Chile’s AI Ethics Law Faces Backlash From Tech Giants
Chile is pushing one of the world’s toughest AI laws, and testing whether a country can protect ethics without driving innovation away.
Chile is walking a tightrope that few nations have managed successfully by trying to regulate artificial intelligence without driving away Big Tech. The country’s new AI law, one of the toughest anywhere, has already set off alarms in Silicon Valley.
The proposed legislation, which passed Chile’s lower house in October 2025, takes a risk-based approach similar to Europe’s AI Act. It classifies AI systems into four tiers based on potential harm: unacceptable risk (banned outright), high risk (strict oversight), limited risk (transparency requirements), and minimal risk. The idea is simple: the higher the risk to people, the tighter the control.
This new bill would ban technologies that undermine human dignity, including deepfakes, systems that manipulate emotions without consent, and facial recognition tools operating without explicit permission. Violators could face fines of up to $1.5 million. It’s a bold attempt to set ethical boundaries before the AI harms spiral, but not everyone is celebrating.
Louis Eriakha
While lawmakers tighten the rules, Chile is also courting some of the world’s biggest tech investors. Amazon Web Services (AWS) has committed $4 billion to build three data centers in Santiago, launching next year. Google, meanwhile, is laying a 14,000-kilometer undersea cable connecting Chile to Australia and planning a second local facility. With more than 40 data centers already in operation, Chile has become one of Latin America’s digital powerhouses.
That growth has come with pushback. AWS Chile’s Country Manager, Felipe Ramírez, put it bluntly: “We’re not against regulation. What we don’t like to see are processes that take too long.” His comments echo broader industry frustration over compliance costs and uncertainty. Law professor Matías Aránguiz from Pontificia Universidad Católica adds that Chile is “exponentially increasing the technological regulatory burden” without pairing it with pro-investment policies.
And the stakes are real. Argentina recently landed a $25 billion OpenAI data center project, and Brazil is offering tax breaks for AI hardware imports. Chile risks losing momentum if its rules are seen as too restrictive.
Oyinebiladou Omemu
Ironically, Chile has long positioned itself as a regional pioneer in responsible tech governance. It was among the first countries to complete UNESCO’s AI Readiness Assessment and has championed digital ethics across Latin America. Yet implementation has often lagged. A gig economy law passed in 2023 is still not in effect, and Google withdrew a $200 million data center permit after environmental disputes over water use, a reminder that even non-AI regulations can stall innovation.
Chile’s dilemma mirrors a global debate that’s dividing policymakers everywhere. Europe has opted for comprehensive guardrails but faces criticism for slowing innovation. The United States has taken a lighter approach, prioritizing growth over restrictions. Chile is attempting a middle path, one that protects citizens while keeping investors on board.
Whether it can pull that off remains to be seen. But one thing is clear: as the world races to regulate artificial intelligence, Chile has positioned itself as the testing ground for how far ethics can go before innovation walks away.
Ogbonda Chivumnovu
