Big tech looks set to swerve AI regulations – at least for now

Laws to regulate AI have hit a hurdle following pushback from big tech and US President Donald Trump.

In the US, Trump is considering using an executive order to ban regulations to rein in AI, according to Reuters, while in Europe, the European Commission said it wants to delay some aspects of the AI Act in response to complaints from big tech over bureaucracy.

With no federal laws regulating AI forthcoming in the US, some states have pushed to enact their own local legislation, including recent laws in California and Colorado.

The Trump administration has previously attempted to block such state-level AI laws by including a 10-year moratorium on local regulation in his "big, beautiful bill" over the summer, though that was thwarted by the Senate. Earlier this week, Trump backed plans to add a similar ban in the National Defense Authorization Act.

Now, the president is considering using an executive order in an attempt to discourage any state-level AI laws by threatening lawsuits or withholding federal funding, according to a draft of the document seen by Reuters.

As drafted, the order would establish an "AI Litigation Task Force" led by Attorney General Pam Bondi to challenge in court any state that implements AI regulation, on the grounds that "such laws unconstitutionally regulate interstate commerce" and are preempted by existing federal rules.

The order would also see the Department of Commerce refuse to allocate funding for broadband to states that don't comply.

Colorado recently approved a rule designed to prevent algorithmic discrimination – highlighting a long-running issue of bias in large-language models (LLMs), which the draft order seen by Reuters noted may force "AI models to embed DEI in their programming".

California has also wrangled with a series of AI laws, and recently passed a law around disclosure that would require companies tell the government how they plan to avoid serious risks and fess up to any critical safety incidents.

A White House official did not confirm the order to Reuters, and said it was speculation.

European regulation delays

Over in Europe, the European Commission has suggested delaying some aspects of the EU AI Act for 16 months and tweaking others as part of a move which sparked concerns it's responding to criticism from American tech giants.

The commission said the move was part of wider efforts to "simplify existing rules" on AI, cybersecurity, and data in its Digital Omnibus, which aims to streamline technology-focused laws to make them easier to manage for companies.

The EU’s economy commissioner, Valdis Dombrovskis, said the measures would save businesses and consumers alike €5bn in red-tape related costs by 2029.

He added: "Europe has not so far reaped the full benefits of the digital revolution and we cannot afford to continue to pay the price for failing to keep up with a changing world."

Criticism of delay

Critics disagreed on the value, however. Blue Duangdjai Tiyavorabun, Policy Advisor at European Digital Rights (EDRi), suggated the Digital Omnibus is a “full-on betrayal of Europe’s promise”.

"They are trading the protection of people from harmful AI systems for hollow promises of ‘innovation’. This is no shocker: when tech money flows like water in Brussels, guess who is steering the ship?"

A Commission official said during a briefing: "Simplification is not deregulation. Simplification means that we are taking a critical look at our regulatory landscape."

Alongside delaying the timeline for implementing "high-risk rules" by 16 months to December 2027 from August 2026, the Commission said it would extend some rule simplifications for small businesses and small mid-cap companies.

Elsewhere, it plans to extend compliance measures so more companies can use regulator sandboxes in core industries like automotive and centralize oversight on AI systems to help reduce governance fragmentation.

"Efficient implementation of the AI Act will have a positive impact on society, safety and fundamental rights," the EC said in a statement. "Guidance and support are essential for the roll-out of any new law, and this is no different for the AI Act."

Thierry Breton, former European commissioner for the internal market and digital affairs, wrote in the Guardian, that Europe should be proud of its AI laws.

"We should resist any attempt to unravel these laws, through 'omnibus' bills or otherwise, mere months after they have entered into force, under the pretext of simplification or remedying an alleged 'anti-innovation' bias," he said.

"No one is fooled over the transatlantic origin of these attempts. So let’s not be useful idiots."

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