One Set of AI Regulations is Probably Better than 50 to 100

Some states are creating statewide regulations for artificial intelligence. Whether that is a good thing or not is debatable. The wisdom of AI regulations is not perhaps the issue. Everyone acknowledges there will be some regulation, at some point.

The issue is whether many different regulations and regimes is helpful or harmful.

By some accounts, State lawmakers across the US introduced nearly 700 AI-related bills in 2024, according to the Business Software Alliance. Of the bills that were introduced, 113 were ultimately enacted into law. 

That process of creating separate rules in potentially 50 different jurisdictions, while perhaps well-intentioned, virtually always raises costs of suppliers, and almost inevitably costs to consumers. 

The same sort of process applies in lots of industries. 

National vs. Local Regulation and Consumer Prices
Study	Key Findings
Chambers & Collins (Mercatus Center), How Do Federal Regulations Affect Consumer Prices?	Found that a 10% increase in total regulations leads to a 0.687% increase in consumer prices. The study also highlighted that low-income households are disproportionately affected, as they spend a larger share of their income on heavily regulated goods.
IFAC & BIAC Survey (2018), Patchwork Financial Regulation a $780 Billion Drag on the Economy	Estimated that fragmented financial regulations cost the global economy over $780 billion annually, equating to 5–10% of annual revenue turnover for financial institutions. Over half of the respondents indicated that resources were diverted from risk management due to the costs associated with diverging regulations.
Mercatus Center Study, Regulatory Accumulation and Its Costs	Determined that regulatory accumulation has reduced the annual growth rate of the U.S. GDP by an average of 0.8%. The study also found that increased regulations disproportionately burden low-income households by raising the prices of basic goods such as food and utilities.
Bergeaud & Raimbault (2017), An empirical analysis of the spatial variability of fuel prices in the United States	Identified that state-level policies and local socio-economic factors significantly influence fuel prices, leading to substantial variability across different regions. The study underscores the impact of local regulations on consumer prices.
Li, Gordon & Netzer (2018), An Empirical Study of National vs. Local Pricing by Chain Stores Under Competition	Found that national pricing can be more profitable for firms in certain competitive environments, as it helps avoid intense local competition. However, the optimal pricing strategy varies depending on market conditions, indicating that uniform national pricing isn't always the most beneficial approach.

Most observers would acknowledge that higher consumer prices are a result of the fragmented regulatory regimes in many industries. 

Regulated Industry	State-Level Regulation Example	National Regulation (or Lack Thereof)	Impact on Consumers	Price Impact
Artificial Intelligence (AI)	Data privacy, algorithmic fairness	California Consumer Privacy Act (CCPA) imposes strict AI and data-use limitations	Developers must customize products for each state's privacy laws; increased legal risk	Slower rollout of AI tools; higher costs passed on to users
Automotive / EVs	Emission standards, sales mandates	California's zero-emission vehicle (ZEV) mandates; bans on gas car sales post-2035	Auto makers must produce state-specific vehicle variants; complex distribution logistics	Higher car prices in ZEV states; reduced consumer choice
Healthcare	Telemedicine, insurance coverage	States have unique rules on provider licensing and allowable services	Providers face barriers offering services across state lines; insurers must tailor plans by state	Unequal access to care; administrative costs increase insurance premiums
Energy	Fuel formulations, renewable mandates	California requires special gasoline blends; some states mandate renewable quotas	Refineries must produce multiple blends; adds transportation and inventory costs	Higher fuel prices in regulated states; seasonal price swings
Finance / FinTech	Lending rules, crypto regulation	New York's BitLicense for crypto firms; state usury laws	FinTechs must obtain licenses in each state; may avoid high-cost states like NY	Restricted availability of services; delays in access
Employment / Labor	Minimum wage, gig worker classification	California’s AB5 reclassifies many gig workers as employees	National firms (Uber, Doordash) must operate under different employment models across states	Increased service fees; reduced flexibility in gig services
Education / EdTech	Student data privacy, content standards	Illinois Student Online Personal Protection Act (SOPPA) imposes strong data privacy rules	EdTech firms must develop state-specific compliance features	Slower implementation of new tools; reduced access for smaller schools
Food & Agriculture	Labeling, animal welfare	Massachusetts requires cage-free eggs; Vermont passed first GMO-labeling law	Food producers face higher costs from differing labeling/packaging and sourcing requirements	Higher food prices; limited product availability in some regions
Construction / Housing	Building codes, zoning laws	Each state/city sets codes; California has stricter seismic/energy efficiency rules	Builders must redesign projects by region; national firms struggle to scale housing solutions	Higher housing costs; slower construction timelines
Tobacco / Cannabis	Sales restrictions, taxation	States regulate sales age, THC limits, and advertising; some states prohibit sales	Multistate cannabis firms must customize operations for compliance; interstate transport often banned	Prices vary widely; consumers in prohibition states pay black-market premiums

AI as Industrial Policy has Precedents

It does appear that a partnership between the U.S. federal government and firms developing artificial intelligence is developing. Some examples include the executive branch championing the $500 billion "Stargate" infrastructure initiative led by OpenAI, Oracle, Japan's SoftBank, and the UAE's MGX.

