U.S. President Donald Trump’s aggressive move to block states from regulating artificial intelligence is splitting the tech lobby — and steering its frustration squarely toward David Sacks, the president’s top AI adviser.

Sacks, a San Francisco-based investor, largely wrote the executive order Trump signed last week that throws the legal and financial power of the federal government against state AI laws. A controversial move even within the GOP, it was a major win for Sacks, who also acted as its biggest promoter within the White House.

Standing next to Trump last Thursday as the president signed the order, Sacks touted its importance. “You’ve got 50 states running in 50 different directions — it just doesn’t make sense,” he said. “We’re creating a confusing patchwork of regulation, and what we need is a single federal standard.”

Tech companies largely agree with that view. But they and their lobbyists worry the order — and Sacks’ bulldozing style — have set their interests back by creating new friction in Congress, and derailing a national strategy that recently notched a big win in California.

More than half a dozen people closely involved with the issue in Washington told POLITICO that Sacks undercut the tech industry’s effort on Capitol Hill to craft a more permanent federal solution on state AI rules, instead ramming through unilateral action that could turn AI law into a national political fight.

“He’s made it a lot harder,” said Brad Carson, president of Americans for Responsible Innovation, an organization pressing Washington for new rules on AI.

“Thanks to the preemption fights, you have kids’ safety groups, you have Republican governors, Republican [attorneys general], you have Marjorie Taylor Greene denouncing it. It’s become a thing,” said Carson. “And that’s all because of, really, their efforts just to jam everyone.”

Carson’s organization, funded by progressive groups like the Omidyar Foundation, is generally seen as opposed to the tech lobby. But in interviews for this article, numerous people in and around the AI industry said they agree with his claim that Sacks’ order undercuts the congressional effort to preempt state AI rules — and given its tenuous legal status, may not even protect them from state rules in the meantime.

“Businesses don’t like uncertainty, OK?” said Bilal Zuberi, founder and managing partner at venture capitalist firm Red Glass Ventures. “And this is an uncertain future for any EO.”

The escalating concern about Sacks’ strategy — especially his approach to Congress — shows how the hard-charging, maximalist ethos of the tech billionaires surrounding Trump continues to clash with the cautious give-and-take that has historically led to major legislative wins in Washington.

In a statement to POLITICO, a senior White House official framed the executive order as a strategic play to spur Capitol Hill into action.

“As the President said, if Congress didn’t act, he would,” said the official, granted anonymity to discuss the administration’s strategy candidly. The official called the order “a big step forward for AI in the United States from facing a patchwork of regulations” — but also said that the administration still wants to work with Congress and that it “incorporated significant feedback in the last few weeks” on the order.

Two wins, and a quick backlash

Sacks is an Elon Musk confidant who had spent little time in Washington before snagging a top White House job overseeing AI and crypto policy. His work as a Silicon Valley investor has also raised concerns about potential conflicts of interest. He serves as a special government employee, a distinction that caps his work at 130 days over a year-long period.

He has previously notched two major wins in Washington, helping push through a pro-crypto law and weakening restrictions on microchip sales to China, which benefited the California chipmaking giant Nvidia.

But on state AI laws, Sacks’ push for an executive order interrupted the political momentum that industry had been building for a compromise approach. Most notably, Big Tech had hashed out a victory in California, where Gov. Gavin Newsom signed an AI safety law largely supported by the industry, its Democratic critics and pro-business Republicans.

Many in the AI lobby had hoped to ride that current into Washington with a new strategy to cut a deal for a federal law that both Democrats and Republicans could support. But that era of good feelings ended when Trump signed the order last week, threatening to deploy the Department of Justice directly against California and other states moving to regulate AI, some of them Republican-led.

Within minutes of the order’s signing, Newsom shot back: “President Trump and Davis [sic] Sacks aren’t making policy — they’re running a con.” Other Democrats also piled on, with some on Capitol Hill pledging to introduce bills that would repeal the order. Florida Gov. Ron DeSantis, a Republican, said Monday that his state “has a right” to regulate AI and predicted Florida “would be well positioned to be able to prevail” in any legal challenge.

Carson said the order is “only going to embolden a lot of people more on the other side of this question, Republicans included, to do something.”

