WASHINGTON — Representatives Jay Obernolte, a California Republican, and Ted Lieu, a California Democrat, introduced a bipartisan bill in the House this week to regulate artificial intelligence. The legislation proposes a new federal agency tasked with setting safety standards and auditing AI models for bias and transparency. The bill focuses on "high-risk" AI applications—a definition left to the proposed agency to interpret.
The oversight body would require AI developers to register their models and submit to regular audits, a process that favors well-resourced tech giants. Companies like Microsoft, Alphabet and Amazon, which already invest billions in AI research and compliance, stand to benefit. Their existing legal and lobbying teams can more easily absorb new regulations, effectively raising the barrier to entry for smaller competitors. Microsoft spent $11.2 million on lobbying in 2025, according to OpenSecrets data, a figure that includes significant outlays on AI-related policy.
This framework sets a precedent where only firms capable of sustaining extensive regulatory compliance departments can operate at scale. Smaller AI startups and open-source developers face higher compliance costs under this regime. Mandated audits and extensive documentation requirements could stifle innovation from independent actors who lack the capital for such overhead—creating a regulatory moat that keeps advanced AI development inside a handful of dominant firms.
The bill also grants the new agency broad authority to define acceptable use guidelines for AI systems. That power could allow the agency—potentially steered by industry-heavy advisory boards—to shape market competition in favor of established players. Existing market leaders often advocate for standards that align with their current operational models, making it harder for new entrants to gain traction. Lobbyists for major tech firms have been active on Capitol Hill, pushing for frameworks that prioritize stability over rapid, unregulated growth.
By participating in the drafting process and advocating for specific compliance structures, those companies solidify their market positions. The bill now moves to committee for review, where further industry input is expected.
