Evolving Regulatory Frameworks & Emerging Technology

New and evolving technological and regulatory frameworks are providing substantial opportunities for growth and innovation across various industries and markets. Recent frameworks and legislation have focused on facilitating financial and policy support to bolster domestic manufacturing, modernize infrastructure and advance emerging technologies. As a result, industrial and public-oriented technologies and adjacencies, such as construction and engineering, infrastructure and resource optimization, and computer vision, are benefitting. Additionally, regulatory and legislative prioritization on the secure, resilient and compliant operation of key emerging technology operations is yielding significant competitive market opportunities in cybersecurity, supply chain and governance.  

Existing, emerging and evolving regulatory frameworks present operational and technological challenges, as well as market and innovation opportunities. The ability to effectively understand and navigate the increasingly complex regulatory and legislative landscape is critical to achieving improved competitive posturing, technological differentiation, and market opportunity. The following regulatory and legislative initiatives carry significant technological impact and opportunity.  

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CHIPS and Science Act

Overview

The CHIPS and Science Act, enacted in 2022, is a $280 billion initiative designed to strengthen US innovation and technological leadership, particularly within the semiconductor industry. The legislation allocates $52 billion in subsidies to enhance domestic semiconductor manufacturing and research. This move is critical for reducing the US’s dependency on foreign semiconductor supplies, especially in the face of increasing global competition from countries like China. Since its passage, eight major companies have received $29.3 billion in funding, with Intel alone accounting for nearly 30% of the total allocated subsidies.

In addition to semiconductors, the CHIPS and Science Act has allocated over $200 million towards advancing digital twin technology, which can significantly improve product lifecycle management through real-time simulations. Additionally, approximately $300 million has been directed towards advanced substrate packaging initiatives, crucial for enhancing the performance and reliability of semiconductor devices. Another $100 million has been dedicated to advanced metrology research, which is essential for developing precise measurement standards and tools in high-tech manufacturing processes.

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Implications & Opportunities

• Advanced Technology Facility Development: The CHIPS and Science Act’s investment in domestic semiconductor manufacturing creates a robust market for construction and engineering technologies tailored to high-tech facility development. Companies providing innovative solutions for constructing and managing semiconductor fabrication plants and research facilities can leverage this funding. Advanced project management software, building information modeling (BIM), and automated construction technologies will be crucial in meeting the complex requirements of these state-of-the-art facilities, driving growth and market opportunities in the semiconductor sector.
• Partner Risk Management: With a focus on developing advanced and critical technological infrastructure, the CHIPS and Science Act necessitates advanced risk and compliance management solutions for vendors and third parties. Technology providers can develop sophisticated platforms that evaluate and continuously monitor the risk profiles of suppliers and partners, ensuring they align with regulatory standards. Leveraging AI-driven analytics and real-time data, these tools can proactively identify compliance issues and potential vulnerabilities in the supply chain.

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Infrastructure Investment and Jobs Act (IIJA)

Overview

The Infrastructure Investment and Jobs Act (IIJA), signed into law in November 2021, marks a historic $1.2 trillion investment in America’s infrastructure. This bipartisan legislation aims to modernize and upgrade the nation’s transportation, water, energy and broadband systems, fostering economic growth and enhancing public safety. The IIJA is a response to decades of underinvestment in infrastructure, which has led to deteriorating roads, bridges, and public transit systems.

A key component of the IIJA is its support for transportation infrastructure. The Act allocates $110 billion for repairing and rebuilding roads and bridges, emphasizing projects that address climate change mitigation, resilience, and safety for all users. Additionally, the legislation provides $66 billion for passenger rail, the largest investment since Amtrak’s creation, in an effort to modernize the Northeast Corridor and expand rail service across the country. This investment is expected to improve transportation options, reduce greenhouse gas emissions and create thousands of jobs.

The IIJA also addresses the urgent need for broadband access, allocating $65 billion to ensure every American has reliable high-speed internet. This investment is particularly crucial for rural and underserved communities lacking broadband infrastructure. By expanding internet access, the IIJA aims to bridge the digital divide, enabling more Americans to participate in the digital economy, access remote education, and benefit from telehealth services.

