State-Level Assertiveness
California Governor Gavin Newsom ordered state agencies to develop recommendations for AI contract standards addressing harms such as child sexual abuse material generation, civil rights violations, unlawful surveillance, and misuse in public services. The order also calls for updates to the state's digital strategy, broader access to vetted generative AI tools for workers, and guidance on watermarking AI-generated imagery and video.
The Geopolitical Subtext
The next time the federal government labels a business a supply-chain risk, as the Department of Defense did last month to San Francisco-based AI tools maker Anthropic, the state of California will review that designation and make its own decision about whether to do business with them.
This is a direct pushback against federal control over AI companies headquartered in California.
The Bigger Pattern
Artificial intelligence (AI) regulation is moving from theory to enforcement, reshaping how privacy leaders manage accountability worldwide. Legislators are no longer debating whether AI needs oversight. They are defining who is responsible, when risk assessments are required, what must be disclosed, and how enforcement will work in practice. As binding AI laws take effect through 2026, privacy leaders are increasingly involved in interpreting and operationalizing these requirements.
Federal vs. State Tension
Trump issued his executive order — which aimed to prevent a piecemeal, state-level approach to AI regulation in favor of "minimally burdensome national policy" for the use of the technology — after Congress was unable to pass legislation over the past year. As a result, it lacks the strength that legislation would provide to rein in state-level actions given that Congress has the exclusive power to pre-empt state laws under the Constitution.
My Take: California will win this negotiation—at least for now. Without federal legislation, state law prevails. Newsom's order is a clever move: it doesn't defy Trump, it simply asserts California's concurrent authority. Watch for a compromise by late 2026 where California standards become de facto national ones through market pressure.
