Hello and welcome back to Regulator. It’s been a very long two weeks away from your inboxes, but luckily for us, Big Tech and Big Government did not stop fighting. In fact, it’s gotten even spicier. Let’s get into it.
Last week, I was following up on several rumors that Donald Trump would sign an executive order that would fulfill a longstanding goal of the AI industry: legal preemption that would prevent states from passing their own AI laws. Mostly, I was calling sources trying to get a sense of how the Trump administration planned to approach it: Which agency would be spearheading it? What legal arguments would they use? How would it interact with Congress, which was trying to pass a similar moratorium in the National Defense Authorization Act?
And then I got a copy of the draft order itself — possibly a sign that someone in the administration deeply, deeply loathes David Sacks, Trump’s Special Advisor on AI and Crypto. Even though he’s not a permanent government employee — he is, in fact, a billionaire tech venture capitalist with a provisional employment status similar to the one Elon Musk previously held — Sacks has become deeply influential in setting the administration’s AI and crypto policies. (Just look at Trump’s recent statements about federal AI preemption.)
Leaks rarely come out of Donald Trump’s White House these days, especially compared to his previous term. Back then, everyone in the Trump administration was trying to undermine everyone else on a regular basis, dropping juicy, scandalous tidbits to their favored reporters on a near-hourly basis. In that first term, the career, norm-following officials of the federal bureaucracy were anxiously texting journalists about chaos they’d been preventing. Conservative media figures were eagerly telling reporters about their late-night phone calls with Trump. And the Fifth Avenue New Yorkers were fighting the Steve Bannon–led populists, who were fighting the establishment Republicans, who were fighting the Democrats, who were fighting each other.
There are fewer leaks this time around, primarily because the administration is built around blind loyalty to the president. DOGE gutted the bureaucracy and Trump hired people who would always tell him yes. But on that rare occasion that an actual document leaks out of the administration, it’s a sign that someone has carefully weighed the risks of undermining their enemy, considered the cost of doing so, and decided they hated them enough to do it anyway.
Which brings us to this draft executive order. If it had been signed, it may not have been an actual ban on state AI laws, but it would have given the executive branch the power to strongly dissuade states from writing or enforcing their own laws. Below the break, I walk through the policy implications of the order with Charlie Bullock, a senior research fellow at the Institute for Law and AI, who pointed out all the ways that the government would be able to punish the states for trying to regulate AI: suing them, withholding billions of dollars in federal funding, and hitting them with FTC fines.
While the order itself might eventually be found illegal, he noted, the order would make it painful for a state to fight back: “A state that really needs broadband funding, for example, could say, It might take a long time for us to get our funding. Even if it can win a court case to make them give us that funding eventually, it would take a long time. States might be incentivized not to pass legislation contrary to the policy of the order.”
But politically, the second Trump administration takes an approach to executive orders that’s more shoot first, ask questions about its legality later. Other equally overbroad orders haven’t leaked prior to their signing, and there was nothing spiritually different about this executive order, save for who had been empowered most: every directive included language that required the government to consult the Special Advisor for AI and Crypto, who happens to be a certain tech billionaire from the private sector from outside the political world. And that power play was clearly enough for someone to break Trumpworld omerta.
We’re going to go into the parameters of the power grab below, but before we do, here’s the latest from The Verge:
This week at The Verge:
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