The hard part is getting data to train your model, and it becomes a natural monopoly because the service that performs better will see more traffic to collect more data.
But I don't understand how you can regulate AI in a way that makes any sense. Ban specific algorithms? Limit data collection? Create some confusing wording around generic "algorithms that improve other algorithms" or something like that?
And even if you passed such a law, it's trivially easy for someone from any other part of the world to set up an API for their ML algo to run.
Regulation on AI sounds like it would be about as successful as the war on drugs.