Democrats seized a sizable majority of both chambers of Congress in the November 3 midterm elections, and technology companies should expect to see significant changes in legislative and oversight priorities on tech issues as a result. Enacting legislation in a divided government will prove challenging, but with their historic sweep, incoming Democratic leaders believe they have a mandate to drive policies that respond to voters’ concerns that ushered them back to power: the everyday cost of living and abuse of power.
We expect Democrats to introduce legislation, hold hearings and markups, and pass bills on topics that motivated voters, such as data centers and energy costs, alleged self-dealing in Trump Administration agreements with tech companies, and AI safety.
While few bills introduced in the 120th Congress will become law because the new majority will not reach the 60-vote threshold to end a Senate filibuster or the two-thirds threshold needed to override a presidential veto, Democrats have multiple legislative and oversight tools at their disposal to make policy.
One path to enacting legislation allows Democrats to bypass the filibuster altogether. By using the budget reconciliation process—a special procedure for certain budget bills that requires only a simple majority for passage in both chambers—Democrats could send a package of bills to the President’s desk without risk of a Republican filibuster. While President Trump could veto a reconciliation bill, it could open the door to dealmaking with the President on some issues. Alternatively, Democrats could leverage a presidential veto of popular legislation as a campaign issue in the 2028 election.
In addition, some legislation will pass with bipartisan support. Annual appropriations bills and the National Defense Authorization Act (NDAA) act as vehicles that often carry other bipartisan priorities. They can also offer opportunities to constrain executive actions, such as tariffs and export controls, or advance policies like AI safety, that Democrats could not otherwise accomplish through standalone legislation.
Several policy areas also enjoy genuine bipartisan support, including kids online safety, China-related national security measures, and certain AI guardrails. These issues present potential opportunities for passing legislation in the next Congress, but it remains to be seen whether congressional Democrats and the Trump Administration ultimately will cooperate on these issues.
Beyond legislation, Democrats will deploy oversight as a major tool to pressure both the Trump Administration and private businesses to drive policy. Democratic committee chairs, armed with subpoena power, will investigate technology companies’ dealings with the Administration, their ties to China and other countries of concern, and the effects of their products on safety and cost of living for Americans, with the intent of catalyzing legislation or voluntary change.
In light of these policy tools, we preview below how the Democratic Congress will likely approach several key technology policy areas.
Safety and regulation. Following a bevy of AI safety disclosures this past summer, the congressional debate over AI is shifting away from preemption toward guardrails. Republicans spent the 119th Congress trying to preempt state AI laws, first through a moratorium the Senate stripped from the 2025 reconciliation bill on a 99-1 vote and then through narrower proposals that stalled, while President Trump signed a December 2025 executive order directing a DOJ task force to pursue litigation against “onerous” state AI laws. Democratic majorities—and perhaps some Republicans—will likely refuse to preempt state laws without enforceable federal standards to replace them. In the meantime, we expect to see Democratic-led committees focus on transparency, safety testing, and incident reporting for frontier AI developers, along with oversight of the Administration’s handling of AI regulation.
Note that unlike many other issues, “AI regulation” falls under the jurisdiction of multiple congressional committees. For example, technical standards for AI safety likely fall within House Energy & Commerce Committee and Senate Commerce, Science, and Transportation Committee jurisdiction, while consumer protection and certain privacy issues would likely fall to the House and Senate Judiciary Committees; cybersecurity would fall to the House Homeland Security Committee and Senate Homeland Security and Governmental Affairs Committee, and so on. Overlapping or conflicting jurisdiction, combined with individual committee chairs’ priorities, complicates—and often frustrates—Congress’ ability to draft and consider comprehensive AI legislation.
Unless and until Congress enacts preemptive legislation, tech companies should also expect that states will continue enacting and enforcing their own AI safety laws.
Infrastructure and data centers. Just as data center construction has exploded to support exponential growth in AI compute needs, AI infrastructure has emerged as a major campaign issue. According to one poll, 56 percent of voters nationwide reported that data centers and AI played a “crucial or major role” in their vote for Congress. At the state and local level, voters also passed ballot measures to restrict data centers in at least 33 jurisdictions. Only one—Harwood, North Dakota—adopted a pro-data center measure.
In September, Democrats blocked passage of an AI data center bill, led by Senator Bernie Moreno (R-OH), that would set federal standards for data centers to bear the full costs of their energy consumption, and require state utility regulators to “consider” imposing those standards. Democratic opponents argued the bill lacked an enforcement mechanism and put forward alternative legislation that would require large data centers to pay the full cost of electrical grid upgrades. A Democratic Congress will approach AI datacenters as a cost-of-living issue, pursuing hearings and legislation that focus on energy and water sourcing and usage. We also expect congressional oversight of incentive agreements between large-scale data center developers and localities.
