AI after the midterms: What businesses should expect next

Transcript:

Tyler: Hi everyone, welcome back to our Tech Law Talks podcast. Today we're going to talking about the 2026 midterm elections and specifically what they mean for AI. So there's been a lot of discussion about post-Blue Wave, post some of the big changes at both the federal and state level. What should we expect for the AI industry? And so we will be kind of diving in that today and just getting some thoughts on what does this mean for the future of AI now that we're post-midterms. I'm Tyler Thompson. I'm one of the chairs of the firm's Global AI Practice, and I'm a partner based in the Denver office. And then Gerard, I'll hand it over to you to introduce yourself.

Gerard: Sure, I'm Gerard Donovan, an IP attorney based in our DC office uh and another co-chair of the Global AI Group.

Tyler: I guess just to get right into it, I don't know what you think about the the regulatory side, I mean, I think probably some certainly we've seen like some state legislatures get a little bit more blue and a little bit more unified. I'm still pretty skeptical of at the state level that we're gonna see, hey, a new wave of state level AI laws. I guess I think it'll continue to advance at a similar pace to that at that it has already, right? Where we're seeing, hey, some states doing some one off things, the Colorado, California on ADMT, but some states doing some niche rules. I think that we're gonna continue to see, but I would be surprised if, three to six months from now we're like, wow, that pace really accelerated and now there's a lot of regulatory action at the state level. I don't know, what are your thoughts?

Gerard: I don't have a strong view on that either way. I think so coming into this, there was always the question of whether or not, with Republicans in the House and Senate there was going to be broad preemption at the federal level that would have stalled the states, and I I think that's now not gonna happen. And so there there will continue to be straight regulation. I I think that some of the consequence of this election is I think it shows just how how many people are, against AI or at least at the the current pace, people are unhappy about it from the exit polls. And so I think that could motivate some more states to, come up with other regulations to try to gain political capital of, trying to make things better. but I don't think it's gonna be a rapid acceleration. I think, what we've seen over the last three years, four years is a lot of proposed state legislation, a lot of things that have gotten close and haven't gotten to effect. So I think we might see regulations in some more states, but I I wouldn't think it would be all of a sudden a C shift and you know different states passing legislation. And I I would think slash hope that we're not going to see too many completely different approaches to it. Instead, hopefully it's a little bit of, lab approach of testing different things and seeing how it works, but hopefully we see some alignment as opposed to navigating, vast differences in different states.

Tyler: Now I wonder if there's an could be an element of, you forum shopping, right? Like if I'm a big frontier model developer. You know, depending on what I'm interested in, maybe if I'm more interested in kind of government contracts or something like that, maybe now I'm going to the administration. But if I more want to make that play, and there's been a lot of criticism in the news recently of folks saying, hey, the the big, you leading frontier model developers who are coming out and saying pro safety, is that a real thing or are they just trying to do that to, to kind of whitewash their image? No, now can somebody form shop and say, hey, I can go to, a Congress that's very unified democratic if I want to be seen as, hey, I'm a good guy and you should trust me to self-regulate and lead the regulatory efforts in the space. Or do you go to the executive branch if you want to be, you more aggressive, right? Or you want to sell to certain industries or you're looking for protection from China. But I don't know. I mean, I think that's largely speculative on my part, but I wonder if there now is a forum shopping element where I don't think either side is truly fully against AI, but now the way you can approach either issue, it gives you an a true option.

Gerard: Yeah, what I wonder is whether or not the kind of the positions on AI will evolve. I mean, I I think when you saw like the end of the Biden administration, I think that especially the Democrats, but more generally also bipartisan, there's a lot of concern about AI safety, about acceleration, whether that was a concern. over the last couple of years you you've seen I think more pro AI development and and I think largely bipartisan. And now that you have a a difference between the the legislature and you the executive branch, I I expect a lot of the the working with the executive branch will continue, you along the same path it's been, but I would also think that the AI companies will want to work with Congress to make sure, you they're educated and they're doing the right things. And I I think it is a good thing if the AI companies are, you self-regulating or taking these concerns to heart and being as transparent as they can be about it. but I I wonder both whether the the Democrats and the Republicans will change their views or, you know, specific members change their views or or pivot a little bit to try to move toward where they see the kind of the majority of Americans as this being. And I think that that seems to be to me, you shifting a little bit back and forth and I I don't know if it shifted finally or if we were gonna see more people pro AI in another six months when they see more capabilities or more anti if it's impacting the workforce or other things. So uh I think it's a lot of kind of wait and see.

Tyler: I think the point you made about the bipartisan, you know, that's something that always strikes me it's it doesn't really clearly divide on party lines. And I think the midterms is maybe a great example of that, right? So it's just really interesting to see I think how it's it doesn't fall cleanly into one ideological camp. And I think you really the midterm could be a good indication of that, right? Of how that this issue was maybe motivating and motivating across party lines a little bit.

Gerard: I agree with that and I think some of this I think the potential for legislature in the next two years or successful legislation is really where there is, bipartisan support because otherwise I just I don't see a lot of things getting through. And I wouldn't expect sweeping AI legislation at the federal level, but I could see bipartisan agreement on on smaller bills which would create state preemption on, more limited issues and I I could see paths forward, in i it's it's hard to s identify specific areas, but where agreement can be reached. And I think, things like deep fakes and stuff where generally there's pretty broad bipartisan agreement. There could be federal legislation. And I think for some areas where there's broad alignment, that can make sense just to simplify things, not have different obligations in different states. but again, wait and see.

