Artificial Intelligence and the Great Divergence – Strategic Analysis and Practical Implications for Tech Companies
- Roy Wang
- 6 hours ago
- 5 min read
Artificial intelligence is changing how the U.S. economy grows—and the government is moving fast to stay ahead. Recent federal policies are making it easier and cheaper for companies to invest in AI, while also reshaping rules around regulation, global expansion, and talent. This article explains what these shifts mean in practice, and how technology companies can respond.
If you have questions about how recent U.S. AI policy shifts, regulatory direction, or infrastructure investment trends may affect your business or technology strategy, the ILS legal team is here to help. We advise companies on AI-related compliance, policy risk, and strategic planning in a rapidly evolving landscape. Please contact Roy Wang, Esq. at roy.wang@consultils.com, to discuss your specific needs.
How AI Is Reshaping the U.S. Technology Landscape
This briefing is based on a January 2026 report from the U.S. Council of Economic Advisers titled Artificial Intelligence and the Great Divergence. The report argues that the United States is entering a new turning point driven by artificial intelligence. As AI investment and adoption accelerate, the U.S. is pulling ahead of other countries, and the government is actively supporting this shift through policies focused on infrastructure, lighter regulation, and expanded energy capacity.
The report also makes clear that this change is happening very fast. Key indicators—such as the computing power used to train AI models—are growing at an extraordinary pace. According to the CEA, AI-related investment contributed an annualized 1.3 percent increase to U.S. GDP in the first half of 2025, signaling that AI is already having a measurable impact on economic growth.
Capital Investment and Tax Strategy: The One Big Beautiful Bill (OBBB)
The One Big Beautiful Bill Act signed in July 2025, serves as the primary fiscal engine for this revolution by lowering the after-tax “hurdle rate” for domestic innovation. Most critically for tech startups, the law restored 100 percent bonus depreciation for IT infrastructure and data center equipment, allowing for full, immediate expensing of qualified investments.
Practical Impact:
Re-evaluate hardware purchasing plans and R&D timelines in light of current tax incentives
Deduct the full cost of servers and specialized GPU hardware in the year of purchase
Improve near-term cash flow by reducing upfront tax burden
Scale technical infrastructure more efficiently during a period of high capital costs
Regulatory Environment: Deregulation and “Objective” AI
The administration views “excessive regulation” as a significant drain on productivity that disproportionately impacts small businesses by stifling competition and innovation. Current deregulatory efforts aim to reduce these barriers, with the CEA estimating that such policies could deliver up to 0.8 percentage points of additional GDP growth annually. Alongside this reduction in oversight, new federal procurement guidelines mandate that the government only contract with AI developers whose systems are “objective and free from top-down ideological bias”.
Practical Impact:
Expect higher compliance standards when pursuing U.S. federal contracts
Pay special attention if the company has an international background or global operations
Audit AI training datasets for potential bias or policy risk
Review and document model “safety” and alignment protocols to meet federal “objectivity” requirements
Global Market Access
The administration is utilizing the “Pax Silica” partnership—which includes allies like Japan, Qatar, and the UAE—to secure global AI supply chains and market dominance. Significant commitments have been secured through trade deals, such as the EU's agreement to purchase $40 billion in U.S. AI chips and the UAE's $1.4 trillion investment commitment directed toward the U.S. tech sector.
Practical Impact:
Treat allied markets as built-in expansion opportunities for U.S.-based tech companies
Look beyond the U.S. market when planning growth and fundraising strategies
Prioritize expansion into Pax Silica partner countries
Leverage “U.S.-origin” hardware and software as a competitive advantage
Benefit from stable economic growth across allied markets
Talent and the Labor Market: Jevons’ Paradox in AI
While there are concerns regarding AI’s impact on employment, the CEA report highlights “Jevons’ Paradox,” where technological advances that increase the efficiency of a resource (like labor) often lead to an increase in its overall usage. Historical disruptive technologies have ultimately led to greater employment and the creation of entirely new professional fields.
Practical Impact:
Expect automation of some entry-level coding and administrative tasks
Plan for increased demand for new, specialized AI-related roles
Shift hiring strategies away from traditional entry-level tech positions
Invest in training for emerging roles, such as modern AI agents and hybrid AI operators
Align workforce planning with how AI is changing job functions, not just headcount
Artificial intelligence is no longer a distant or abstract trend—it is actively reshaping how technology companies invest, expand, hire, and compete. As U.S. policy continues to accelerate AI development through tax incentives, regulatory shifts, and global partnerships, companies that understand these changes early will be better positioned to manage risk and capture opportunity.
The key is not simply adopting AI, but aligning business strategy, compliance planning, and long-term growth decisions with the direction of this rapidly evolving landscape.
If you have questions about how recent U.S. AI policy shifts, regulatory direction, or infrastructure investment trends may affect your business or technology strategy, the ILS legal team is here to help. We advise companies on AI-related compliance, policy risk, and strategic planning in a rapidly evolving landscape. Please contact Roy Wang, Esq. at roy.wang@consultils.com, to discuss your specific needs.
Disclaimer: The materials provided on this website are for general informational purposes only and do not, and are not intended to, constitute legal advice. You should not act or refrain from acting based on any information provided here. Please consult with your own legal counsel regarding your specific situation and legal questions.
As Partner and Head of M&A at ILS, David advises technology companies on venture financings, M&A, and cross-border transactions—bringing top-tier legal expertise and deep technical insight. He has closed $3B+ across 100+ deals, supporting clients from early-stage startups to global enterprises across the full corporate lifecycle, with a dealmaking style that combines strategic judgment and crisp execution.
Previously, David was Head of Legal at Humane, Inc., an AI unicorn acquired by HP, and practiced at Wilson Sonsini, Latham & Watkins, Cooley, and Gibson Dunn. He is known as both legal counsel and strategic business partner on complex, high-stakes transactions across AI, clean energy, biotech, and software.
Email: david.liu@consultils.com | Phone: 626-344-8949
As Partner and Head of Transactions at ILS, Fiona delivers professional legal and strategic support to tech companies—with a focus on AI, medical devices, and fintech. Beyond full-spectrum technology law, she specializes in export control and compliance: supporting tech firms at all growth stages, aiding startups in scaling operations, and helping mature enterprises address regulatory challenges.
Previously, Fiona gained hands-on experience building legal frameworks from scratch. She advised unicorn companies on global expansion and regulatory hurdles, developing deep insight into clients’ growth challenges. Combining legal expertise with commercial judgment, she helps clients establish sustainable legal processes and provides clear guidance to advance their business.
Email: fiona.xu@consultils.com | Phone: 626-344-8949
Roy specializes in corporate, compliance, regulatory, and financing matters, with extensive experience in executing complex transactions and navigating sophisticated regulatory frameworks to support business strategy.
He began his career at a Magic Circle firm and has over five years of experience across derivatives and structured finance, financial regulation, and international commercial arbitration, advising clients on cross-border financing and regulatory compliance.
With a strong global practice background, Roy provides strategic, practical guidance on complex legal matters with both local and international implications.
Email: roy.wang@consultils.com | Phone: 626-344-8949