President Trump rescinds Biden’s AI executive order and announces AI investment with technology leaders

The AI Executive Order included a wide range of federal regulatory principles and priorities regarding AI and directed a number of federal agencies to promulgate technical standards and guidelines. For further information on the AI Executive Order, please refer to our prior A&O Shearman on Tech blog posts here and here. The action also puts into question the future of the previously created U.S. AI Safety Institute within the Department of Commerce.

Additionally, on January 21, 2025, President Trump announced the launch of Stargate, a new joint venture developed with contributions from SoftBank, OpenAI, and Oracle, among others, to invest as much as USD500 billion in AI infrastructure in the U.S.. The total investment amount will be deployed over a four-year period, with USD100bn to be deployed immediately. SoftBank and OpenAI will be the lead partners for Stargate, with SoftBank having financial responsibility and OpenAI having operational responsibility. President Trump reiterated his plans to keep AI “in America” and flagged that China is a key rival in the AI arms race. President Trump has also indicated that he will help get AI built through emergency declarations and executive action.

The AI related federal government developments have continued on an almost daily basis. On January 23, 2025, President Trump then issued an executive order, entitled “Removing Barriers to American Leadership in Artificial Intelligence.” This executive order establishes that U.S. AI policy is to sustain and enhance America’s global AI dominance in order to promote human flourishing, economic competitiveness, and national security. Within 180 days of this executive order, the Assistant to the President for Science and Technology (“APST”), the Special Advisor for AI and Crypto, and the Assistant to the President for National Security Affairs (“APNSA”), in coordination with the Assistant to the President of Economic Policy, the Assistant to the President for Domestic Policy, the Director of the Office of Management and Budget, and the heads of such executive departments and agencies as the APST and APNSA deem relevant, shall establish and submit to President Trump an action plan to achieve the AI policy (discussed above). This action plan will likely define a great deal of federal policy concerning AI for the foreseeable future.

We believe that the Trump administration will likely take a more hands-off approach to regulating AI, except for perhaps in critical areas such as the defense and healthcare sectors. The Trump administration has previously criticized President Biden’s AI regulations as heavy-handed and hindering tech innovation. It is clear that AI, like cryptocurrencies, will be a focus of the new administration. In an interesting combination of coverage for these two technologies, on December 5, 2024, the Trump administration appointed David Sacks, to be its “AI and Crypto Czar.” Mr. Sacks is expected to bring a pro-industry stance to the federal government’s oversight of AI.

Similar to the way in which U.S. privacy laws developed, we believe that, in the absence of federal regulation, the opportunity to create AI-specific regulation will pivot back to the U.S. states. Certain states, like California, have already been leading these efforts and passing a series of laws regulating the development and use of AI. California appears poised to continue to lead in this area along with a few other states who are focused on having appropriate guardrails in place for this technology. We will continue to monitor these developments. For further information on the recently passed California AI laws, please refer to our prior A&O Shearman on Tech blog post here.