Bytes: Week in Review — Texas’ age verification law, a potential moratorium on local AI laws, and Meta splits its AI team
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LHH, a beautiful working world. Learn more at LHH.com slash beautiful. One big, beautiful bill to rule them all on AI policy. From American Public Media, this is Marketplace Tech. I'm Megan McCarty Carino. There's a provision tucked into the big, beautiful bill among the tax cuts and Medicaid cuts that would bar states from passing laws to regulate artificial intelligence for a decade.

We'll get into it on today's Marketplace Tech Bytes Week in Review. Plus, Meta is reshuffling its AI team again in an apparent attempt to catch up to the competition. But first, this week Texas Governor Greg Abbott signed a law requiring age verification for the Apple and Google app stores. It also requires parental consent for app downloads and in-app purchases by minors.

But it raises some legal questions. Here to discuss all that is Maria Curie. She's a tech policy reporter at Axios. I mean, the states are clearly leading the way on various fronts and protecting kids online is one of them. So Utah already passed a law. Now Texas is the second state to do this. But there are dozens more all across the country that are picking up steam.

And basically what this law would require is to have the app stores themselves verify the age of users before they download any of the apps and then verify their parents so that they can then acquire the parental consent. And then if they do any downloads within the app, they also have to get consent.

consent for that. And so it creates privacy concerns, you know, according to Apple and Google for the amount of data that's going to have to be gathered to verify ages. Meta, though, was, of course, kind of thrilled with this development because it takes the onus off of them to verify ages for their own apps, right?

Yeah, absolutely. Meta, X, Snap, all of these companies have been pushing for this type of measure, not only at the state level, but at the federal level. And we heard Meta CEO Mark Zuckerberg previously testify in Congress that he really believes it should be up to the app stores. And their justification is that it's a one-stop shop for verifying kids' ages, and it's easier to do than to have to do it at the individual level for every single app.

So now let's get into some of the legal issues. I mean, this topic has been kind of like one of the most remarkably bipartisan issues in politics these days, but has also been kind of universally legally thorny. No doubt this Texas law is going to face legal challenges as other similar laws have. In fact, another Texas law that required age verification for sites with adult content is

is being considered by the Supreme Court this session. So what's kind of at stake legally here?

So across the board, whether it's age verification or the design of apps or all of these different types of approaches to protecting kids online, the legal issue that it runs into normally is the constitutional issue, a First Amendment issue. And so we are expecting the Texas law to be challenged in court on these same grounds. And a lot of them have been overturned by courts in California that happened. And that's one of the things that lawmakers here in D.C. are paying attention to. If we pass something at the

federal level, will it just quickly be overturned? And so because of those sticky constitutional issues, we've seen different approaches like gain speed at the federal level with, for example, the Defiance Act that is picking up steam or the Take It Down Act that was just signed into law. Efforts that are meant to protect kids online, but don't really touch speech in any way.

And the issue has sort of been that if you put up these barriers to verify age or to, you know, keep minors out of certain sites, that that could, you know, might necessarily create barriers for everyone. That is kind of an infringement of freedom of speech, right? Yeah.

That's right. And also there is an issue of verifying whether or not this person is your parent. And if your parent has different viewpoints from you as a teenager, as someone who is 17 years old or younger, because this law covers 18 year olds and younger, you know, are you infringing on the freedom of speech and freedom of expression of some of these groups that, you know, really rely on social media to have community? And so it's going to be a thorny issue for courts to figure out.

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That's ga.co slash AI Academy. We interrupt this program to bring you an important Wayfair message. Wayfair has got style tips for every home. This is Nicole Byer, health care expert.

helping you make those rooms flyer. Today's style tip, when it comes to making a statement, treat bold patterns like neutrals. Go wild! Like an untamed animal print area rug under a rustic farmhouse table from Wayfair.com. Ooh, fierce! This has been your Wayfair style tip to keep those interiors superior. Wayfair, every style, every home. You're listening to Marketplace Tech. I'm Megan McCarty Carino. We're back with Maria Curie, tech policy reporter at Axios.

All right. Well, now we want to turn to some federal legislation that could have implications for tech regulation. And that is the big, beautiful bill, President Donald Trump's budget package that includes tax cuts, some Medicaid cuts. And tucked in there is a provision to ban states from passing laws that regulate AI. Maria, you've been covering this. What's going on there?