In addition to transportation and broadband, the IIJA invests $55 billion in water infrastructure to provide clean drinking water and eliminate lead service lines. The Act also includes $17 billion for port infrastructure and $25 billion for airports to enhance supply chain efficiency and reduce emissions. Further, the IIJA allocates $7.5 billion for building a national network of electric vehicle (EV) chargers, supporting the transition to a clean energy future.

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Implications & Opportunities

• Infrastructure Construction & Engineering: The IIJA provides substantial technology opportunities for companies specializing in construction and engineering solutions. The $1.2 trillion allocated to modernize transportation, utility and broadband infrastructure drives demand for advanced construction management platforms, project planning tools and digital engineering solutions. These technologies can streamline operations, enhance project efficiency, and ensure compliance with environmental and safety regulations, positioning technology providers to benefit significantly from increased infrastructure activity.
• Smart City Technologies: The modernization initiatives and funding contained within the IIJA create significant tailwinds for AI/ML applications, particularly around computer vision and predictive analytics, in smart city infrastructure. With support from the Act, technology providers can develop advanced and intelligent solutions for smart metering, grid optimization, transportation management, and waste and recycling systems. These innovations can facilitate real-time data collection and analysis, improve resource allocation, and enhance operational efficiency. As cities modernize their infrastructure with IIJA funding, the demand for intelligent systems that can optimize public service operations and improve sustainability will create substantial market opportunities for AI and computer vision technologies.
• Sustainable & Resilient Infrastructure: The IIJA’s emphasis on climate change mitigation and resilience in infrastructure projects creates opportunities for companies specializing in sustainable construction technologies. Solutions that integrate eco-friendly materials and methods can help meet regulatory requirements and address environmental concerns, aligning with global sustainability trends. These technologies are poised to capture growing market interest in green construction solutions, expanding their reach and impact in the industry.

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AI Election-Related Bills

Overview

In response to AI’s growing influence on electoral processes, the US Senate Committee on Rules & Administration advanced three critical bills on May 15, 2024. These bills—the Preparing Election Administrators for AI Act, the AI Transparency in Elections Act, and the Protect Elections from Deceptive AI Act—aim to mitigate the risks posed by AI technologies in elections.  

The Preparing Election Administrators for AI Act requires the US Election Assistance Commission (EAC) to develop voluntary guidelines for state and local election administrators. These guidelines will address the risks and benefits of AI in election administration, cybersecurity threats and the impact of AI-generated disinformation. The Act also mandates the EAC to release a report on AI’s role in the 2024 elections, providing insights into how AI was used and its effects on the information environment.

The AI Transparency in Elections Act establishes labeling standards for political advertisements containing AI-generated content. This bill requires clear disclosure when AI-generated images, audio, or videos are used in political ads, particularly those advocating for or against a candidate or soliciting contributions. The transparency requirement aims to help the public understand when AI is used, reducing the potential for misinformation and manipulation during election campaigns.

The Protect Elections from Deceptive AI Act introduces a federal cause of action for candidates whose likeness or voice is used in materially deceptive AI-generated content. This legislation seeks to prevent the distribution of deepfake videos and other AI-generated media that could mislead voters or harm candidates’ reputations.  

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Implications & Opportunities

• AI/ML Upstream & Downstream Transparency: The AI-related election bills, including the AI Transparency in Elections Act, reinforce and accelerate the need for improved AI/ML transparency solutions. With new regulations requiring clear disclosure of AI-generated content in political advertisements, there is increased demand for technologies that provide visibility into upstream AI training processes and downstream AI outputs. Companies can develop advanced platforms that track and document AI/ML model training data, algorithms, and decision-making processes, ensuring compliance with transparency requirements and facilitating greater AI trust and operationalization.  
• AI Guardrail & Policy Management: The Preparing Election Administrators for AI Act underscores the need for advanced AI guardrail and policy management solutions. Technology providers can develop specialized guardrails and policy solution sets within broader governance platforms that assist election administrators in implementing, managing, and monitoring AI guardrails to ensure ethical and transparent AI usage. These solutions may feature automated compliance checks, real-time monitoring and detailed policy enforcement capabilities, addressing the complexities of integrating and operationalizing AI technologies.  

