2.0 [2], launched in late 2023 [2], caters to the needs of small and medium-sized businesses seeking to establish trust with partners [2]. Training for staff across various departments is essential to identify and address potential compliance risks effectively [1], while comprehensive solutions that streamline certification processes and align with governance [2], risk management [2], and compliance (GRC) priorities are increasingly vital for navigating this complex regulatory environment.
Conclusion
The One Big Beautiful Bill Act significantly impacts AI and technology companies by imposing stringent compliance requirements and offering opportunities for federal support. Companies must navigate a complex regulatory landscape, balancing federal and state-level mandates while ensuring robust internal controls and compliance strategies. The act underscores the importance of vigilance and adaptability in the face of evolving regulations, emphasizing the need for comprehensive compliance frameworks and training to mitigate risks and capitalize on available incentives.
References
[1] https://www.jdsupra.com/legalnews/ai-and-tech-under-the-one-big-beautiful-4570151/
[2] https://www.koop.ai/blog/big-beautiful-bill-ai
