According to TechCrunch, President Donald Trump signed an executive order on Thursday evening titled “Ensuring a National Policy Framework for Artificial Intelligence.” The order directs the Department of Justice to set up a task force within 30 days to challenge certain state AI laws and gives the Commerce Department 90 days to compile a list of “onerous” state laws. It also asks the FTC and FCC to explore federal standards that could preempt state rules. The move is led by Trump’s AI and crypto policy czar, David Sacks, and is a response to stalled efforts in Congress to pause state-by-state AI regulation. Critics, like the Future of Life Institute’s Michael Kleinman, call it a “gift for Silicon Valley oligarchs” to shield companies from accountability.
The Uncertainty Trap
Here’s the thing: an executive order doesn’t magically create a national standard. It just starts a fight. And that fight is going to play out in courtrooms for years. Sean Fitzpatrick, CEO of LexisNexis, tells TechCrunch that states will defend their consumer protection authority, with cases likely going all the way to the Supreme Court. So while the order’s stated goal is to reduce a “patchwork” of rules, its immediate effect is to prolong and centralize the uncertainty. Startups are now stuck in legal limbo, navigating shifting state requirements while waiting to see if federal courts or Congress will ever provide clarity. That’s a terrible place to be when you’re trying to build and sell a product.
Who Really Wins?
So who benefits from this? Basically, the big players. Andrew Gamino-Cheong, CTO of Trustible, nailed it: “Big Tech and the big AI startups have the funds to hire lawyers to help them figure out what to do, or they can simply hedge their bets.” They can afford to wait out a lengthy court battle. A small startup building, say, a mental health AI chatbot? They can’t. Arul Nigam from Circuit Breaker Labs pointed out the brutal uncertainty for companies in his field: do they have to self-regulate? What standards should they follow? Should they even keep building? This order doesn’t answer those questions. It just makes them more urgent and more dangerous to guess wrong on.
The Real Cost for Innovation
The damage goes beyond legal fees. Gary Kibel, a partner at Davis + Gilbert, warned this could lead to two extremes: highly restrictive rules or a “wild west” with no action at all. Both are bad, but the wild west scenario actually favors the giants who can absorb risk. Meanwhile, Trustible’s Gamino-Cheong notes that legal ambiguity makes it harder to sell to the very customers who need robust AI—legal teams, financial firms, healthcare orgs. Sales cycles get longer, insurance costs go up, and system work increases. “Even the perception that AI is unregulated will reduce trust in AI,” he said. And trust is already in short supply. You can read more about governance perspectives directly from Trustible’s analysis here.
A Congress-Shaped Hole
Look, everyone seems to agree a single national framework is better than 50 different state laws. Morgan Reed of The App Association said it plainly: “We can’t have a patchwork.” But an executive order isn’t a law. It’s a political maneuver that kicks the can to the judiciary. The actual text of the order instructs the administration to work with Congress, but that’s the core of the problem. Congress hasn’t been able to agree. So we’re substituting a legislative stalemate for a legal battle. The result? Startups, the supposed beneficiaries, get squeezed the hardest. They need clarity to build. Instead, they’re getting a multi-year court drama where the only sure winners are the law firms.