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Enhancing National Frameworks for Overseas Restriction of Critical Exports Act (ENFORCE)

Overview

The ENFORCE Act, formally known as the Enhancing National Frameworks for Overseas Restriction of Critical Exports Act, is a critical update to the Export Control Reform Act of 2018 (ECRA). Introduced in May 2024, the Act addresses the urgent need to prevent foreign adversaries from exploiting domestic AI and other emerging technologies. The primary objective of the ENFORCE Act is to enhance the authority of the Bureau of Industry and Security (BIS) within the Department of Commerce, empowering it to regulate and control the export of advanced AI systems and technologies that pose significant national security risks.

One of the key provisions of the ENFORCE Act is the expansion of BIS’s authority to include “US persons controls” on activities related to covered AI systems and other emerging technologies crucial to national security. This means that top US AI companies must implement rigorous security checks before collaborating with foreign entities, particularly those linked to adversarial governments such as China. By requiring licenses to export these technologies, the Act aims to prevent the transfer of sensitive AI capabilities that could be used for malicious purposes, including the development of bioweapons or cyber attacks on American infrastructure.

The ENFORCE Act also mandates updates to the International Emergency Economic Powers Act (IEEPA), aligning it with the current technological and geopolitical landscape. This update ensures that the export control framework remains robust and adaptable to evolving threats. Specifically, the Act defines “covered artificial intelligence systems” as those exhibiting high-performance capabilities that could significantly impact national security, even if they are initially provided with technical safeguards.  

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Implications & Opportunities

• Supply Chain & Procurement Orchestration: The ENFORCE Act’s enhancement of export controls on critical technologies underscores the need for resilient supply chain solutions with greater visibility and traceability. Technology solutions that provide predictive analytics and real-time tracking systems can help companies comply with these stringent regulations, ensuring that critical technologies are not exported to adversarial entities. This proactive approach reduces operational and regulatory risks and improves supply chain efficiency and adaptability. By providing tools that enhance supply chain security and visibility, technology providers can support enterprises in adhering to the ENFORCE framework, capturing a critical niche in the market.
• Ecosystem Risk Management: In addition to supply chain and procurement orchestration, the ENFORCE Act also creates notable opportunities within ecosystem risk management. To achieve secure and compliant supply chain operations, advanced technology developers and operators must ensure effective and comprehensive ecosystem risk management across partners, vendors, suppliers and other third parties. Operators can ensure secure, resilient and compliant end-to-end supply chain operations by integrating real-time, data-driven, and adaptive ecosystem mapping, impact assessments, and automated compliance management.  

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Future of AI Innovation Act

Overview

The Future of AI Innovation Act, introduced on April 18, 2024, aims to position the United States as a global leader in the development and ethical use of AI technologies. The legislation is a response to calls from researchers and industry experts for a comprehensive framework that addresses the cybersecurity and ethical challenges associated with AI. Key components of the Act include establishing the US AI Safety Institute at the National Institute of Standards and Technology (NIST) and creating AI testbed programs.

The US AI Safety Institute will focus on developing AI standards that ensure national security, public safety, and the protection of individual rights. The Institute’s research will cover various aspects of AI safety, including system and model reliability, security and privacy. By establishing robust standards, the Institute aims to mitigate the risks associated with AI technologies and promote their responsible use in various sectors.

Establishing AI testbed programs is another crucial aspect of the Future of AI Innovation Act. These testbeds will allow companies to assess their AI systems’ capabilities, limitations, and security risks. By facilitating rigorous testing and evaluation, the Act aims to ensure that AI technologies are robust, secure and reliable before they are deployed in real-world applications.

