Welcome to the podcast. I'm your host, Jayden Schafer. Today on the show, we're talking about one of the most important AI policy moves that I think we've seen in quite a long time. President Trump has just signed a new AI executive order.
I want to talk about why this could be fundamental in shaping the future of AI inside of the United States and perhaps inside the world. This isn't just another bureaucratic document that is going to sit on a shelf. This executive order is a really direct shot at the patchwork that we have right now on a state level of different AI regulations. We have California, we have New York, we have Illinois, a whole bunch of people have been states have been putting in their own AI regulation.
And what people are saying is that this is a signal to Silicon Valley, um, and a statement that America is trying to essentially consolidate the power of this regulation on a federal level and on a state wide level. This is what Trump's goal is. So, um, we're going to dive into all of this before we get into the story. You probably pay for a bunch of different subscriptions to get access to the best AI tools.
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So President Trump recently signed a new executive order on AI. And I think just at a high level, it's about one thing he's trying to centralize the AI policy at a federal level. He's trying to stop individual states from, um, you know, what he says is struggling innovation with a thousand different rules. I know that it is really tricky to have a state by state regulation on a lot of technological areas.
AI feels like a new thing. And so the argument is that, you know, it's better on a federal level. I think this move by the administration was inevitable. What we're seeing in the US is pretty tricky.
California has their own set of AI rules. Colorado has another New York has its own algorithm laws. Illinois, Virginia and a bunch of others are all kind of piling on. And so the problem isn't that people, you know, want AI to isn't that they don't want AI to be used responsibly.
Obviously everybody wants that. I think the big problem is, you know, deciding which state makes up the definition and the compliance rules. The hard thing is it's basically like the state with the big population that makes these strictest rules is going to be de facto what everyone has to follow. So if that became California, California has a massive population and a lot of these AI companies reside inside of there, but it could have been New York as well.
But let's say California makes all of the AI, you know, all of the AI regulations and rules and they're the strictest, then basically if you want to create AI in the United States, you need that market. And so you have to follow those. I think that's what the federal government is trying to wrestle control away from them, because there's, you know, you have to think there's a lot more than just the compliance. There's the reporting, there's penalties.
And so it's really tricky for smaller AI companies, obviously to grow. And that's kind of the argument, whether that's an accurate kind of issue, but the argument is that this is making it tricky for smaller companies. I think that there's probably an element to this of like California making rules and California extracting penalties and fees from big companies. So you can see that that would be an incentive for California to make the strictest rules.
And of course, that is why you could imagine Trump with his kind of beef with California and you knew something really doesn't want him to have that power. So I think if you're in a startup, it is really difficult to get 50 different legal teams going or someone that can represent all 50 different states. If you're an enterprise company, this is definitely going to slow down development. If you're a foreign company, especially China, this is probably something that they don't care at all about because their regulation is basically non-existent.
I guess they do have rules about what data can go into their models, but beyond that, they can release whatever they want. They don't have to read team or do a safety testing. So this is kind of a tricky point when we're making it harder for American companies than foreign companies. And so Trump's executive order is saying that this shouldn't be the case.
I think the core idea is that the United States is going to have one national AI framework, not a fragmented state by state regulatory kind of thing that we have going on right now. And I think the current order directs the federal agencies to identify state AI laws that are considered overly burdensome, inconsistent or harmful to national AI competitiveness. And then it is letting those federal government agencies go and challenge those regulations in law. So essentially it's just kind of counter-su and get rid of any regulations that they don't think are good.
So states can still go and make all their own AI regulations, but if they make one that is deemed over burdensome by the federal government, they'll get sued to have a lawsuit about that. I think one of those controversial parts of this is that it ties federal funding to compliance. So in other words, if a state is insisting on enforcing that particular AI regulation and it's directly conflicting with the federal AI policy, that state could lose access to certain federal funds. That's infrastructure money, broadband funding, technology grants, all of those are on the table with this executive order.
And I think predictably a lot of governors of different states are mad about this. From a business and innovation standpoint, some people are saying this makes a lot of sense. AI is not like zoning laws or local traffic rules. It's kind of foundational technology.
