Why We Can’t Afford to Let Disorderly State and Local Rules Disrupt Innovation

In anticipation of a second Trump administration, the U.S. innovation economy can prepare for numerous policy reforms that will allow private industry to more easily develop and implement new technologies. This will encourage more economic growth and job creation. While the American public awaits specifics, technology policy observers forecast policies that will enhance U.S. leadership in advanced industries and an economic agenda that accelerates a digital transformation across public and private sectors. To unlock this potential, the new administration must put special emphasis on creating a regulatory environment that is conducive to artificial intelligence (AI) development and adoption. In particular, it must favor the kind of light touch framework that fostered the growth of the internet as we now know it.

There is, however, an obstacle that could interfere with advancements in the AI space. Recent years have seen a proliferation of state and municipal level regulations that are likely to curtail – or in some cases even possibly outlaw – the use of new tools.

Consider the regulatory obstacles that some localities have place to impede the use of AI in housing and rental-property markets. Specifically, these regulations have been targeted at real estate software tools. This includes the products of one company, Realpage. Local legislators are calling for a purge of this type of price transparency technologies. In fact, new laws have been enacted in San Francisco. Other cities like Philadelphia, Jersey City, San Diego, San Jose, and states like Colorado and New Jersey, have also considered legislation to prohibit this kind of market-analysis tools.

Instead of supporting innovations that could increase consumers’ awareness of the going rate of rental housing in a given neighborhood, localities are opting to turn back the technological clock. Effectively, local lawmakers are exerting a preference for stagnant, rigid rent pricing in place of smart, data-driven methods. Yet, such a approach invariably hurts consumers who would otherwise benefit from lucrative deals, while also introducing new concerns about housing availability during peak periods.

The locally driven onslaught against the real-estate-software sector is potentially just the tip of the iceberg in a broader chilling effect against new AI systems. Lawmakers’ propensity for overregulation is likely stifle development in this space. Ultimately, a suffocating compliance landscape imposes significant costs on innovators who must keep up with ever-changing, burdensome, and often inconsistent rules.

Cities and states can best succeed by refraining from micromanaging technologists and entrepreneurs and allowing national leaders to set the stage for new American dynamism. With commonsense guardrails, consumers can look forward to a variety of new market-generated products, new efficiencies, and the lower prices that result from advancements in technology. 

As the Trump administration gets started, it should emphasize implementing clear and light-touch national technology standards that will yield the maximum levels of innovation and prosperity.