Tyler: Do you I I don't know if this will for me, so I kind of want to ask you this question. Do you feel like the midterms are gonna change any advice or anything that you're giving to your clients, even if it's just very high level where the industry's going? Or do you feel like, hey, it's a lot of news this week, but maybe it's not gonna be a big impact a month from now?

Gerard: I think it changes a little bit of the kind of long horizon view on strategy. And so I mean a lot of the the work I do in IP is looking at like the copyright issues and other IP issues surrounding it, patent issues, trade secret. Uh and there's been questions, especially on the copyright side, about whether there would be any federal legislation that goes to training and clarifies the kind of fair use analysis or anything and I it it seemed unlikely before. I think it's just more unlikely now that these things are gonna, you largely resolve through the courts for the next few years. I think for all of this, I think kind of like said going back to the nineties with the Digital Millennium Copyright Act, kind of making some new areas of law because technology changed how things go, I think that's still something that that could happen in the future. I just think for that to happen to AI. You're probably not going to get broad legislation in the relatively short time period. So, you know, for planning today, you're really looking at courts guidance for the next, you two, three years, unless you really start to see consensus building around some issues that I don't think we've seen yet, has potential, but I again I think those will be more targeted. How about how about in your practice?

Tyler: Yeah, I think that's similar. I mean, I think it's, it's a little bit of more of the same, right? I think we are all undering operating under these assumptions on the regulatory side that, hey, it's going to be uncertain for a while. Anything big or comprehensive is probably unlikely. And so now certainly seems more so. And so, you know, I think in some ways it's it's affirming the ways that our clients have been thinking about it of okay, hey, this is gonna be something like you said that I gotta think about the courts are deciding it. Some, privacy laws that have been kind of amalgamated to be more applicable in the AI space are going to decide it. And, you know, that's the way that we should think about it in the near term. And I think post-midterm, very much so. I think that's just affirm that and we're going to continue to see that. And, I think the other guidance change maybe that I would have to my clients, and I don't even know that this is necessarily a change is that that public rhetoric or that, politician rhetoric, it you shouldn't really necessarily expect that to match the outcomes that are gonna affect, you and your business on a day to day basis, right? Like it's just it's so common now. Every time I open the paper in the morning it's, hey, here's five things on AI. A lot of them are negative. Everybody's really aligned against it. And like, yeah, there's a lot of that talk, but actually seeing the results and seeing going into, regulatory enforcement or new laws is has been sparse and I think that's just gonna continue to be the same.

Gerard: Speaking of regulatory enforcement, let me ask you, d do you expect there's gonna be, you an uptick or a change in enforcement or or any difference in investigations from the legislative side now that we have kind of a different executive branch and and legislation?

Tyler: Yeah, it could be. I mean, at the state level, I think it's it's more possible, right? Now you've got a little bit more resounding endorsement of that side of things in the midterms, like at least for the time being. And so maybe some of that reticence of enforcement is going to be gone, right? It's hard. I mean, we've been predicting both in the privacy and the AI space for a long time of enforcement's gonna come. This is gonna be a big enforcement year. I mean, I remember January of this year saying this is gonna be a big enforcement year for Colorado for privacy, and I don't feel like that has it really materialized as much as we thought. so now I'm just getting to the point where it could happen, more enforcement could come, but it's kind of a believe it when I see it type of deal.

Gerard: What I think is gonna be very interesting to see and I think we'll might even see in the next, two, three months is if you start to see lines of more bipartisan agreement on AI related stuff, because I think coming out of this there are some, broad popular views and yeah, it just I think there's potential and you know, there's also a lot of disagreement between the parties, so maybe it won't really come together. But I I I I wouldn't be surprised if there was more bipartisan agreement on on at least niche areas related to AI. And I think that could lead to investigations or state legislation or potentially federal legislation. And and those will be interesting things to watch.

Tyler: Yeah, I agree. I totally agree. I guess just to wrap up, all the the hype around, the midterms, the AI space is really gonna change now, do you think that's real or fake? Do you think the midterms are gonna have a long term effect on the AI space or do you think it's kind of overblown?

Gerard: I think I mean, especially in my areas of practice, I think it didn't have a it didn't have a huge effect in that I don't think it was really a mandate one way or the other on AI. I don't I think that we're gonna continue to see law develop through the courts, law slowly develop through the states, which has been the same thing that's been happening for the last few years. And so might change it around the edges, but I think we're gonna largely continue as we have been.

Tyler: Yeah, I'm with you. I think, if to put it that bluntly, I guess I'd have to go overblown. I think it's, you know, it does affirm a lot of the things that we've been thinking. I think it could nudge things in a certain direction, like we just talked about maybe a little bit nudge towards more enforcement or something like that. But you know, compared to the rhetoric and in the media I'd have to say overblown for right now. Great, that's another quick hitter of tech law talks talking about the midterms effects on the AI election, and we will see you all next time.

Gerard: Thank you. Talk later.

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