It touches national security, defense, health care, finance, education, productivity. So it's really tricky to have 50 different interpretations of what is quote unquote allowed if you have every single state making their own rules. So I think it's similar to how we handle aviation or like telecom, interstate commerce, all that kind of stuff. If every state had their own rules for airplanes, it would obviously be chaos and a massive nightmare for every airport and Boeing and Airbus and everyone.
So we have a federal level, we have this on federal level for aviation industry. So this executive order is trying to create something called the AI litigation task force inside the Department of Justice. And their job is essentially to actively go and challenge state laws that are what they're doing, what they call obstructing national policy. So I don't think it's a symbolic move, which I feel like sometimes in these executive orders we see it's kind of posturing and feels symbolic and it's hard to see what the tangible impact will be.
They're pretty serious. I mean, they're essentially saying like you can keep doing whatever you guys want, but like we will sue you. You're going to go core if it's if it's not what the federal regulations are, if it's more overly burdensome than that. So I guess why it matters, there's a lot of critics right now that are jumping in and saying that undermine states rights.
And I think I'm generally very pro states rights, but I think that there is a bit of a difference between local governance and national competitiveness. When state level regulation is threatening America's ability to lead in a strategic technology, then the federal government I think has responsibility to step in my opinion. This is I would prefer this on has an AI company. I prefer to just have one set of guidelines and rules I have to follow instead of having to work on 50.
So I think if all of these different states, AI laws are coming from deep technical understanding, that's fantastic, but not all of them are. And I think they're often written by people who don't just build software, they don't train models, they don't deploy AI systems or maybe with good intentions, sure in many cases. But that's not how you win a technological race with Russia and China is through good intentions. So I think another important part of the executive order is it's framing as essentially framing AI is a really important economic growth engine for America.
I think this is very different from previous administrations approaches in technology. You've leaned heavily into the safety mandates during the last administration, audits, compliance, all of that. I think right now they're framing this as trying to remove barriers and accelerate development and let American companies compete and win. So I don't think that means no guardrails.
I just think it means that there are proportion of guardrails. I think that it means that we're going to trust the innovation. We're going to punish actual harm. And instead of having a preemptive regulatory hypothetical risks that we're trying to stop where if there's an issue, we'll stop it.
But otherwise we'll try to see where AI takes us and we'll let it get developed. So I think one thing that's important to understand with this is that the executive order doesn't instantly erase states laws, right? Because we have all these different states, California, New York. They've already been enacting laws.
And so all this is doing is setting it up where legal challenges from a federal level can be taken to make sure that everything is in line. The Commerce Department has been asked to review say, AI laws and publish guidance on which ones are considered problematic. This is going to take months. So it's not going to be quick or immediate months.
I guess what the government is pretty quick. After that, we're going to see a bunch of lawsuits. Some states are going to fight. Others I think will accept what is.
This is definitely going to be a multiyear battle. This is not over. It's just the beginning. But I think the signal has been sent.
And I think startups, investors, people that are building, they know that America is actively trying to make it easier to build AI inside of our country. I think we've already seen how this is kind of helping with the markets. I think when a government makes it clear that they support innovation or capital flow, the talent will stay, companies will invest more. And I think that's kind of what we're seeing right now.
So of course, the media's reaction has been, you know, framing this as Trump helping big tech. Personally, I think this is a shallow take. And I'm not like a huge fan of big tech, only in everything in the whole world. I think there should be way more competition.
But I do think that right now we have companies like opening eye in Google who have massive budgets, massive programs, they could easily afford to kind of follow all the regulatory processes of all 50 states. That's not a big deal. And it feels like some of the regulation that they lobby for opening eye specifically is, you know, just them pulling the ladder up behind them. So personally, as someone that's working on the company, I think making this simpler and easier for small companies is the best thing to do.
So one thing that I also want to point out is how it fits into kind of the broader geopolitical picture. China has a centralized AI strategy. Europe has a really regulation heavy policy that's already definitely slowing adoption. I don't think that's a disputeable way to have the same population basically in Europe as the United States and the United States has, you know, 10x or maybe 100x AI companies coming out of it.
So we'll definitely keep a close eye on this. Thank you so much for tuning into the podcast today. This is your number one spot for the latest in AI business news and everything that's happening in tech. If you enjoyed the episode, it would mean the world to me if you left a rating review on Apple podcast or Spotify.
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