Good morning. What do companies in health care, insurance, utilities, construction, professional services, financial services, education, transportation, waste management, and alcohol/cannabis distribution, among others, have in common? They’re regulated at the state level. In certain areas (food safety, environmental standards and data privacy), a mix of state and federal mandates apply. Washington sets the baseline, and individual states layer on laws that aim to reflect the priorities of local voters. In the absence of a federal missive, like Roe v. Wade in legalizing abortion, state regulations apply.
So one might assume that CEOs would welcome President Donald Trump’s executive order on AI last week that blocks state laws setting AI standards in favor of “a minimally burdensome national standard.” Silicon Valley types like OpenAI CEO Sam Altman, venture capitalist Marc Andreessen and, of course, AI czar David Sacks, praise the move as necessary for America to compete against the bête noire of China. But seven leaders I spoke with had more mixed views. (I spoke to them without attribution to encourage honest feedback.)
Nobody wants a growing patchwork of state laws that cause confusion, rising compliance costs, or what one person called “a race to be the Delaware of AI.” But neither do they want a vacuum when it comes to mitigating the risks or a situation where laws are set by the White House instead of Congress. Among the concerns:
The Executive Order is probably not legal. Everyone agreed that Trump can’t dismiss state rights with the stroke of a pen. As law firm Fisher Phillips notes, “all current and pending state and local AI laws will remain enforceable unless and until a court blocks them through an injunction, or Congress passes a federal law that preempts them.” The consensus: Congress should act—and fear-mongering doesn’t help. “I’m in a state with a lot of regulation and a lot of innovation,” said one California-based CEO. “What matters is resources, talent and technology.”
Businesses want clarity and protection. Tennessee’s ELVIS Act protects individuals from the unauthorized use of AI to mimic their voice and likeness; Texas prohibits its use for unlawful discrimination or sexually explicit content. Colorado requires companies to inform consumers when AI is used for high-stakes decisions from hiring to lending. Smaller businesses want the behemoths of tech kept in check. “Rules can level the playing field,” said one source, “and it’s more expensive to set standards in court.”
The U.S. needs to maintain its competitive edge. The EU Artificial Intelligence Act gives people the right to opt out of having their data used to train models, which stifles innovation. China has an AI Plus framework and President Xi Jinping has proposed creating a World Artificial Intelligence Cooperation Organization (WAICO) to promote a global governance system. The U.S. needs to, as one person put it, have a seat at the table with laws that protect copyright, patents, market access and consumer protections while driving regulation. “I’d rather have less regulation than more regulation,” an enterprise tech leader told me on Friday, “but I’d rather have some regulation than no regulation.”
Contact CEO Daily via Diane Brady at [email protected]
Top news
Weekend mass shootings
Australia Prime Minister Anthony Albanese has vowed action to tighten gun laws after a father and son, using legally licensed firearms, killed 15 people at a Hanukkah celebration at Bondi Beach. Meanwhile, Brown University has called off final exams and sent students home early after a gunman killed two and injured nine in an on-campus shooting.
David Zaslav’s potential payday
Warner Bros. Discovery CEO David Zaslav is poised to collect as much as $1 billion from the sale of WBD if the bidding war between Netflix and Paramount continues to drive up the company’s stock price. His enormous payout will contrast starkly with the job cuts that are expected regardless of which deal goes through and the cost-cutting he’s already imposed at WBD.
Volkswagen’s Germany closure
Volkswagen will cease production at a Dresden, Germany, plant on Tuesday, the first time it’s shuttered a production facility in Germany in 88 years. Europe’s largest automaker is contending with weak demand in China and Europe and the sting of U.S. tariffs.
Private equity squeezes fire departments
Companies backed by private equity firms are quietly buying up the public safety systems needed to fight fires and increasing costs for budget-constrained U.S. fire departments, 85% of which are crewed by volunteers.
Google’s SpaceX gain
Google parent Alphabet is poised to record another gain as the value of SpaceX nears $800 billion. Elon Musk’s rocket company completed a tender offer that priced shares at $421. Alphabet joined Fidelity Investments in a $1 billion funding round in 2015 in exchange for what was then a 10% stake in SpaceX.
Christmas kitsch boom
Connecticut is cashing in on its role in sappy Christmas movies. Locations in the state are the settings for at least 22 Christmas movies by Hallmark, Lifetime and others, and it’s now promoting tours of the quaint towns and cities where the predictable—but hugely popular—movies are filmed.
The markets
S&P 500 futures are up 0.44% this morning. The last session closed down 1.07%. STOXX Europe 600 was up 0.75% in early trading. The U.K.’s FTSE 100 was up 0.88% in early trading. Japan’s Nikkei 225 was down 1.31%. China’s CSI 300 was down 0.63%. The South Korea KOSPI was down 1.84%. India’s NIFTY 50 was down 0.07%. Bitcoin went to $90K.
Around the watercooler
The Asian Infrastructure Investment Bank’s first president defends China’s role as ‘responsible stakeholder’ in a less multilateral world by Nicholas Gordon
Kevin Hassett says he’d be happy to talk to Trump everyday as Fed chair, but the president’s opinion would have ‘no weight’ on the FOMC by Jason Ma
Atlantic CEO Nick Thompson on how he learned to ‘just keep moving forward’ after his famous firing at 22 by Nick Lichtenberg
Everything the Trump administration is doing in Venezuela involves oil and regime change—even if the White House won’t admit it by Jordan Blum
CEO Daily is compiled and edited by Claire Zillman and Lee Clifford.
