Leaked AI Order Exposes Big Tech’s Power Grab

A leaked draft of a proposed executive order from the Trump administration reveals a significant effort to centralize control over artificial intelligence policy at the federal level, potentially curtailing states’ abilities to enact their own AI regulations. This document, obtained by Regulator, outlines a strategy to use federal authority and funding as leverage against states pursuing independent AI legislation, marking a bold assertion of executive power in the rapidly evolving tech policy arena.

The draft order, which had not been signed at the time of the leak, would not outright ban state AI laws but would create mechanisms to strongly discourage them. It directs multiple federal agencies to take actions that could penalize states for implementing AI regulations deemed inconsistent with the administration’s policy. The order specifically requires consultation with David Sacks, Trump’s Special Advisor on AI and Crypto, elevating the influence of this private-sector billionaire in shaping national technology policy.

Legal experts question both the legality and effectiveness of such an approach. According to Charlie Bullock, a senior research fellow at the Institute for Law and AI, “This order cannot make a moratorium happen, literally. An executive order is not congressional legislation.” He explains that while the president can direct executive branch agencies through such orders, they cannot unilaterally override state laws.

The proposed order employs multiple pressure points against states. It instructs the Department of Justice to establish a task force to sue states over their AI laws and directs the Commerce Department to identify which state laws conflict with administration policy. Most significantly, it empowers federal agencies to withhold billions in discretionary grant funding from states with “onerous AI laws.”

Bullock suggests the order’s primary impact would likely be through creating a chilling effect rather than direct legal preemption. “A state that really needs broadband funding, for example, could say, it might take a long time for us to get our funding,” he notes. “Even if they can win a court case eventually, the delay alone might discourage states from passing contrary legislation.”

The order’s inclusion of the Federal Communications Commission has raised particular concerns among policy experts. Section 6 directs the FCC chairman, in consultation with Sacks, to initiate proceedings that could lead to federal reporting standards preempting state AI laws. However, legal authorities question whether the FCC actually possesses jurisdiction over AI regulation, suggesting this provision may exceed the agency’s congressionally granted powers.

Similarly controversial is the order’s attempt to use Federal Trade Commission authority against state AI laws. The draft argues that certain state algorithm discrimination laws constitute “deceptive practices” under the FTC Act, a novel legal theory that experts say lacks precedent and may not withstand judicial scrutiny.

The funding restrictions outlined in the order represent its most potent weapon. Beyond targeting specific broadband programs, section 5(b) instructs all federal agencies to review discretionary grants across all departments, potentially affecting hundreds of billions of dollars in areas from education to transportation. This broad approach mirrors previous administration attempts to attach conditions to federal funding, though courts have sometimes struck down such efforts as unconstitutional.

The leak itself is noteworthy given the current administration’s reputation for loyalty and discipline. Unlike Trump’s first term, which featured regular internal conflicts spilling into public view, this administration has maintained remarkable secrecy. The emergence of this document suggests significant internal opposition to the concentration of AI policy influence in the hands of a private-sector advisor.

While the draft order’s legal foundations appear shaky to many experts, its practical impact could be substantial. States dependent on federal funding might hesitate to pursue AI regulations that could jeopardize their access to critical resources, even if the administration’s position ultimately fails in court. This dynamic creates a powerful deterrent against state-level AI legislation without requiring explicit federal preemption.

The administration’s approach reflects a pattern of asserting executive authority first and addressing legal challenges later. Other similarly ambitious orders have proceeded without prior leaks, suggesting that what distinguishes this case is not its legal audacity but rather the specific power dynamics it reveals, particularly the elevated role of a private-sector billionaire in shaping national technology policy.

As the AI regulatory landscape continues to develop, this leaked document highlights the ongoing tension between federal and state authority in technology governance. The administration’s strategy, while legally questionable, demonstrates the considerable tools available to the executive branch for influencing policy outcomes beyond direct legislation.

(Source: The Verge)