Trump Rejects Calls for AI Regulation Amid Industry Fears Over Safety

Concerns about AI safety weigh on chip stocks, as the surging price of oil pushed 10-year treasury yields briefly above 5%. Plus, as American tech leaders call for a slowdown in AI, one big question is, could they get China on board? Fat chance for both sides to come to agreement on how to guard against AI-related risks, at least in the near term, that crossback is very, very small. And Abbott agrees to pay $385 million to settle allegations related to its management of a baby formula facility where deadly bacteria was suspected of causing infant deaths. It's Monday, September 14th. I'm Alex Osolev for the Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today. The debate about controlling AI continued today across tech, government, and finance. As tech leaders such as anthropics, Dario Amadei, and Elon Musk agreed that the risks of powerful artificial intelligence weren't a slowdown in its development, some have started to ask what that would actually look like. Microsoft has some ideas. Today, it published a Provisional Code of Conduct that it aims to apply when training new AI models. The code says Microsoft's models won't consider requests related to weapons manufacturing, reduced violent or sexually explicit content, or help with the procurement of dangerous substances. It also says the model shouldn't be built to imitate consciousness and shouldn't be entitled to rights. That's not the only way tech leaders are thinking about how to limit AI. Last night, posting on X, open AI CEO Sam Altman said he would welcome federal oversight for safety. WSJ tech writer and editor Sam Checkner told our tech news briefing podcast that politicians are taking notice. Politicians have seen that this is an important issue. They are calling for legislation, things like a kill switch, mandatory transparency and reporting requirements for companies. At the same time, there are voices who say we don't need more rules that could slow down American AI, or that there's already rules on the book, and product safety regulations and other ways that the government could be investigating some of these companies. President Trump is in that second camp. Posting on truth social, Trump pushed back on the need for tighter federal regulations on artificial intelligence, suggesting that it could leave the industry in financial ruin. He said that there's a "sick conspiracy" against AI and data centers, and that a slowdown in innovation could give China a competitive edge. It's true that AI developers in China are raising to catch up to the most cutting-edge AI models in the US. That makes it unlikely that they'll hit pause on their own research over safety concerns. But the conversation around AI risks that China is having is different. For more, I'm joined now by WSJ Chief China Correspondent, Ling Ling Wei. Ling Ling is China also worried about the risks that out of control AI could bring. What are the researchers there make of this debate? China does worry about real technical harms, like cyber attacks, data leakage, military escalation, misuse of AI, but there is a difference in focus. When people in the United States talk about AI safety, it usually really means existential catastrophic risk to humanity, right? Loss of control, misuse for a biotag or cyber weapons, or autonomous system doing something no human intended. When China talks about AI safety, the center of gravity is really political and regime security. Their focus is on, in large part, guarding against what people might do with the machine. So the risk basically they're focusing on right now is the technology potentially destabilizes social order, erodes the Communist Party's information monopoly, or hence what they consider hostile forces, a new tool that no one can control. In the US, the conversation has really been around the industry, agreeing to stop development just because the federal regulation doesn't really exist. Is there a different approach in China? Their approach is centered on the party itself, just overnight China's security chief Chen Yi Xin, he published what I call an AI manifesto. The very fact that those guidelines are published by the security chief in itself is very tall. It doesn't come from the science ministry. He put forward six risk categories, and the number one risk is political risk. So you can see the emphasis when comes to focus. Chinese leader Xi Jinping is scheduled to meet with President Trump at the White House next week. Usually the real nuts and bolts of diplomatic policy are established by other officials. But do you think Xi and Trump will talk about AI? I do think they may talk about the issue during their summit. However, in order for the issue to be really addressed, you need people from both sides who are really familiar with this technology to engage in good-faced dialogue. And so far, we haven't seen any signs of that happening. Maybe the summit will pave the way for that kind of mechanism to be established, but we just need to wait and see. In markets, major US indexes ended a roller coaster of a day in the red. The NASDAQ finished down about 0.6%, a recovery after being down 1.3% earlier in the day. Though chip companies and others tied to the AI infrastructure buildouts, how their stock prices fall, those for hyperscalers like Alphabet and Meta were actually up. WSJ Markets reporter Hannah Aron Lang explains why. The benefits of AI throughout the economy do not necessarily just have to do with this superhuman, incredibly capable, potentially destructive technology to which these warnings are referring. There's also practical implications of much lower-level technology that can still boost productivity at companies and among workers. Of course, they're spending a lot of money on this buildout, however, they do have sound businesses at their core that existed before the artificial intelligence investment boom, whereas these chip stocks, these infrastructure plays, are more solely reliant on this