Some Texas lawmakers insist that a small business carveout in HB 1709, called the Texas Responsible AI Governance Act (TRAIGA), will shield fledgling businesses from its Euro-style micromanagement of artificial intelligence.
They are mistaken.
TRAIGA is a sweeping attempt to regulate AI under the pretext of preventing algorithmic bias. In reality, it imposes excessive compliance burdens that stifle innovation, particularly among small businesses. It forces AI developers, distributors, and deployers to jump through bureaucratic hoops of paperwork, audits, and impact assessments.
The bill’s so-called small business exemption—for firms earning less than $7.5 million annually—ignores how AI works in the real economy. Most small businesses rely on AI tools developed by larger firms—and even use those tools to compete against them. Since those companies must comply with TRAIGA’s mandates, they will pass compliance costs down the supply chain, increasing expenses for everyone and depriving small businesses of a tool they can use to stay competitive against larger businesses.
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Logan Kolas is the Director of Technology Policy at the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, follow us on X @ConsumerPal.