AI is still the Wild West when it comes to government regulation. But 2025 was the year U.S. states started to make an effort.
Some states, including California and New York, passed legislation that required some pretty basic things from AI companies — including transparency, whistleblower protections, and the well-being of teen users in particular.
Tech world proponents of unfettered AI innovation have made no secret of wanting to shut down state-based regulation efforts, arguing that such laws would dampen growth and give China an advantage in AI.
On Thursday, President Donald Trump signed an executive order that attempts to federalize AI regulation, calling for a “national framework.”
“To win, United States AI companies must be free to innovate without cumbersome regulation,” the order says. “But excessive State regulation thwarts this imperative.”
States with “onerous AI laws” may be punished through withholding of federal funds that help provide high-speed internet access to rural areas, according to the order. Agencies may condition their state grants on not enacting an AI law that conflicts with the order’s policy.
The executive order was produced in consultation with David Sacks, a tech venture capitalist and the Trump administration’s special advisor for AI and crypto. A New York Times investigation recently revealed how many of Sacks’ investments will benefit from his policies.
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Michael Kleinman, head of US Policy at the the tech research nonprofit Future of Life Institute, called the order a “gift for Silicon Valley oligarchs.”
“No other industry operates without regulation and oversight, be it drug manufacturers or hair salons; basic safety measures are not just expected, but legally required,” Kleinman says.
“AI companies, in contrast, operate with impunity. Unregulated AI threatens our children, our communities, our jobs and our future.”
OpenAI, the maker of ChatGPT, is being sued by multiple families of teens who died by suicide after heavy engagement with the chatbot. The company recently denied responsibility for the death of Adam Raine, a 16-year-old who talked to ChatGPT about his suicidal feelings and killed himself earlier this year. The order states that the national framework should “ensure that children are protected.”
The same day Trump signed the order, a trio of child safety advocacy groups began airing a PSA highlighting the dangers of AI chatbots for children. The spot ends with an appeal not to stop states from regulating AI.
Earlier this year, Trump’s One Big Beautiful Bill Act attempted to ban state regulation of AI for 10 years, a provision that Republican Congresswoman Marjorie Taylor Greene, then a Trump ally, fought against. The moratorium was very unpopular amongst registered voters, according to a poll conducted in mid-May.
The measure was eventually voted down by the Senate in a stunning display of bipartisanship, 99 votes to 1. Some MAGA supporters, including Trump ally Steve Bannon, continue to oppose industry-led regulation of AI.
How popular the executive order will be with that level of opposition remains to be seen — as is the question of whether it will pass muster if challenged in the courts.