“Do you think Gavin Newsom is going to say, ‘I’m not going to push AI?’ Carson asked. “He may be more eager to do it now than ever.”

What went wrong

The political breakdown threatens to further undermine the tech lobby’s preferred approach to blocking state AI laws — a deal, passed by Congress, that could bring skeptical lawmakers on board by preempting state regulations in exchange for new federal rules on kids’ safety and frontier AI models.

An effort to craft such a deal and insert it into a must-pass defense bill fizzled earlier this month.

In looking at what went wrong, six people familiar with the negotiations — industry representatives, AI experts and others involved in talks on Capitol Hill — identified the White House’s aggressive and uncompromising posture. And they pinned that approach largely on Sacks, who the Trump administration has entrusted with the AI acceleration portfolio in Washington.

Like many others in this report, these people were granted anonymity to speak candidly about sensitive discussions on a top industry priority.

“This was the best opportunity, possibly in the entire Trump administration, to get [state AI] preemption done,” said one person familiar with the defense-bill negotiations. “Most people thought a compromise on policy would be necessary to make it happen. David was unwilling to make that compromise, so we are where we are — and for now, preemption is on life support.”

A Trump administration official also told POLITICO that there is “frustration” at multiple agencies over Sacks’ effort to “rush” state AI preemption.

Sacks “was very successful in the private sector, [but] he doesn’t understand how government works,” said another person familiar with talks around the AI preemption push. “He doesn’t understand how to build coalitions. He doesn’t understand how to concede on minor things in order to get a win, and he just tries to bulldoze everybody.”

A window opens — and slams shut

Since AI began its meteoric recent growth, Congress has done little either to rein in the technology or promote it. States, however, have stepped into that gap: Legislators in both parties have introduced AI bills in all 50 states, and this year adopted dozens of new laws in states as diverse as California, Texas, New York and Utah.

The industry has been pushing for a moratorium on state laws until a streamlined national regime can be put in place. This summer, a Republican attempt in Washington to insert such a provision into the One Big Beautiful Bill Act crashed and burned in a 99-to-1 Senate vote.

In the wake of that failure, tech lobbyists began pulling together the contours of a deal on preemption that they believed could attract Democrats and some concerned Republicans on Capitol Hill. The tech lobby would get its ban on most state AI laws, while Democrats and tech-skeptical Republicans would receive new child safety protections as well as rules on frontier AI models. The defense bill eventually emerged as the most likely vehicle for that compromise.

“Right before Thanksgiving, there really was, in an odd way, an aperture for negotiation,” said one top representative for the AI industry.

But that representative, as well as other people familiar with the preemption talks, said Sacks’ reluctance to pressure House Majority Leader Steve Scalise (R-La.) or other lawmakers to compromise helped sink a major opportunity for the AI sector.

In fast-moving legislative maneuvers like this one, the White House often plays a key role by pressing Congress to compromise. But people familiar with the talks said Sacks had little interest in granting concessions to Democrats or skeptical Republicans — preferring instead to jam Congress by unilaterally preempting state rules with an executive order.

The industry representative said the message Sacks delivered to Congress — that Republicans shouldn’t negotiate, but instead just ram preemption through — caused the effort to fizzle out.

“He has been probably more intransigent, with people saying to him, ‘No, David, we actually have a chance here,’” the representative said. “‘It’s so hard to pass bills in Washington. We actually have a moment. Let’s just go and figure this out.’”

Several people stressed that the failure to preempt state AI laws via the defense bill wasn’t Sacks’ alone. They said Scalise was already wary of a compromise on state AI preemption, as were influential AI safety groups and some Democratic lawmakers.

A senior official in Scalise’s office said the House majority leader was open to some kind of a defense-bill compromise on preemption, but that key Democrats failed to engage. Washington Sen. Maria Cantwell, the top Democrat on the Senate Commerce Committee, disputed that characterization, telling POLITICO that her office “had talks all summer” about preemption and “even met with David Sacks.”

“We were like, here’s what we need to do,” Cantwell said in early December. “And then all of a sudden, out of nowhere, comes this push to put it in the [defense bill].”

One person familiar with the defense-bill negotiations said Sacks and the White House could have pressed both sides to make a deal — but chose instead to pull away from Congress and pursue an executive order.

