Trump signs order to limit state AI regulations, with California in the crosshairs
The battle between California and the White House escalated when President Trump signed an executive order blocking state laws regulating artificial intelligence.
The president’s power move to seize control of regulation of the technology behind ChatGPT via an executive order on Thursday was applauded by his allies in Silicon Valley, who have warned that multiple layers of rigid rules and regulations are holding them back and could leave the United States behind in the battle to benefit most from artificial intelligence.
The order directs the attorney general to create a task force to challenge some state AI laws. States with “onerous AI laws” could lose federal funding from the broadband rollout program and other grants, the ruling said.
The Trump administration said the order would help U.S. companies win the AI race against countries like China by eliminating “cumbersome regulations.” He is also pushing for a “minimally burdensome” national standard rather than laws in all 50 states that the administration says make compliance difficult, especially for startups.
“You need to have a centralized source of approvals when they need approvals. So everything has to go to one source. They can’t go to California, New York and various other places,” Trump told reporters in the Oval Office on Thursday.
California Governor Gavin Newsom opposed the order, stating that the decision “advances corruption, not innovation.”
“They’re committing fraud. And every day, they’re pushing the limits to see how far they can go,” Newsom said in a statement. “California is working on behalf of Americans by building the strongest innovation economy in the country while implementing common-sense protections and guiding the path forward.”
The contentious statements between Newsom and Trump underscore how the tech industry’s influence over regulation is increasing tensions between the federal government and state lawmakers who are trying to put more guardrails around artificial intelligence.
While AI chatbots can help people quickly find answers to questions and generate text, code and images, the increasing role technology plays in people’s daily lives has also led to greater concerns about redundancy, equality and mental health harms.
The order greatly impacts California, which is home to some of the world’s largest technology companies, including OpenAI, Google, Nvidia and Meta. This also jeopardizes the $1.8 billion in federal funding California received to expand high-speed internet across the state.
Some analysts said Trump’s order was a win for tech giants that have pledged to build data centers and invest trillions of dollars in research and development.
“We believe that over time more organizations are expected to move towards the AI roadmap through strategic deployments, but this executive order clears up more questions about future AI developments and eliminates a major problem going forward,” Wedbush analyst Dan Ives said in a statement.
Facing lobbying efforts from technology companies, Newsom vetoed some artificial intelligence bills this year and signed others into law.
A new law requires platforms to display labels warning about the mental health harms of social media for minors. Another aims to make AI developers more transparent about security risks and provide greater protection for whistleblowers.
He also signed a bill requiring chatbot operators to have procedures in place to prevent the production of suicide or self-harm content; but child safety groups have stripped support for that legislation because they say the tech industry has successfully pushed for changes that weaken protections.
States and consumer advocacy groups are expected to file a legal challenge to Trump’s decision.
“Trump is not our king and cannot wave a pen to unilaterally override state law,” state Sen. Steve Padilla (D-Chula Vista), who signed into law the chatbot security bill that Newsom signed, said in a statement.
In addition to California, three other states (Colorado, Texas, and Utah) laws passed The rules set some guidelines for artificial intelligence across the private sector, according to the International Assn. Privacy Experts. These laws include limiting the collection of certain personal information and requiring greater transparency from companies.
More ambitious AI regulatory proposals from states would require private companies to provide transparency and assess potential risks of discrimination from AI programs. Many have edited parts of AI: banning the use of deepfakes in elections and creating porn without consentFor example, setting rules on the government’s own use of artificial intelligence.
The order drew both praise and criticism from the tech industry.
Collin McCune, head of government affairs at venture capital firm Andreessen Horowitz, said on social media site X that the executive order was “an incredibly important first step.”
“But the gap in federal AI legislation remains,” he wrote. “Congress needs to come together to create a clear set of rules that will protect the millions of Americans using AI and the Little Tech builders who are pushing AI forward.”
Omidyar Network Chief Executive Officer Mike Kubzansky said in a statement that he is aware of the risks posed by poorly drafted rules, but the solution is not to override state and local laws.
“Americans are rightfully concerned about the impact of artificial intelligence on children and jobs and the costs that the rapid development of data centers imposes on consumers and communities,” he said. “To ignore these issues through a blanket moratorium is to abdicate elected officials’ debt to their constituents, which is why we strongly oppose the Administration’s latest executive action.”
Investors appeared unimpressed by the potential support the industry could receive from the White House.
The stock market fell sharply on Friday, led by AI stocks.
Bloomberg and the Associated Press contributed to this report.
