David Sacks: The AI Regulatory Frenzy at the State Level is “Very Concerning”

I think it's very concerning. There's a regulatory frenzy happening at the states right now. Let me give you some stats on this. All 50 states have introduced AI bills in 2025. There's been over a thousand bills in state legislatures. 118 AI laws have already been passed across the 50 states. Everyone just seems to be motivated by the imperative to do something on AI, even though no one's really sure what that something should be. Exactly. And there's no real agreement on like what all these AI regulations are supposed to do. So they're just making things up or what the risks are or what the risks are. So you've got 50 different states each with their own

reporting regime, which is going to be a trap for startups. They've all got to figure this out about what they're supposed to report on, what the deadlines are, who to report to. And if you want to see where this is going, look at Colorado. This has already been passed into law, SB24-205, Consumer Protections for Artificial Intelligence, that bans something they call algorithmic discrimination. Algorithmic discrimination is defined as unlawful differential treatment or disperate impact based on protected characteristics. So things like age, race, sex, disability. If any of those factors drive an AI decision and it results in a disparate impact, then both

the developer of the AI model and the deployer, which means the business that's using it, can be in violation of this law and they can be prosecuted by the Colorado attorney general. So, let's say that you got someone like a mortgage loan officer who's reviewing applications and let's say they don't even discuss race. They're just using race neutral criteria like a credit rating or financial holdings. If the result of their decision nevertheless had a disperate impact on a particular protected group, its decisions could be found to be discriminatory and moreover the developer of that model could be liable even though their model just gave an answer that under the circumstances

was truthful. The only way that I see for model developers to comply with this law is to build in a new DEI layer into the models to basically somehow prevent models from giving outputs that might have a disperate impact on protected groups. So, we're back to woke AI again. And I think that's the whole point.