OpenAI and Google have supplied AI services to Singapore-based subsidiaries of Alibaba, Baidu and Tencent, despite their parent companies being on the Pentagon’s blacklist, a report said. The sales are legal under current US rules, which restrict China-based access but do not broadly cover overseas subsidiaries of listed firms.

OpenAI and Google have been supplying advanced artificial intelligence (AI) services to Singapore-based subsidiaries of Alibaba, Baidu and Tencent, even though the Chinese companies' parent groups sit on the Pentagon's blacklist over alleged ties to China's military, a new investigation has found. The sales are legal under current United States export controls, which do not broadly prohibit blacklisted Chinese firms from accessing American AI models through overseas subsidiaries.

Confirmed sales to blacklisted groups

According to the Financial Times, both OpenAI and Google confirmed to the newspaper that they have provided AI models and services to the Singapore-based affiliates of the three companies. All three parent groups, Alibaba, Baidu and Tencent, appear on the Pentagon's so-called 1260H list, which identifies entities the United States alleges have links to the Chinese military.

The report exposes a gap in Washington's efforts to slow Beijing's AI development. Current export controls target specific entities and specific geographies, restricting mainland China while leaving jurisdictions such as Singapore largely untouched. A Singapore-incorporated subsidiary of a blacklisted Chinese firm operates under Singaporean law and can enter contracts that its parent company on the mainland cannot.