More recently there were big deals to bring cutting-edge chips and data centers to Saudi Arabia and the UAE. 

Country	Deal Size / Commitment	Key U.S. Firms Involved	Main Components	Timeline / Notable Details
Saudi Arabia	$600 billion+ (total package)	Oracle, Google, Salesforce, AMD, Uber, DataVolt, AWS, Qualcomm	- Oracle: $14B, 10-year commitment - DataVolt: $20B in U.S. data centers - $80B in joint tech/AI projects - HUMAIN: up to $10B AMD, $10B Nvidia AI hardware - $5B AWS "AI Zone" - $300B in immediate deals - $1 trillion corridor by 2030 ambition	Announced May 2025; multi-year rollout 1, 2, 5, 7
UAE	$1.4 trillion (10-year UAE investment in U.S.);  $200B in tech/AI package	G42, Microsoft, Nvidia, Oracle, Cisco, OpenAI, SoftBank, BlackRock, Global Infrastructure Partners	- 500,000 Nvidia AI chips/year to UAE through 2027 - 5GW AI datacenter campus in Abu Dhabi (G42) - Stargate UAE: 1GW OpenAI-led facility - Reciprocal investment in U.S. data centers - $100B Global AI Infrastructure Investment Partnership (GAIIP)	Announced May 2025; phased through 2030 1, 2,  4, 6

President Trump also signed a series of executive orders to hasten the deployment of new nuclear power reactors, with the goal of quadrupling total U.S. nuclear capacity by 2050.

Energy Secretary Chris Wright told Congress that AI is "the next Manhattan Project,” warning that losing to China is "not an option.”

That might closely resemble several past efforts by the government to spur economic growth by supporting targeted industries. 

Industry/Initiative	Era/Date	Government Role/Support	Outcomes/Impact
US Arsenals & Manufacturing	1816–1861	Collaborative R&D, standardization	Advanced machine tools, standardized parts, global manufacturing leadership 2
Erie Canal	1825	State-funded infrastructure	Opened Midwest markets, spurred trade and local development 2
Pacific Railway Act (Railroads)	1862	Land grants, federal loans	Built transcontinental railroad, linked coasts, boosted commerce 2
Federal-Aid Highway Act	1956	Direct federal funding, infrastructure	Created interstate highway system, expanded commerce, advanced construction tech 2
Shipbuilding (WWII, renewed focus)	1940s, 2020s	Direct contracts, subsidies, tax incentives	Rapid industrial expansion, military and commercial shipbuilding 4
Cybersecurity (NIST Framework)	2013–present	Voluntary standards, collaborative development	Improved critical infrastructure security, public-private trust 3
CHIPS and Science Act (Semiconductors)	2022	Large-scale subsidies, R&D funding	Domestic chip manufacturing, supply chain resilience, tech leadership 4

All that might suggest something for technology investors. In addition to the many startups sure to emerge, some of which will have the opportunity to become quite important, existing technology leaders also will be leaned on by government. 

That suggests the normal computing market mechanisms, whereby a new era of computing creates new leaders, might be modified in the early AI era. As legacy firms Microsoft and Apple seemingly survived the transition form the PC era to the present, so other firms such as Alphabet, Meta and Amazon might survive the coming transition to the AI era as well. 

That might be fairly unprecedented, but will be assisted by the need for collaboration and support of the federal government to create a big new industry. 

Sign of the Times: Mary Meeker Report Focuses on AI

It’s a sign of the times, as Mary Meeker, who used to publish internet reports annually, now is out with a new report on artificial intelligence. As you might expect, her statistics show faster growth for ChatGPT than for the internet. 

source: Bond

She also shows that ChatGPT searches are growing faster than Google search. 

source: Bond

And, as you might also expect, the cost of inferences is dropping even faster than computer memory. 

source: Bond 

And ChatGPT is being adopted faster than virtually all other internet applications as well. 

As you might also suspect, ChatGPT might reach 50-percent levels of household use in record time.