Chamath Palihapitiya Argues State-Level AI Laws Threaten US Dominance, Backing Trump's AI Overhaul: 'China Is Unified'

Silicon Valley venture capitalist Chamath Palihapitiya has publicly endorsed President Donald Trump's new executive order aimed at dismantling state-level artificial intelligence (AI) regulations, arguing that a fragmented legal landscape threatens the investment pipeline driving the American economy.

Economic Case For Federal Standard

Palihapitiya's comments come immediately after the White House announced a sweeping directive to establish a single national AI framework, a move designed to override what the administration calls “excessive State regulation.”

In a statement on X, Palihapitiya argued that the federal government must take the lead in defining the rules of the road for the burgeoning technology.

He warned that navigating a “patchwork” of contradictory laws across the country would stifle the capital needed to fuel innovation. “Playing a game with 50 sets of rules isn't viable,” Palihapitiya wrote. “Having to do so would slow down investment.”

He emphasized that the stakes are remarkably high, noting that AI investments are “currently responsible for half of American GDP.” For the “All-In” podcast co-host, the executive order represents a crucial opportunity to create a streamlined environment where these investments can continue unimpeded.

See Also: Trump Signs Executive Order Targeting ‘Excessive State Regulation’ of AI, Will Launch Task Force To Challenge Laws ‘Inconsistent’ With Federal Policy

Unified Against Global Competitors

Palihapitiya's endorsement aligns closely with the geopolitical rationale used by the Trump administration. He shared a clip of the President signing the order, highlighting the quote: “We have to be unified. China is unified.”

The executive order explicitly positions U.S. leadership in AI as a matter of national security, warning that the country is in a “race with adversaries for supremacy.”

To enforce this unified front, the Department of Justice is launching an AI Litigation Task Force tasked with suing states whose laws are inconsistent with federal policy or burden interstate commerce.

Win For Big Tech

The move marks a significant victory for major AI players, including OpenAI, Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL), and Meta Platforms Inc. (NASDAQ:META), who have lobbied heavily for federal preemption of stricter state laws.

However, the deregulation push has drawn sharp criticism from progressives. Senator Bernie Sanders (I-Vt.) condemned the order as a gift to “oligarchs,” arguing it allows tech billionaires to operate without sufficient oversight at the expense of workers.

Here is a list of a few AI-linked ETFs for investors to consider:

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo courtesy: Shutterstock/ Brian Jason