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To understand the stakes of the debate over AI regulation, look no further than Minnesota, where tech oligarch Elon Musk is once again generating embarrassing headlines.

Last week, a federal judge denied a request from Musk’s artificial intelligence company xAI to block a Minnesota law banning nude deepfakes used to sexually harass women and girls from taking effect. Musk faced widespread backlash after Grok, one of xAI’s signature products, introduced an AI feature that allowed users to digitally undress people in images circulating online. In March, three young girls sued xAI, alleging Grok was used to create child sexual abuse material. Minnesota Gov. Tim Walz called Musk a “creep.”

It’s a bad look for Musk, but the lawsuit wasn’t filed for applause. Musk and competing tech titans are currently spending immense political capital molding to their advantage the regulatory environment that AI companies are stepping into as the technology rapidly advances. The xAI lawsuit against Minnesota’s ban on nude deepfakes is part of Musk’s broader campaign against state regulation and so-called “woke AI.”

Musk has worked closely with President Donald Trump, who has issued multiple executive orders attempting to shape AI development and discourage regulation by individual states. In response to Trump’s orders, the Federal Trade Commission (FTC) proposed a new policy in July that critics say would undermine the First Amendment and civil rights laws while potentially coercing companies into promoting white nationalist narratives with AI models that millions of people increasingly rely on for information.

“This tech-Trump alliance — far from bringing expertise to responsibly guide policy on tech and AI — has only furthered the administration’s corruption and enabled its campaign to censor and control our information ecosystem,” said Shilpa Jindia, policy counsel at the digital rights group Free Press, in a statement on August 3.

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Free Press is one of several digital rights groups that recently submitted comments opposing a policy statement on “AI accuracy” proposed by the FTC, which is tasked with protecting consumers from deceptive advertising. Echoing comments by Musk and others on the right about “woke AI,” the FTC statement claims AI companies may be required by state laws or simply “tempted” to train large language models (LLMs) such as Claude and ChatGPT to deliver “ideologically motivated distortions” to consumers expecting objective answers to their questions.

Allowing such ideological “distortions” may violate the federal law that created the FTC to protect consumers from deceptive advertising.

Allowing such ideological “distortions” may violate the federal law that created the FTC to protect consumers from deceptive advertising.

AI companies market their products as problem-solving tools that “distill all of human knowledge,” so allowing such ideological “distortions” may violate the federal law that created the FTC to protect consumers from deceptive advertising, according to the policy proposal. Using LLMs as a primary source of information is “becoming part and parcel of daily life,” and the FTC could take legal action........

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