The U.S. Department of Justice moved Friday to intervene in xAI’s lawsuit against Colorado, escalating a legal fight over how states can regulate artificial intelligence and whether companies can be held liable for “algorithmic discrimination.”
“Laws that require AI companies to infect their products with woke DEI ideology are illegal,” Assistant Attorney General Harmeet K. Dhillon said in a statement. “The Justice Department will not stand on the sidelines while states such as Colorado coerce our nation’s technological innovators into producing harmful products that advance a radical, far-left worldview at odds with the Constitution.”
Cody Barela, a partner at Colorado-based law firm Armstrong Teasdale, said the DOJ’s argument that Colorado’s law slows AI development may be stronger than its constitutional claim.
“I think that particular argument will be less likely to win, but I do think they have a valid argument in terms of the burdens that the Colorado policy would place on these companies,” Barela told Decrypt, adding that courts may be more receptive to arguments that Colorado’s law emburdens AI startups and could slow U.S. competitiveness.
“The burden on them, in comparison to the delay that it causes in the AI race, might actually be a better argument, and maybe a winning argument based on administration policy—that they basically don’t want any burdens limiting tech companies in the AI race,” he said.
If xAI and the DOJ succeed, then Barela said the case could influence how other states approach AI regulation.
“I think there are states that are a lot more willing to avoid placing any restrictions on tech companies, both to promote themselves as tech‑friendly and to bring more companies there,” he said. “Others may just sit back and wait for the federal government to come up with a nationwide policy, rather than start a piecemeal, state‑by‑state process that’s harder to comply with.”
