A major development in U.S. AI policy may leave startups and other companies navigating a prolonged period of legal ambiguity instead of delivering clear, nationwide standards.
President Trump’s new executive order directs federal agencies, including the Department of Justice, to challenge state AI laws in court and instructs the Commerce Department to identify “onerous” state regulations that could affect eligibility for federal funds such as broadband grants. It also calls on the FTC and FCC to explore federal standards and encourages collaboration with Congress on a uniform AI framework.
Critics warn that the result of the executive order could be extended litigation and uncertainty. Startups may find themselves caught between conflicting state and federal demands.
Gary Kibel, partner in Davis+Gilbert’s Privacy, Technology + Data Security Practice Group, told TechCrunch that although businesses would welcome a single national standard, “an executive order is not necessarily the right vehicle to override laws that states have duly enacted.” He cautioned that the current uncertainty could create extremes — from highly restrictive rules to nonexistent enforcement — that disproportionately favor Big Tech firms with the resources to absorb regulatory risk.
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