Clash Between Local Governments and Trump Over AI Privacy and National Data Centers
An executive order issued in California shifting AI privacy over state-led initiatives to local governments has come into conflict with the Trump administration, which focuses on national data centers and AI defense.
The California state government's attempt to separate the individual from the state in relation to AI-by blocking personal surveillance and the indiscriminate use of AI in warfare—is intensifying the conflict, as the Trump administration's strategy to strengthen the AI industry for global dominance involves national data centers.
On the 17th, Jeong Chang-rae, leader of the Democratic Party under the Lee Jae-myung administration, stated, “The Lee Jae-myung government pursues locally-led growth,” and announced that “the Democratic Party will expand support for data centers, foster AI talent, construct energy highways, and create RE100 industrial complexes,” revealing a system of “support, division, and control” for local data centers funded by government finances.
At the launch ceremony of SK Group’s AI data center in Ulsan on June 20 of last year, President Lee stated, “It seems that the local economy of South Korea will only revive if Ulsan thrives,” adding, “I hope the KOSPI index surpasses 3,000 points today.”
Lee Jae-myung, Local division, KOSPI 3000,
On the 30th, California Governor Gavin Newsom announced the first executive order requiring AI companies contracted by the state to protect safety and privacy.
The core of the executive order is the state government's review of policies by AI companies seeking government contracts, requiring them to first explain their "AI safety and privacy policies" through a "contractor review" process to prevent the exploitation of individuals, including the spread of child sexual abuse data. The executive order specifically mandates watermarking for AI-generated images; the governor specified that state officials must attach watermarks to videos generated or manipulated by artificial intelligence, a regulation designed to allow consumers to distinguish between images created by individuals and those produced by the state using AI.
Regarding this executive order, The New York Times stated that it constitutes intervention in "defense-related federal government contracts," noting that "state governments must review whether AI models powering chatbots and other tools are being used to monitor individuals or block specific speech, and AI companies must explain how to avoid 'bias' in their systems." The article further noted that "if the federal government designates a company as a supply chain risk regarding the securing of independence from federal contract standards, California will conduct its own assessment in light of the recent incident where the Pentagon disqualified the AI startup Anthropic."
The New York Times reported, “If an AI company is not deemed a risk factor, the state government can allow it to remain as a contractor.” The newspaper noted, “This is significant because the legal dispute with Antropic, which provided AI technology for the Department of Defense to use in classified systems, has revealed cracks in the pursuit of AI for display purposes. The Pentagon terminated the contract after Antropic stated that the government could not use its models for large-scale domestic surveillance and the deployment of autonomous weapons.”
In a statement released on the same day, Governor Newsom said, “We will ensure that companies protect people’s rights, not exploit or endanger them,” adding, “We will not sit idly by while that happens.”
He went on to refer to President Trump’s attempts to override state government measures, stating, “This is hammering the safeguards that Californians rely on.”
The New York Times reported, “President Trump warned states in early March not to interfere with artificial intelligence regulations, and the White House stated in policy guidance that ‘a patchwork of conflicting state laws would undermine America’s innovation and its ability to lead the global AI race.’ However, California Governor and Democrat Gavin Newsom defied President Trump’s demands by issuing an executive order requiring safety and privacy protection measures for AI companies contracting with state governments, stating that he would fight to uphold California laws that provide safeguards against AI-related fatalities, fraud, and risks to children.”
On the 20th, in the guidance titled “President Trump Unveils National AI Legislative Framework,” the White House announced its initiative, stating that “the administration (...) needs strong federal leadership to ensure public trust,” and that “a jumble of conflicting state laws would hinder America’s innovation and its ability to lead the global AI race.”
The New York Times reported, “However, California Governor Gavin Newsom, a Democrat, went against President Trump’s demands and issued an executive order requiring safety and privacy protection measures for AI companies contracting with state governments.” The White House’s six national-led goals defined "parental responsibility" in the first item, "Empowering Parents to Protect Children," stating that "the administration urges Congress to provide effective tools, such as account controls, that allow parents to protect their children's privacy and manage device usage."
The second item, "Empowering the American Community," specified the strengthening of federal government authority, stating that "AI development must empower American communities and small businesses through economic growth and energy dominance," and that "Congress must also strengthen the federal government's capacity to prevent AI-based fraud and address AI national security issues."
The third item, "Respecting Intellectual Property Rights and Supporting Creators," applied the principle of "business first" to AI companies' "copyright infringement" as an "industry protection policy," stating that "for AI to advance, it must be able to fairly utilize what it learns from the world it inhabits," and that "the administration proposes ways to achieve both of these goals so that AI can prosper, while ensuring that the creativity of Americans continues to drive our country's greatness." Paragraph 4, "Prevention of Censorship and Protection of Freedom of Expression," stated that "AI must not be a means for the government to dictate right and wrong," and declared the "elimination of state censorship" by proposing measures to allow AI to pursue truthfulness and accuracy without limitation.
In Paragraph 5, "Promoting Innovation and Securing U.S. AI Dominance," the White House stipulated the granting of absolute status to Congress, including "removing unnecessary barriers to innovation," "accelerating the adoption of AI across industrial sectors," and "providing testing environments for building and deploying world-class AI systems."
Paragraph 6, "Educating Americans and Cultivating an AI-Ready Workforce," stated that "the administration expands (AI) opportunities across industries and encourages the creation of new jobs in the AI-based economy."
In the executive order "Securing a National Policy Framework for Artificial Intelligence" issued on December 20 of last year, the White House directed "lawsuits to invalidate state laws," stating that "state laws affect interstate commerce by regulating activities that are sometimes not permitted across state borders." The order further instructed that "within 30 days of the order taking effect, the Attorney General shall form an AI Litigation Task Force to challenge state AI laws that are inconsistent with the policies specified in Section 2 of the order, including cases where such laws unconstitutionally regulate interstate commerce on the grounds that they preempt existing federal regulations."
The escalating war between states and the federal government over AI regulation has been ongoing for years, severely dividing Congress due to competition between the Democratic and Republican parties, while Big Tech companies are pouring political funds into the Republican Party and the Trump administration. The New York Times reported on the fierce battle between the two parties, stating, “They failed to pass any legislation regulating AI, and state legislators had to take the lead in protecting children and strengthening the privacy of social media consumers.” The article added, “This fight has taken on new significance as concerns over power-consuming data centers, rising electricity rates, and the impact of artificial intelligence on the overall economy have come to the forefront of some state and local elections, and OpenAI, Google, and Meta have poured hundreds of millions of dollars into lobbying for candidates favorable to the industry.”
Alex Bores, a Democrat in the New York State Assembly who co-sponsored an AI bill requiring AI companies to report safety incidents, said, “There is not a single serious policy figure who believes that what the White House is doing will protect consumers.”
The NYT continued, “This debate has also sparked tension within the Republican Party,” noting that “it includes not only billionaire tech leaders but also social conservatives and economic populists concerned about the harms of technology.”
Ohio Republican State Senator Louise Blessing spoke of the division within the Republican Party, stating, “There isn’t even a substantive attempt to legislate at the federal level, and it seems as though they don’t want Big Tech to suffer,” adding, “That is very unpleasant.”
On March 3, Senator Blessing and dozens of other Republican state legislators sent a letter to the White House urging it to allow states to regulate artificial intelligence, contrary to the White House’s executive order; about 40 Republican lawmakers signed the letter.
In January, Utah Republican State Representative Doug Pipia introduced the H.B. 286 bill, requiring AI companies to disclose safety plans and child safety measures.
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