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Implications & Opportunities

• Responsible AI Governance: As a key and central element of the Future of AI Innovation Act, responsible AI governance solutions remain a significant and growing market opportunity across industries. There is a particular emphasis on and prioritization of streamlined platforms underpinned by end-to-end observability and explainability functionality. These solutions play a key and foundational role in effective AI adoption and operationalization and will become increasingly important in enabling compliant, secure, reliable, and capable AI utilization.  
• Secure AI Development: The Future of AI Innovation Act underscores the growing concerns and risks within the AI software development lifecycle (SDLC), particularly given the complexity of AI technologies and the rising momentum in open-source strategies. As a result, there is growing traction and activity within the software supply chain security and vulnerability management verticals. Designed to ensure the integrity, resilience and security of AI development and operationalization, these tools can automate the identification and remediation of security threats, risks and vulnerabilities across the SDLC. As AI-driven threats and risk surface expansion accelerate alongside evolving AI security frameworks, secure AI development tools and platforms will continue to represent a key segment of the broader AI market.  

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Spectrum and National Security Act

Overview

The Spectrum and National Security Act focuses on efficiently managing the nation’s spectrum resources to support commercial innovation and national security objectives (“spectrum” refers to the radio frequencies that wireless signals travel over, enabling mobile communications). The Act aims to balance the spectrum needs of commercial entities with the requirements of defense and public safety agencies. The legislation seeks to enhance the US’s technological capabilities by optimizing spectrum allocation while ensuring robust national security measures.

A key element of the Act is its emphasis on promoting technological innovation through spectrum availability. The legislation facilitates the deployment of new wireless technologies, such as 5G, which are crucial for the future of telecommunications, autonomous systems, and the Internet of Things (IoT). The Act aims to drive economic growth and maintain the US’s leadership in global technology markets by ensuring that sufficient spectrum is available for these emerging technologies.

The Spectrum and National Security Act also includes measures to enhance the security of spectrum use. It mandates the implementation of advanced security protocols to prevent interference, unauthorized access and other potential threats. These security measures are essential for protecting critical communication infrastructure and ensuring the reliability of services that depend on spectrum resources.

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Implications & Opportunities

• 5G & IoT Deployment: The Spectrum and National Security Act facilitates the allocation of spectrum for new wireless technologies, creating a substantial market opportunity for companies developing 5G and IoT solutions. Technology providers can leverage this Act to deploy next-generation networks that enhance connectivity and support a wide range of smart devices. By focusing on developing and implementing advanced 5G infrastructure and IoT platforms, companies can drive innovation and capture significant market share in the rapidly expanding wireless technology sector.
• Advanced Network Security: Driven by emerging and evolving network risk and threat concerns, the Spectrum and National Security Act underscores the need and opportunities for sophisticated network security systems. With the rise of AI-driven threats and identity risks, there is growing demand for advanced secure access service edge (SASE) platforms that integrate intelligent anomaly detection, behavior analytics, and authorization tools to provide for a more effective and adaptive security posture.  
• Advanced Network Processing: Given the focus on bolstering spectrum and network capabilities and accelerating technological advancement, the Spectrum and National Security Act supports the development of advanced network processing technologies to manage the increasing data demands of modern communication networks. Companies can enhance their competitive posture to capitalize on expanded spectrum and network opportunities by developing high-performance processing solutions that improve speed, reduce latency, and enhance overall network performance. By focusing on advanced network processing capabilities, technology providers can meet the growing needs of data-intensive applications and services, securing a competitive advantage in the market.

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Conclusion

Recent technological regulatory and legislative frameworks present a transformative opportunity across the technology landscape and various industries, driving growth and innovation. By strategically aligning with these frameworks, companies can capitalize on substantial financial support and emerging market opportunities and dynamics in construction, engineering, security, AI governance, and other advanced technology segments. The focus on modernization, sustainability, and security within these frameworks addresses current industry challenges and paves the way for a new competitive landscape spanning technology and operations.  

Looking for ways to effectively navigate the rapidly evolving regulatory landscape and emerging technology market opportunities? Contact our experts today to learn more about our research capabilities and how we can tailor a regulatory technology strategy that addresses your current and future challenges, needs, and objectives.