Trump's AI Executive Order: When AI Investors Write AI Policy

What Happened

Trump signed the order in the Oval Office with David Sacks standing beside him. The stated goal: prevent a "patchwork" of 50 different state regulations.

The actual goal: stop states from requiring AI companies to prevent discrimination, disclose how their systems work, or take responsibility when their products cause harm.

Here's what the executive order does:

• Creates an "AI Litigation Task Force" — The Justice Department will actively sue states whose AI laws the administration doesn't like
• Threatens federal funding — Agencies must report on and restrict funding to states that implement AI regulations
• Directs FTC preemption — Orders the FTC to claim that federal consumer protection law preempts state AI laws
• Targets specific states — Colorado's AI Act gets explicitly called out as "probably the most excessive"

The Conflict of Interest Problem

David Sacks isn't just some policy wonk who cares about innovation. He's an investor in AI companies that would be regulated by the very laws he's trying to kill.

During the signing, Sacks argued: "You have got 50 states running in 50 different directions. It just doesn't make sense. We're creating a confusing patchwork of regulation. What we need is a single federal standard."

Translation: States are protecting consumers, and that's bad for my portfolio.

There is no federal AI standard. Sacks isn't proposing one. The order doesn't create one. The "single federal standard" is no regulation at all.

Which State Laws Are Targeted

The executive order takes aim at several state laws designed to protect consumers from AI harms:

Colorado AI Act

Requires companies to prevent "algorithmic discrimination"—AI systems that treat people differently based on race, gender, disability, or other protected characteristics. The EO claims this law "may even force AI models to produce false results."

That's a lie. The law requires AI to not discriminate. It doesn't require AI to lie.

California's AI Transparency Laws

California has passed multiple laws requiring disclosure of how AI systems work and what data they use. Earlier drafts of the EO explicitly attacked California's SB 53. The final version softened the language but kept the intent.

Other State Laws

The order references "over 100" state AI laws that have passed. Sacks specifically mentioned California, New York, and Illinois as states with the most regulations.

He said kid safety laws would be protected. Everything else? Fair game for federal lawsuits.

California's Response

Governor Newsom's office didn't hold back:

"President Trump and David Sacks aren't making policy — they're running a con. And every day, they push the limits to see how far they can take it. California is working on behalf of Americans by building the strongest innovation economy in the nation while implementing commonsense safeguards."

Governors in California, Colorado, and New York have all indicated they will continue passing and enforcing their AI laws regardless of the executive order.

Why This Probably Isn't Legal

Here's the problem for the administration: executive orders can't preempt state law.

Under the Constitution's Supremacy Clause, federal law can override state law—but it requires actual federal law passed by Congress. Not executive orders.

Legal experts have been clear:

• The EO doesn't identify any federal AI law that could preempt state regulations
• There IS no federal AI law
• States can generally go above and beyond federal standards, not below them
• The FTC can't just declare preemption without Congressional authority

As NPR put it: "Trump is trying to preempt state AI laws via an executive order. It may not be legal."

The lawsuits are coming—but this time, states will be suing the federal government.

The Real Stakes: Who Gets Hurt

State AI laws exist because AI systems are already causing harm:

• Hiring discrimination — AI screening tools reject qualified candidates based on race and gender
• Housing discrimination — Algorithmic tenant screening perpetuates redlining
• Healthcare denials — AI systems deny coverage and care based on flawed predictions
• Facial recognition errors — Black Americans are disproportionately misidentified and wrongly arrested
• Credit discrimination — AI lending decisions encode historical bias

Colorado's law requires companies to prevent these harms. Trump's order wants to stop Colorado from requiring that.

The question isn't innovation vs. regulation. It's: who's allowed to be harmed by AI without recourse?

What This Means for Privacy

AI systems are surveillance machines. They require massive data collection to function. State AI laws often include provisions requiring:

• Disclosure of what data AI systems collect
• Consent before using personal data for AI training
• Transparency about automated decision-making
• Rights to opt out of AI profiling

Kill the AI laws, and you kill these privacy protections too.

There's no federal privacy law. There's no federal AI law. Without state regulations, there's nothing between you and an AI system that can deny you a job, an apartment, a loan, or healthcare—with no explanation and no recourse.

The Pattern

This executive order follows a pattern:

1. Salt Typhoon hacks 9+ telecoms → FCC rolls back cybersecurity rules
2. AI systems discriminate against protected groups → Trump orders lawsuits against anti-discrimination laws
3. States try to protect consumers → Federal government threatens to cut their funding

Every time there's a problem, the response isn't to fix it—it's to stop anyone from fixing it.

What Happens Next

Protect Yourself

Until this plays out in the courts, here's what you can do:

• Support state privacy laws — Contact your state representatives to support strong AI and privacy regulations
• Know your rights — Even without federal law, state laws still exist and are enforceable until courts say otherwise
• Document AI harms — If an AI system discriminates against you, document everything. This evidence matters for future litigation.
• Minimize AI exposure — Limit data you provide to companies using AI for decision-making
• Use privacy tools — AI systems need your data to profile you. Reduce what they can collect.

The Bottom Line

An AI investor wrote an executive order to protect AI companies from accountability. The order may not be legal. States are fighting back. But until the courts rule, AI companies have cover to ignore consumer protection laws.

This is what happens when the people writing the rules are the same people profiting from breaking them.

References

1. Ensuring a National Policy Framework for Artificial Intelligence - White House
2. Trump is trying to preempt state AI laws via an executive order. It may not be legal - NPR
3. Trump signs executive order for single national AI regulation standard - CNBC
4. Trump's AI executive order advances corruption, not innovation - Governor of California
5. President Trump's Latest Executive Order on AI Seeks to Preempt State Laws - Gibson Dunn
6. Trump signs executive order blocking states from enforcing their own regulations around AI - CNN
7. New Executive Order aims to preempt state AI regulation - DLA Piper

Related Articles

• AI Surveillance: The Algorithmic Panopticon — How AI enables mass surveillance
• Salt Typhoon: The Worst Telecom Hack in American History — Another case of deregulation after disaster
• Facial Recognition Bans in the US — State and local efforts to regulate AI surveillance
• How Data Brokers Build Your Profile — The data that feeds AI systems