Yeah. So, I mean, we know that this Congress and this administration is not interested in passing, you know, any type of heavy handed laws. They want a light touch regulatory approach. And so there really isn't any major bill on the Hill right now that might

you know, pass and become and offer some guardrails for AI. So the states have really taken the lead on passing legislation, introducing legislation, debating it at the local level. And what this would do is essentially place a moratorium for 10 years on any AI bill from being enforced.

And so that makes laws that are already on the book unenforceable and new laws, you know, not really worth introducing because you can't enforce them. And so it's really a different approach instead of trying to pass a law that preempts all of these state measures and offers, you know, a blanket solution. They're just saying no laws should be passed at all, which is a really drastic new approach.

And this is not just some abstraction. I mean, dozens of states have already passed regulations

laws that could be affected here, you know, many of them having to do with deep fakes or deceptive content, copyright. Tell me more about all the laws that are out there. Yeah. So some of those that you mentioned and, you know, a lot of states are coming out against it for that reason. They're passing protection for the artists in their states, for, you know, the journalists in their states. And so, you know, they're passing transparency measures to make

sure that these algorithms are safe and responsible. And you've seen a lot of states push back on this measure. And it's now headed to the Senate, this provision. And a lot of senators, like Senator Marsha Blackburn of Tennessee, is coming out against it because, of course, her state has come out with protections for all the musicians there. So I'm expecting an uphill climb in the Senate for sure.

Right. You know, this provision, it hasn't gotten a ton of attention, but we have heard some Congress people speak out against it. A couple of weeks ago, Congresswoman Doris Matsui from California said this. The U.S. should be leading in the global race for AI dominance. If we don't lead, others will. However, we can't shoot ourselves in the foot by stopping the good work that states have done and will continue to do.

Now, heading to the Senate, you noted that Senator Marsha Blackburn, I believe also Josh Hawley has expressed reservations. Where do you kind of see this going? So in the Senate, there is this nerdy rule. It's called the Byrd Rule. And you can't include anything that has to do with policy in a budget bill and anything that has to do with spending. And so I think a lot of senators, we're going to start to see

come out against this over technicalities, over, you know, this doesn't really belong in this spending package. And we might see it pulled out into a standalone bill. And then it becomes a question of, is there enough support just to pass this? You have to understand that this is a much bigger negotiation about issues that

impact people maybe a lot more than some of these tech bills. And so Senator Josh Hawley, for example, may end up making the calculus that Medicaid is more important than this AI provision. So we'll see. They get back next week and they're going to start debating it.

All right. Well, now we want to talk about some company news that could perhaps be relevant given everything we just talked about. Your colleagues at Axios reported this week that Meta is reorganizing its AI teams in what appears to be kind of an effort to get products to market more quickly in this very competitive marketplace.

According to an internal memo seen by Axios, Meta is breaking its main AI team into two, one focused on AI products like the Meta AI Assistant, various other AI features in Meta apps.

And the other unit called AGI Foundations, which is more focused on research, it's in charge of developing, you know, menace large language models called LAMA. Maria, what stands out to you here? Well, they've done this before, right? In 2023, they did a team shakeup to try to compete.

I think it's one approach. I don't think that just by doing this, they're going to be able to beat out all of the competition. Competition is very stiff right now. It's a matter of infrastructure. It's a matter of investments. It's a matter of how many new models are you coming out with and how often. And so this is just one approach. We'll see if it bears fruit. But it's true that the competition is fierce right now. And I can understand why Meadow would want to be doing this.

Right. And the focus really seems to be, you know, to speed up the release of products, you know, speed up, you know, things that consumers are going to have their hands on. Of course, it was Mark Zuckerberg who famously adopted the saying, move fast and break things, which I think given some of the regulatory complications that we just talked about might be important.

Absolutely. These two things go hand in hand as companies try to come out with new products as fast as possible, whether it's OpenAI or Meta or Google or any of the companies. Congress doesn't seem very interested in passing any type of guardrails. And on top of that, they're trying to block state level guardrails. So things are moving very fast. Of course, there are these voluntary commitments and these things that companies can do independently.

from government regulation, but to many lawmakers and consumers, that's not enough.

That was Maria Curie at Axios. You can find the full video of this episode of Marketplace Tech Bytes Week in Review on our YouTube channel, Marketplace APM. And subscribe if you haven't already to watch us every Friday. Jesus Alvarado produced this episode. Daniel Shin also produces our show. Gary O'Keefe is our engineer. Daisy Palacios is the supervising producer. Nancy Fargali is the executive producer. I'm Megan McCarty Carino, and that's Marketplace Tech. This is APM.

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