States Defy Washington, Tech Lobby as Voter Backlash Fuels AI Regulation

The technology industry’s campaign to block state regulation of artificial intelligence is losing political force as public anxiety and election-year pressures embolden lawmakers to advance new restrictions.

State legislators are pursuing measures covering frontier-model safety, independent audits, children’s interactions with chatbots, data privacy, and the environmental and economic effects of AI data centers, Politico reported Wednesday (Sept. 2). The activity reflects a reversal from late 2025, when federal preemption threats and the prospect of heavily funded electoral challenges appeared capable of freezing state action.

“The landscape has changed dramatically…,” Utah Rep. Doug Fiefia said, per the report.

Fiefia previously abandoned a broad AI and children’s safety bill amid industry and White House pressure, the report said. But after defeating a state Senate incumbent supported by the tech-backed political network Leading the Future, he said he plans to revive the proposal.

The episode illustrates the technology industry’s changing political fortunes. Leading the Future, backed by more than $100 million from OpenAI President Greg Brockman and venture capitalists Marc Andreessen and Ben Horowitz, had threatened to support candidates opposed to state AI regulation, according to the report. Instead, lawmakers increasingly view fighting the industry as an electoral advantage.

Public concerns extend across party lines and include AI’s effects on children, employment and privacy, along with rising opposition to the data centers needed to power advanced models. In an election year, that sentiment is giving state and local officials a stronger incentive to act, the report said.

“As the polling got more negative or more people were supportive of some sort of regulation,” lawmakers became increasingly attracted to the issue, said Jeremy Kudon, executive director of the American Innovators Network, an industry group backed by Andreessen Horowitz and Y Combinator, per the report.

Massachusetts lawmakers are considering an AI safety bill potentially stronger than laws adopted in Illinois, California and New York, the report said. Rhode Island enacted chatbot safeguards in June, while California lawmakers are advancing measures addressing audits, chatbots and privacy. Legislators in Utah and South Carolina are renewing children’s online safety efforts.

Maryland Sen. Katie Fry Hester, whose previous bills governing high-risk AI and chatbot companions stalled amid industry opposition, said public perceptions of technology companies have deteriorated, according to the report. She said she expects a children’s chatbot proposal to fare better next year.

Washington’s inability to establish a national framework has also weakened industry demands that states stand down, the report said. Congress rejected a proposed 10-year moratorium on state AI laws in 2025 after opposition from governors, attorneys general and state lawmakers. A subsequent attempt to attach preemption language to defense legislation also failed.

President Donald Trump’s December executive order threatening lawsuits and funding cuts against states adopting AI restrictions initially chilled legislative activity. But the Department of Justice has not brought the threatened challenges, leading lawmakers to regard the order as ineffective, according to the report.

Governors had served as a remaining industry backstop. Former Virginia Gov. Glenn Youngkin vetoed high-risk AI legislation, California Gov. Gavin Newsom rejected a chatbot bill, and New York Gov. Kathy Hochul secured changes to an AI safety law. But rising opposition to data centers has begun pressuring even governors previously receptive to industry arguments, including Pennsylvania Gov. Josh Shapiro and Texas Gov. Greg Abbott, the report said.

The lobbying balance is shifting as well. Advocacy organizations supporting tougher rules have acquired enough funding to maintain a sustained statehouse presence. Some receive support connected to Anthropic, which favors safety requirements for the largest developers, according to the report. Industry critics accuse the company of pursuing regulation that could disadvantage competitors, while Anthropic says its proposals target companies earning more than $500 million annually and would not burden startups.

Technology lobbyists are consequently moving away from trying to prevent state regulation altogether. Instead, they’re seeking greater consistency among state laws, warning that conflicting requirements could hurt smaller companies. OpenAI has promoted a “reverse federalism” strategy intended to align states around a common safety standard, the report said.

The strategy concedes the central political reality. State AI laws are increasingly unavoidable. With public skepticism rising and federal preemption stalled, the industry is shifting from trying to stop the regulatory train to negotiating where it goes.

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