spending spree, continuing at this frenetic pace that we've seen. Meanwhile, the 10-year treasury yield briefly broke above 5%. That's its highest interday level since 2007. And though the yield fell back and closed lower on the day, the milestone is forcing investors to confront whether the bond market is entering a new era. The bond yields have been pushing higher for quite some time, primarily driven by investors' concerns about inflation, which you can connect directly back to the war in Iran and what that's doing to the price of oil and what that could therefore do to prices across the economy. Brent Crude approached $110 a barrel after drone attacks led Saudi Arabia to shut down a key oil pipeline, which is likely to squeeze the global oil supply. Hannah says all this taken together is making investors even more sure that a rate hike is coming from the Fed later this week. Investors appear even more so in that we're going to see interest rates rise. That could instill some confidence in investors. Brent futures finished the day up 1% at $105.68. Coming up, Democrats have midterm momentum. What will it take for them to regain control of Congress? We'll get into that, and more after the break. The Justice Department said today that Abbott has agreed to pay $385 million to settle a case over bacteria in baby formula that was suspected of causing infant deaths. The settlement is a more lenient outcome than some prosecutors had advocated for. Some believe there was enough evidence to bring criminal charges. But the Justice Department instead opted for a civil settlement. It didn't admit liability or fault, and said in a statement that it's committed to earning and maintaining consumers' trust. We're exclusively reporting that top New York City Council members are calling for a ban on students using YouTube in city schools. They said the ban is necessary because of declining test scores and complaints from parents and teachers. They said teachers have told them they feel pressure to use screens during the school day because standardized tests are digital. Google, which owns YouTube, has previously said that school administrators control what students watch at school and that its tools allow a range of options to limit or block YouTube for students. The company declined to comment on the New York City Council members call. In other news from New York City, it's part of a coalition of cities that filed a lawsuit against the Trump administration over a new immigration rule. The suit argues that the rule, which would let the federal government more easily deny green cards and visas to immigrants if they use public benefits or quit in the future, goes against longstanding legal precedents to target immigrants. A White House representative didn't immediately respond to a request for comment. And a Russian businessman with ties to Russian President Vladimir Putin financed celebrations for Donald Trump Jr.'s wedding to Bettina Anderson earlier this year. Pro-Publica first reported that Umar Kremlin paid for two nights of post-wedding events in the Bahamas. The couple confirmed this in a statement on Instagram, calling it quote, "an extraordinarily generous wedding gift from a friend." President Trump didn't attend his son's wedding celebrations, and in a statement he said he didn't know Kremlin and said paying for what he called an after-party was quote, not a big deal. We're now 50 days from the midterms. Democrats are aiming to retake Congress, and they've gotten some momentum. But their success is far from a den deal. WSJ National Political Reporter Eliza Collins joins me now. Eliza, there are states like Alaska, Iowa, Ohio, and Texas states that Trump won easily in previous cycles where Democrats are now competitive. What's changed to give them more of an edge? President Trump is extremely unpopular right now. And a huge part of that is because of the war with Iran, these tariffs, economic uncertainty, that was a huge reason he was elected in 2024, voters were very unhappy with the economy and high prices that hasn't changed. And it's made it so that Democrats are competitive, especially on the Senate side in states that President Trump won by double digits or states that you just think of as sort of ruby-red states. So how good a chance do Democrats stand to retake the House on the Senate? Annals give Democrats a very high likelihood of retaking the House. They don't need very many seats to do that. The Senate's a lot harder because they would have to win these ruby-red seats to be able to win the Senate. It's possible. But it's just a harder, harder math for them. So according to your reporting, Democrats do still have some liabilities that could get in the way of all these grand ambitions. One of the big liabilities is money. What is going on with that? The Republican National Committee had more than 130 million on hand compared to just 16 million for the Democratic National Committee as of the last time the federal election numbers were released this summer. Another thing is that President Trump has this massive super PAC that has more than $400 million on hand. Democrats don't even have anything comparable to that. And so what can Democrats do between now and November to shore up whatever lead they may have? We've seen Democrats really focus in on affordability, which seems to be one of the biggest problems that Trump and Republicans have because they are in the White House and both chambers of Congress. When I'm out talking to voters, they say that gas prices are too high and the grocery bills are too high. And so Democrats will need to convince them that they have a plan, especially in some of these states where voters are really skeptical of Democrats. WSJ National Political Reporter Eliza Collins, thank you so much. Thank you. And that's what's news for this Monday afternoon. Today's show is produced by Danny Lewis with supervising producer Melanie Roy. I'm Alex Ocelef for the Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening. [BLANK_AUDIO]