$100M AI Deregulation Push: What Small Businesses Should Watch

A pro-AI PAC with a $100 million budget just entered the midterms

A new political operation called Innovation Council Action plans to spend more than $100 million in the 2026 midterm elections backing candidates who favor AI deregulation — and punishing those who push for stricter rules. The AI deregulation push is now the largest single issue campaign in tech, and it will shape the compliance rules your small business lives under for the next decade.

The group is led by Taylor Budowich, a former Trump White House deputy chief of staff, and has the blessing of David Sacks, who served as the White House’s AI czar. Axios first reported the $100M commitment on March 29, and The New York Times confirmed the operation the same day. Industry-wide, pro-AI political spending is now tracking north of $300 million for the cycle.

For a small business owner in Beckley or Bristol, this might feel like Washington noise. It is not. The rules being negotiated right now will determine whether the AI tools you use get cheaper or more expensive, more capable or more restricted, and whether you face one federal rulebook or fifty state ones.

What Innovation Council Action is actually pushing for

Innovation Council Action (ICA) is organized as a 501(c)(4) — the same structure used by politically active advocacy groups that can raise and spend unlimited sums. According to Fox News reporting on the launch, the group has three stated priorities:

• Block state-level AI laws through federal preemption
• Defeat ballot measures and candidates pushing AI safety rules
• Support candidates who back the Trump administration’s AI Action Plan

That last piece matters. The America’s AI Action Plan instructs federal agencies to consider using preemption to curb “burdensome” state AI regulations. A proposed 10-year moratorium on enforcing state AI laws was stripped from the One Big Beautiful Bill Act last year, but the executive order reopened the fight administratively.

ICA’s $100M is designed to finish what the legislation started — by replacing lawmakers who voted against preemption with ones who will support it.

Why the state-versus-federal fight is the one to watch

Right now, small businesses are navigating what lawyers call a “two-track reality.” California’s SB 53 established the first state-level safety disclosure and governance obligations for frontier AI developers. Colorado’s Anti-Discrimination in AI Law takes effect in June 2026. New York, Oregon, Washington, Florida, and Missouri all have bills in motion — we covered those in our spring 2026 state AI legislation roundup.

The practical issue for a small business is this: if you use an AI chatbot on your website, an AI dispatcher for your HVAC crew, or an AI tool to screen job applicants, the state where your customer or applicant lives may dictate what the AI is allowed to do. That means separate disclosures, separate audit logs, separate opt-outs.

ICA and its allies want one federal standard that preempts all of that. The state attorneys general and consumer groups on the other side want the states to keep regulating while federal law is still in flux.

Whichever side wins will reshape what “AI compliance” actually costs your business.

What small businesses actually gain or lose from deregulation

There is a comfortable assumption that “deregulation = lower costs for small business.” It is more complicated than that.

Where deregulation helps small businesses:

• Fewer per-state compliance obligations when you operate across state lines
• Lower AI tool prices if vendors do not have to build 50 different compliance modes
• Faster rollouts of new AI features — less legal review before shipping
• Reduced paperwork for using AI in hiring, lending, or customer service

Where deregulation can hurt small businesses:

• Less consumer protection means more liability exposure when AI tools fail
• Looser rules on AI-generated content raise the bar on distinguishing your real marketing from fake competitor ads
• Weakened state enforcement leaves small businesses without a cheap recourse when a large AI vendor’s tool harms them
• No preemption guarantees mean you could still end up with federal and state rules stacked on top of each other

The PwC 2026 AI Performance study found that roughly 75% of AI’s economic gains are being captured by just 20% of companies — the largest ones. Deregulation designed around frontier model developers does not automatically trickle down to the plumbing shop in Charleston.

Our take on the $100M bet

The framing of “deregulation versus safety” misses what matters for Main Street.

What small businesses actually need is clarity and proportionality. Right now, the compliance burden on a 10-person accounting firm using an off-the-shelf AI tool is written the same way as the burden on OpenAI — because most state laws regulate the tool, not the user. That is the real fight hiding underneath ICA’s campaign.

If the $100M push produces a federal framework that exempts small businesses using third-party AI tools from duplicating their vendor’s compliance, that is a win for Appalachian small businesses. If it produces a blanket preemption with no protection for consumers or users, larger players walk away with the gains — and small businesses inherit the backlash when the public loses trust.

We covered a similar dynamic when Trump’s AI Advisory Council was announced earlier this month — the room was stacked with Zuckerberg, Huang, and Ellison. No small business voice at the table. ICA is the political arm of that same council’s worldview.

What to do right now

You cannot outspend a $100M PAC, but you can stay ahead of what it is likely to produce.

1. Keep your AI vendor contracts clean. Ask vendors which states they comply with today. If the federal rules change, you want to be portable, not locked in.
2. Document your AI use cases. If new rules arrive — in either direction — you want a clear inventory of where AI touches your customers, employees, and data.
3. Watch two specific bills. H.R. 5388 (the American Artificial Intelligence Leadership and Uniformity Act) and Colorado’s enforcement guidance on its AI discrimination law are the near-term signals that will tell you which way the wind is blowing.
4. Talk to your state SBDC. Small Business Development Centers are where plain-English guidance on AI compliance is starting to appear — especially in states that have their own laws on the books.

The bottom line

A $100M political operation pointed at AI deregulation is a signal that the rules are genuinely up for grabs over the next 18 months. Small businesses should neither cheer nor panic — they should prepare. The winners in any regulatory environment are the businesses that know what AI they use, why they use it, and what they would change if the rules changed tomorrow.

If you want a straightforward audit of where AI lives in your business today — and what to do if the regulatory ground shifts — get in touch. We help small businesses in Appalachia stay ahead of AI policy changes without turning compliance into a second job. You can also explore our consulting services for a deeper engagement.