“Everyone was looking for leadership here,” the person said. “We’re in one of those situations where we’re asking, ‘Who’s in charge?’”

An unwelcome order

If Sacks’ reluctance to compromise weakened the congressional effort to find common ground on preemption, his drafting of a new executive order — one that mostly circumvents Congress and promises to turn state preemption into a court battle — finished it off earlier this month.

Multiple people said they believed Sacks saw the order as leverage over Congress, and expected it would force the hand of AI-skeptical lawmakers to approve state preemption.

“I think his calculus was, ‘We should show that we’re going to take action unless Congress does,’” said one AI policy expert familiar with the negotiations.

But the plan backfired. In late November, a draft of the order leaked — and its brute-force approach sparked a flood of public pushback from Democratic legislators and state governors, including Republicans. The AI expert said the draft order caused both sides to “dig in their corners, double down on the positions they were holding.”

It was a predictable outcome for Washington veterans, who had believed that any White House attempt to strongarm Congress would sabotage a compromise.

The executive order signed by Trump last Thursday is meant to help industry by limiting states’ ability to regulate AI. But most tech lobbyists believe the order is on shaky legal ground, providing scant relief from state rules even as it puts a congressional compromise further out of reach.

“I welcome the consistency of having one single rulebook,” said Dorna Moini, CEO of Gavel, an AI and automation suite for lawyers. “But the reality is that the uncertainty isn’t reduced. It’s whiplash, and now there is this chaos as to whether the preemption is going to be valid.”

“This needs to be done by Congress,” said one tech lobbyist last Thursday, predicting legal challenges to actions taken under the executive order.

After POLITICO contacted the White House for this report, two tech firms reached out to praise one aspect of the order, its call for Congress to preempt state AI laws.

“The EO helps underscore the urgency of getting this done correctly,” said Luther Lowe, head of public policy at San Francisco-based venture capitalist firm Y Combinator. Lowe expressed a desire to “work with Congress to make sure this is done correctly.”

In a statement, Chris Lehane, head of global affairs at OpenAI, said his company is “aligned with the Executive Order’s clear language about the need for federal legislation to establish a national framework as an important step towards helping to set up the much needed federal legislation in 2026.”

Neither Lowe nor Lehane addressed the meat of the executive order, which directs federal agencies to target states that pass AI laws.

Can the White House get to ‘Yes’?

A handful of lobbyists and industry-friendly experts defended Sacks for this report.

“I’m not worried about Sacks’ chops in terms of his ability to navigate Congress and get things done,” said Collin McCune, head of government affairs at venture capitalist firm Andreessen Horowitz, which has close ties to the Trump White House. McCune noted that Sacks “pushed through an incredibly complicated, historic crypto bill — that was his first thing out of the gate.”

But others are now wondering if Sacks has become a liability in the AI industry’s quest to preempt state AI rules. And if Sacks refuses to bless a viable legislative deal on preemption, some say he should be sidelined.

“He either does have to go, or he has to do the world’s biggest PR campaign,” said one person familiar with the preemption talks in Washington. “He will have to do a real tour across town, and really change his attitude in a way that would surprise me if he were able to pull it off.”

There are some early signs that Sacks may moderate his take-no-prisoners approach to a state AI moratorium.

Sacks recently convened a special meeting with GOP governors and staff where he sought to assuage their concerns that the executive order would undermine states’ ability to protect kids online, according to one person familiar with the conversation. The final order was slightly softened from its earlier draft, including a carveout that lets states regulate AI’s impact on kids. And at the signing ceremony for the order, Sacks pledged to “work with Congress” to “define [a] framework” for AI.

Still, many in industry remain unconvinced that Sacks — or Trump — are ready to compromise.

At a White House holiday party earlier this week, the president indicated that he hopes Congress will codify his executive order on state AI laws. “But even if we can’t, it’s good for three years and two months,” Trump added.

As the new year approaches, the AI industry is watching the White House closely.

“Can they reach a deal on a legislative framework, and can they keep the aperture for a deal open?” the top industry representative asked. “Or does the administration continue to do things that poison the well?”

Cheyenne Haslett contributed to this report.