Source: TechCrunch

TechCrunch reports on the mixed reaction from the startup community regarding President Trump's Executive Order to preempt state AI laws. While the promise of "one rulebook" appeals to founders tired of navigating a patchwork of state regulations, legal experts warn that the Order effectively dismantles existing frameworks without immediately replacing them with clear federal statutes. This creates a "legal limbo" where state laws are challenged but no federal safety harbor exists, leaving startups uncertain about liability and compliance standards during the transition.

The article notes that while major venture capitalists (VCs) and big tech firms have lobbied for this deregulation to accelerate development, smaller companies fear the resulting chaos. The Order relies on the hope that Congress will eventually codify a national standard, but in the interim, the aggressive litigation strategy by the DOJ against states like California and Colorado could lead to years of court battles. This uncertainty makes it difficult for startups to assess risk, particularly regarding consumer protection and algorithmic bias, where state laws previously provided the only clear guidance.