Yesterday, the House Energy and Commerce Committee advanced a draft budget bill containing a provision that warrants significant attention from the entire e-commerce community: Section 43201. This section proposes a 10-year moratorium on state or local government regulation of artificial intelligence models, systems, or automated decision systems. The EIA sees this provision as a crucial step toward fostering a consistent and predictable regulatory environment necessary for AI innovation to flourish.
As an industry, we have observed a concerning trend over the past few years: a proliferation of state-level initiatives seeking to regulate artificial intelligence (AI). States across the country are exploring various approaches, from general AI legislation to rules targeting specific AI applications. While the intent behind these efforts may be to address potential harms, the reality is that a fragmented, state-by-state approach creates an incredibly complex and potentially unworkable landscape for e-commerce businesses that inherently operate across state lines.
Consider the practical challenges this patchwork presents. E-commerce transactions and communications often involve customers located in different states at any given moment. Determining which state’s specific AI regulations apply to a mobile communication or interaction involving AI or RCS becomes technologically difficult and often not feasible to track in real-time. This is because mobile devices constantly shift network connections as users move, making precise location data for regulatory compliance purposes both unavailable and sometimes legally impermissible to collect.
Imagine the daunting task ecommerce businesses would face in trying to comply with potentially 50 different sets of rules regarding how AI is used or disclosed in customer interactions. This would necessitate incredibly complex and expensive tracking and compliance systems, diverting valuable resources away from innovation, customer service, and overall business growth. This burden is particularly challenging for small and medium-sized enterprises (SMEs). Such an environment risks stifling innovation, discouraging businesses from investing in and deploying the very AI-powered solutions that benefit consumers through more relevant and timely communications.
The EIA firmly believes that overly broad or premature regulation of AI, especially on a fragmented state basis, could have significant negative consequences. It can create unnecessary burdens due to vague definitions, lead to disclosure fatigue for consumers if notices become ubiquitous, and ultimately impair the personalization that AI enables and that consumers increasingly expect.
AI is a critical component of modern e-commerce. It allows companies to understand customers better, personalize experiences at scale, optimize marketing, and enhance operational efficiency. AI drives value by providing relevant recommendations, tailoring promotions, and offering fast customer service. In the context of text message marketing, for example, AI assists businesses in delivering more relevant messages, potentially leading to fewer unwanted communications for opted-in consumers, contrasting with unsubstantiated claims of widespread consumer harm.
This is why the EIA supports the proposed 10-year moratorium on state AI regulation included in the House Energy and Commerce Committee draft bill. By enacting a temporary federal pause, Congress can provide the necessary stability and clarity for businesses to continue innovating with AI. This approach allows time for these technologies to mature and for policymakers to develop a comprehensive, consistent, and technology-neutral federal framework that can protect consumers without hindering the immense potential of AI for the e-commerce sector.
While the moratorium does include certain exceptions, such as laws primarily intended to facilitate AI deployment or streamline procedures, and laws that treat AI systems the same as comparable non-AI systems under generally applicable requirements, the core protection against fragmented substantive state regulation is vital.
The EIA is actively engaged in this debate. We are educating policymakers on the critical importance of protecting AI innovation for e-commerce. We advocate against unnecessary regulations, highlighting the lack of demonstrated consumer harm and the potential negative consequences for businesses. We have submitted comments to the FCC urging them to avoid overly broad definitions and new regulations on AI-assisted text messaging, arguing the focus should remain on unwanted/fraudulent communications. We also emphasize the need for any future regulations to be prospective only and advocate for a consistent federal approach to avoid compliance nightmares.
The provision for a 10-year moratorium on state AI regulation in the House Energy and Commerce Committee draft bill aligns with our advocacy for a sensible and consistent regulatory environment. It represents a recognition of the challenges posed by fragmented state laws and the need for federal leadership to ensure the continued growth and innovation of the e-commerce sector.
Join us by telling your member of Congress that you support Section 43201 and a policy environment that fosters AI innovation and ensures the continued success of e-commerce.
