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As Vice President JD Vance leaves Paris after urging Europe to reduce regulations and promote AI innovation, that effort is already in jeopardy. A series of quiet maneuvers by the Biden administration, major technology incumbents and a government-funded nonprofit called the Future of Privacy Forum (FPF) threatens to impose sweeping AI regulations in American states — even after President Donald Trump revoked the previous administration’s restrictive framework.
On January 23, Trump signed Executive Order 14179, “Removing Barriers to American Leadership in Artificial Intelligence,” replacing Biden’s command-and-control approach with a pro-innovation mandate to defend U.S. AI leadership against rivals like China. But remnants of the old policy survive in nonprofits like FPF, which are busy drafting state bills mirroring President Joe Biden’s agenda.
Public records confirm FPF was obligated nearly $5 million from federal agencies across FY24 and 25 under Biden. Last year, FPF’s website touted those grants as supporting the “White House Executive Order on artificial intelligence,” FPF since scrubbed the reference — but the federal grant database still links the money to that now-defunct directive.
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Several states, with sponsors connected to FPF, including Texas, Virginia, Connecticut, and Colorado have introduced near-identical AI bills with fuzzy concepts such as “algorithmic discrimination” and “high-risk” systems. These vague rules afford regulators broad discretion, deterring not just startups but also high-growth tech firms that can’t divert precious resources to compliance overhead.
Venture capitalist Marc Andreessen, fresh from meetings with Biden, described the former president’s AI vision as “the most alarming” he’s ever encountered — replete with the notion that a new regulatory regime can and should micromanage cutting-edge technology. Progressive activists have long prepared for this: the left spent years building “safety-ist” NGOs ready to embed themselves in new agencies, believing they alone know how to direct AI “responsibly.” The right, by contrast, never groomed regulators to champion market freedom. That imbalance means any new regulatory body would likely be staffed by those eager to expand government power.
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This pathology of planning reflects the misguided idea that new and evolving systems require centralized oversight. But Hayek’s “knowledge problem” reminds us that that no central authority can aggregate and process the dispersed information needed to govern a complex, changing system efficiently. Therefore, sweeping bills loaded with ambiguous mandates open the door to cronyism, helping well-heeled incumbents navigate red tape while smaller innovators are sidelined.
Even if a bill exempts certain startups, the compliance drag effectively cements the status quo — technology giants enjoy a legally bulwarked upper hand. In the words of famed University of Chicago economist George Stigler “regulation is acquired by the industry and is designed and operated primarily for its benefit.”
Proponents claim these measures address “algorithmic harms,” but genuine harms — defamation, fraud, revenge porn — are already illegal. States can easily update criminal codes to tackle issues like synthetic sexual images without creating entire bureaucracies. Lawmakers in places like Texas would do better to heed their own instincts for small government and avoid duplicating heavy-handed Biden-era rules.
If these bills continue to proliferate, America risks a Balkanized regulatory minefield in which Big Tech ironically profits most. Instead, we need targeted, minimal interventions — if any at all — rather than broad frameworks crafted under a discredited federal policy. Our global competitiveness in AI and the vitality of our entrepreneurial ecosystem hang in the balance.
States must resist the temptation to create new offices for leftist bureaucrats and activists, lest they harass the builders who can deliver a golden age of American innovation.
Joe Lonsdale is an entrepreneur and investor. He co-founded Palantir Technologies and the venture firm 8VC. He is the chairman of the University of Austin (UATX) and the Cicero Institute, a nationwide policy group.
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