The proposal to ban states from passing their own AI legislation by tying it to federal broadband funding is exposing fault lines and alliances across the aisle.

Why it matters: State regulation of AI is emerging as yet another issue that the GOP isn't united on, making the provision's future in the reconciliation bill uncertain.

Driving the news: We scooped yesterday that the Senate parliamentarian approved new language from Sen. Ted Cruz to rebrand the moratorium as a "temporary pause."

• "History has shown that this light-touch regulatory approach to new technologies has been incredibly successful in promoting American innovation and jobs," Cruz said following the parliamentarian's decision.

State of play: Both Democrats and Republicans pushed back immediately, and outside groups upped the pressure to remove the provision from the bill.

• Some say they want to protect states' rights. Some think state-level AI bills protect consumers while the federal government falters.
• Others say that state-level tech bills have protected conservatives from being censored online. And others think the provision is simply a giveaway to Big Tech.

Friction point: Cruz has plenty of company in Congress among those who would prefer to see a federal standard on AI rather than an assortment of state laws.

• But tying the 10-year freeze to broadband funding and restricting states from doing what they want is a bridge too far for many Democrats and Republicans.
• Senate Democratic talking points seen by Axios call the moratorium "dangerously broad" and describe linking it to broadband funds as a "hostage situation."

What they're saying: "We cannot prohibit states across the country from protecting Americans, including the vibrant creative community in Tennessee, from the harms of AI," Sen. Marsha Blackburn said in a statement to Axios.

• "I am willing to work with Chairman Cruz to ensure we do not block states from standing in the gap for their citizens until we have a national standard in place for regulating AI."
• Blackburn's comments align her with Democrats like Sens. Maria Cantwell and Ed Markey, who both plan to fight the provision with amendments. Sen. Josh Hawley has also said he's against the provision.

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Populist conservatives like Steve Bannon and Mike Davis oppose the moratorium, along with House Freedom Caucus conservatives, who wrote in a letter earlier this month that they wanted the provision out of reconciliation.

• "This ten-year moratorium in the Big Beautiful Bill gives Big Tech the green light to censor conservatives," Mike Davis, founder of right-wing advocacy group the Article III Project, told Bannon on his War Room show Monday.
• "It's going to be open season on conservative users online," Davis said, citing bills in states including Florida and Texas that right-wing groups have advocated for because they think they've been silenced online.
• A spokesperson for the House Freedom Caucus did not respond to a request for comment on the bill's new language.

In the White House, Vice President JD Vance has said he doesn't think the provision will make it in the final bill and he "can go both ways" on it.

• "I don't want California's progressive regulations to control artificial intelligence. I also agree with Marsha [Blackburn] and Bill [Hagerty] that you want to protect country artists in Nashville from having their crap stolen," Vance said on a podcast earlier this month.
• Trump's AI adviser David Sacks, meanwhile, is strongly in favor of the pause and has said it would help prevent "AI Doomerism that is becoming a dominant strain on the American and European Left."

The intrigue: The pushback highlights the unlikely alliance of Democrats and Republicans who've been supportive of the anti-Big Tech, pro-antitrust movement.

• That group has had massive influence in President Trump's second term thus far, shown by the ongoing antitrust litigation and wins against Big Tech companies.

What we're watching: Republican senators who championed the BEAD program are wrapping their heads around how the provision might affect internet grants in their states, and more could come out against it.

🤖 DeepSeek deets: "AI firm DeepSeek is aiding China's military and intelligence operations, a senior U.S. official told Reuters, adding that the Chinese tech startup sought to use Southeast Asian shell companies to access high-end semiconductors that cannot be shipped to China under U.S. rules."

📵 WhatsApp off: The House's chief administrative officer informed congressional staffers yesterday that messaging app WhatsApp is banned on their government devices, our Axios colleague Andrew Solender scooped.

👀 Antitrust watch: "UK antitrust watchdog says Google may have to offer rival search options," per AP.

🌎 Global AI: RAND's Afek Shamir and Paul Khullar argue in Tech Policy Press that the G7 summit missed an important opportunity for progress on global AI governance.

• "In an era where highly capable AI systems can be trained in one country, deployed in another, and potentially cause damage in a third, purely national approaches to AI governance may struggle to address cross-border risks," they wrote.