Elon Musk’s artificial intelligence company, xAI, filed a federal lawsuit Thursday seeking to block Colorado’s sweeping new AI anti-discrimination law, arguing that the statute unconstitutionally compels expressive content, enforces a race-based double standard, and improperly reaches commerce occurring entirely outside the state.
The complaint, filed against Colorado Attorney General Philip Weiser, targets the Consumer Protections for Artificial Intelligence (CPAI) law, which is set to take effect on June 30. The law requires developers of “high-risk” AI systems to exercise “reasonable care” to protect consumers from algorithmic discrimination and mandates extensive disclosures and breach notifications.
But xAI argues the law is fundamentally unconstitutional, raising six claims centered on the First Amendment and Equal Protection doctrines.
‘Expressive Act’ or Consumer Safety?
The lawsuit’s central argument is that developing an AI model is an “expressive act” entitled to full First Amendment protection. Citing recent U.S. Supreme Court rulings in 303 Creative v. Elenis (the wedding website designer case) and Moody v. NetChoice (social media content moderation), xAI contends that the CPAI effectively forces the company to redesign its systems, alter training data, and modify system prompts to conform to the state’s particular views on fairness and race.
Because the law mandates a government-approved change to expressive content, xAI argues that strict scrutiny must apply. Under this highest level of judicial review, Colorado must prove the law serves a compelling state interest and uses the least restrictive means available.
“Colorado cannot satisfy that standard,” the complaint states. The company notes that AG Weiser himself has previously called the law “really problematic,” according to media reports. The Colorado Attorney General’s Office has declined to comment on the lawsuit.
Race-Based ‘Double Standard’
The lawsuit further alleges that the CPAI violates the Equal Protection Clause of the Fourteenth Amendment. While the law generally prohibits algorithmic discrimination, it carves out an exception for AI systems used to “increase diversity or redress historical discrimination.”
xAI argues this creates an unconstitutional race-based double standard without any compelling justification. The complaint also challenges key statutory terms—including “historical discrimination”—as impermissibly vague, arguing that developers have no way of knowing what the state will consider a violation.
Extraterritorial Reach
A third major constitutional challenge targets the law’s extraterritorial scope. The CPAI applies any time a Colorado resident is affected by an AI system, regardless of where the AI developer or the user interaction is physically located.
xAI argues this violates the Constitution’s Dormant Commerce Clause, which prohibits states from regulating commerce that occurs entirely outside their borders. The company contends that the CPAI would force out-of-state businesses to redesign their products globally merely because a Colorado resident might one day encounter them.
What the Law Requires
The CPAI defines “high-risk” systems as any AI that “makes, or is a substantial factor in making, a consequential decision” affecting consumers. Developers must:
- Make extensive public disclosures about bias evaluation and mitigation steps.
- Notify the state attorney general within 90 days of discovering that a system has caused—or is reasonably likely to cause—algorithmic discrimination.
- Face civil penalties of $20,000 per violation under Colorado’s Consumer Protection Act, with exclusive enforcement authority held by the AG.
A Growing Litigation Landscape
This lawsuit marks the newest front in an emerging wave of AI-related litigation. In January, Google and Character.AI agreed to settle a lawsuit linked to a teenager’s 2024 suicide. Last September, Anthropic agreed to a $1.5 billion settlement in a class-action lawsuit over the use of pirated materials to train its models.
Legal observers say xAI’s constitutional challenge could set a significant precedent for how states may—or may not—regulate algorithmic bias without running afoul of federal free speech and commerce protections.
xAI is seeking a preliminary injunction to block enforcement of the CPAI before its June 30 effective date, as well as a permanent ruling striking down the law as unconstitutional.
