This week’s tech policy developments offer a revealing look at the shifting balance of power between industry, government, and the states. From Meta’s quiet overhaul of its internal risk reviews to California’s pushback against algorithmic management, the tension between speed, safety, and accountability continues to shape the policy landscape. On the international front, Canada’s retreat from its digital services tax highlights growing U.S. leverage in global tech regulation. Meanwhile, Congress is signaling growing interest in AI, with a Senate hearing probing federal oversight gaps and emerging risks. As always, we’ve gathered the key updates you need to stay ahead.

In this week’s Nimitz Tech:

• BBB: Trump allies lost their first big tech fight as a bipartisan rebellion crushed efforts to block states from regulating AI.

• Labor: California’s “No Robo Bosses Act” targets AI overreach in the workplace, pushing back against algorithmic control of promotions and firings.

• Trade: Canada just scrapped its digital tax under U.S. pressure—handing Trump a win and setting the stage for a global tech tax showdown.

WHO’S HAVING EVENTS THIS WEEK?

July 8th

• 🪙 U.S. Strategy Summit for AI and Cryptocurrency: This summit will bring together policymakers, industry leaders, and academics to engage in vital discussions about the future of artificial intelligence and cryptocurrency in the United States. Register here.

TECH NEWS DRIVING THE WEEK

In Washington

• In a major setback for the tech industry and Trump-aligned Republicans, the Senate voted down a proposed 10-year moratorium on state-level AI regulations, marking the first major tech defeat of the Trump administration and igniting a broader battle over who will control the future of AI governance. Spearheaded by Sen. Ted Cruz and backed by powerful industry players like Nvidia and Andreessen Horowitz, the proposal faced stiff bipartisan opposition from state lawmakers, attorneys general, and even hardline conservatives like Marjorie Taylor Greene, who viewed the measure as an assault on states' rights and consumer protections. Despite intense lobbying and efforts to tie the moratorium to broadband and AI development funding, the provision was stripped from the GOP's legislative package. State legislators now plan to move forward with their own AI safeguards—ranging from transparency mandates to consumer privacy rules—vowing to act unless Congress enacts meaningful federal protections.

• Senator Cynthia Lummis (R-Wyo.) introduced a new legislative package aimed at overhauling the tax treatment of cryptocurrencies, proposing exemptions for small transactions under $300, crypto lending, and deferred taxation on mining and staking until tokens are sold. The bill also closes a major loophole by applying the 30-day wash rule to digital assets and allows crypto dealers to use mark-to-market accounting, aligning them with securities traders. Lummis emphasized the bill’s practicality and economic potential, citing a Joint Committee on Taxation estimate that it would raise $600 million by 2034. Though excluded from Trump’s recent megabill, the proposal arrives amid growing bipartisan momentum in Congress to establish a regulatory framework for digital assets, with related legislation on stablecoins and market oversight advancing in both chambers.

• Rick Muller, director of the Intelligence Advanced Research Projects Activity (IARPA), will step down on July 11 to join quantum computing firm IonQ, marking a high-profile exit amid efforts by the Trump administration to slash and restructure the U.S. intelligence community. IARPA, born in the wake of 9/11 and overseen by the Office of the Director of National Intelligence (ODNI), plays a key role in developing cutting-edge tools like AI and quantum tech for spy agencies. Though IARPA itself isn’t targeted in current Senate proposals, its parent agency faces budgetary strain and a 25% workforce cut under Director Tulsi Gabbard, drawing fire from lawmakers like Sen. Tom Cotton who decry bloated bureaucracy. Muller's departure raises questions about the future of high-risk, high-reward research as intelligence agencies navigate political pressure, staffing reductions, and a rapidly shifting technological landscape.

National

• California’s Senate Bill 7, the “No Robo Bosses Act,” is advancing through the state legislature with the goal of restricting employers’ use of AI for major workplace decisions like promotions, discipline, and terminations. Championed by state Sen. Jerry McNerney, the bill would require human review of automated decisions and prohibit the use of software that predicts workers’ psychological or emotional states, though a controversial ban on fully automated hiring was removed. While labor advocates say the bill offers crucial oversight, business groups including the California Chamber of Commerce and tech industry giants like Meta and OpenAI argue it’s burdensome and threatens innovation. The legislation comes as national Republicans push to ban state-level AI regulations, but California lawmakers and employers remain divided over how to balance innovation with worker protections in an increasingly automated workplace.

• Meta is shifting up to 90% of its internal risk assessments—once performed by human reviewers evaluating privacy, safety, and misinformation concerns—to AI systems, according to internal documents obtained by NPR. The move is designed to speed up the release of features across Facebook, Instagram, and WhatsApp, empowering engineers to self-assess risks through automated questionnaires rather than waiting on privacy experts. While Meta insists human oversight remains for novel or high-risk issues, current and former employees warn this automation could lead to harmful product launches, especially as teams prioritize speed over caution. Critics argue the changes dismantle longstanding safeguards just as CEO Mark Zuckerberg courts favor with the Trump administration and relaxes platform rules on hate speech and misinformation. Though EU users remain protected under stricter regulations, insiders say the shift reflects Meta’s growing reliance on AI not just to police content—but to decide what risks matter in the first place.

International

• Canada has dropped its planned digital services tax (DST) on U.S. tech companies in a last-minute effort to resume trade talks and avoid retaliatory tariffs from the Trump administration, a move hailed by Big Tech and seen as a diplomatic win for Trump. The decision, made just before the tax was to take effect, is expected to influence other countries—particularly in Europe—considering or enforcing similar tech taxes. Trump has fiercely opposed DSTs, calling them discriminatory and threatening trade penalties, while tech industry groups cheered Canada's reversal as a model for global policy. Experts say the move could embolden U.S. tech firms and signal a broader international rollback of such taxes, though some argue Europe has more leverage to resist U.S. pressure than Canada, whose economy is more closely tied to American trade. The outcome may shape upcoming negotiations as Trump’s tariff pause nears expiration and digital tax disputes take center stage in global trade talks.

FOR FUN

• 🏍️ Outdoor Movie: “Grease” on the Library of Congress Lawn - Capitol Hill (7/10)

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