Trump’s AI executive order promises ‘one rulebook.’ Startups may get legal limbo instead.

In a bold move, former President Donald Trump signed an executive order aimed at creating a cohesive national policy for artificial intelligence (AI). This directive, issued on Thursday evening, instructs federal agencies to confront state-level AI regulations, which he argues are creating a burdensome and inconsistent environment for startups. However, legal experts and startup leaders are expressing concerns that this order may inadvertently lead to prolonged uncertainty. They fear it could trigger court disputes, leaving young companies to navigate a maze of fluctuating state laws while awaiting a unified federal framework from Congress. Dubbed "Ensuring a National Policy Framework for Artificial Intelligence," the order mandates that the Department of Justice establish a task force within 30 days to challenge specific state regulations under the premise that AI constitutes interstate commerce requiring federal oversight. The Commerce Department has been given a 90-day deadline to assess and list state AI regulations deemed excessively onerous, which could also influence states' eligibility for federal funding, including broadband grants. Moreover, the Federal Trade Commission and the Federal Communications Commission are tasked with exploring federal standards that could override state laws, while the administration is encouraged to collaborate with Congress on formulating a uniform AI law. This executive order comes amid a broader movement to streamline AI regulations, especially following stalled congressional efforts to pause state-level regulations. Bipartisan lawmakers have expressed that without a federal standard, halting state actions could leave both consumers and businesses vulnerable. Michael Kleinman, head of U.S. Policy at the Future of Life Institute, criticized the order, suggesting it serves the interests of Silicon Valley elites who wish to evade accountability. Sean Fitzpatrick, CEO of LexisNexis North America, pointed out that states are likely to defend their consumer protection laws in court, which may escalate to the Supreme Court. While some proponents believe this order could provide clarity by centralizing AI regulation discussions in Washington, critics argue it may create immediate challenges for startups trying to comply with conflicting state and federal regulations. Hart Brown, a key figure in developing AI recommendations for Oklahoma, highlighted that most startups lack comprehensive regulatory frameworks until they reach a significant scale, which can be costly and time-intensive. Concerns regarding self-regulation among AI companies were echoed by Arul Nigam, co-founder of Circuit Breaker Labs, who noted that the existing patchwork of state laws complicates matters for smaller players in the industry. He expressed hope that Congress could expedite the passage of a robust federal framework. Andrew Gamino-Cheong, co-founder of Trustible, warned that the uncertainty stemming from this executive order could hinder AI innovation, particularly affecting startups that lack substantial funding. He emphasized that the ambiguity could deter risk-averse customers, ultimately prolonging sales cycles and increasing operational costs. Industry experts like Gary Kibel argued that while a unified national standard would be welcomed, an executive order may not be the appropriate method to override state laws. He cautioned that the current landscape of uncertainty could lead to either overly restrictive regulations or a complete lack of regulation, creating an unpredictable environment that could favor larger tech companies. Morgan Reed, president of The App Association, urged Congress to swiftly implement a detailed, risk-based national AI framework, emphasizing the need to avoid a fragmented system of state laws or protracted legal battles over the executive order's constitutionality.