Since the Supreme Court invalidated tariffs imposed under the International Emergency Economic Powers Act in February 2026, the Administration has relied on Section 232 and Section 301, including a 25% Section 232 tariff on certain advanced computing chips that took effect in January 2026 and a Section 301 determination on Chinese semiconductors. Consistent with their campaign theme of affordability, we expect Democrats in the next Congress will frame tariffs as a cost-of-living issue and may push for legislation requiring congressional approval of new Section 232 actions, building on bipartisan proposals from prior Congresses. As with other areas, Democratic chairs will focus on oversight of how the Administration grants tariff exemptions and offsets tied to commitments by companies to invest in the United States.
The Administration’s January 2026 decision to license certain advanced AI chips to China on a case-by-case basis, conditioned on a 25% payment to the government, drew bipartisan objections, and House committees advanced legislation to require the Commerce Department to submit certain chip export licenses for advance congressional review and to require advanced AI chips to contain “security mechanisms,” such as location verification. Democrats will treat chip export policy as both a national security issue and an oversight target, investigating how license decisions were made and whether they were linked to company commitments or favorable treatment by the Administration.
Rep. Sydney Kamlager-Dove (D-CA), the likely chair of the House Foreign Affairs Subcommittee on South and Central Asia, which also oversees export controls, has noted that “It is as much about specific companies as it is about how the [Commerce Department] is being run and how these deals are being allowed that are still giving China access to our most advanced chips.” Republicans on the House Select Committee on China and the Foreign Affairs committees have also expressed concerns with the Administration’s approach to export controls, so we expect Democrats to support including export control measures in the must-pass FY2027 NDAA during the lame duck or perhaps in the FY2028 NDAA next year.
House Democrats have already signaled their intent to scrutinize companies on a host of issues, such as the market power of a small number of AI-related companies, algorithmic pricing, tariff exemptions, favoritism in public procurement, the federal government taking equity stakes in private businesses, and business dealings with government officials or Trump family members. While in the minority, Democrats have sent document-preservation letters to major technology companies about contributions to the White House ballroom and other Trump-linked projects, and leading members have indicated that they will use subpoena power to test whether donors, inaugural contributors, and parties to Administration deals received tariff exemptions, government equity arrangements, regulatory relief, or other favorable treatment.
Representatives Robert Garcia (D-CA) (Oversight Committee), Jamie Raskin (D-MD) (Judiciary), Frank Pallone (D-NJ) (Energy and Commerce), and Maxine Waters (D-CA) (Financial Services), along with Senators Elizabeth Warren (D-MA) (Banking), Sheldon Whitehouse (D-RI), and Richard Blumenthal (D-CT) (Permanent Subcommittee on Investigations) are each positioned to lead parts of this oversight agenda, although the broader Democratic caucus reportedly remains divided over how aggressively to pursue oversight on the private sector versus Trump Administration officials.
Democrats will also likely continue bipartisan scrutiny of technology companies' China ties, including chip sales, research partnerships, and data flows, which offers a path to cooperation with China-focused Republicans, especially if the Democrats opt to renew the House Select Committee on China. Companies should begin preserving documents, mapping contacts with the Administration, and preparing executives for possible hearings now.
The current Congress has pursued two very different flavors of connected and autonomous vehicle (CAVs) legislation: bills that would regulate safety standards for CAVs, and national security legislation aimed at preventing the import of connected vehicles manufactured or developed in China or other “countries of concern.”
On CAV regulation, the leading bill, the SELF DRIVE Act would create a comprehensive federal framework for automated driving systems (ADS) and ADS-equipped vehicles and direct the National Highway Traffic Safety Administration (NHTSA) to develop regulations specific to AV safety, permits AV developers to remove manual driving controls, and makes other changes to existing requirements to accommodate AVs. The SELF DRIVE Act initially enjoyed bipartisan support, but Democrats ultimately withdrew support over the bill’s preemption of state AV laws. House Democrats, including likely Energy & Commerce Committee Chair Rep. Frank Pallone (D-NJ) and Rep. Debbie Dingell (D-MI), who sponsored the bipartisan version of the SELF DRIVE Act, strongly support AV legislation and will likely revisit the legislation in the majority.
On the national security side, Democrats broadly support the Commerce Department’s connected vehicle rule, initially proposed during the Biden Administration and finalized in 2025, and may seek to codify it into statute. The bipartisan Connected Vehicle Security Act, which passed the Senate Commerce Committee in July 2026 on a bipartisan voice vote, would enhance the CV rule and attempt to limit the Administration’s discretion to loosen restrictions on connected vehicle imports. While the lead sponsor, Senator Bernie Moreno (R-OH) has suggested that the bill may advance in the lame duck session, outgoing Senate Commerce Committee Chair Ted Cruz (R-TX) has stated he will oppose the bill without additional changes.
Congress codified and expanded the outbound investment program, first initiated in the Biden Administration, in the FY2026 NDAA through the Comprehensive Outbound Investment National Security (COINS) Act. On October 22, Treasury issued a notice of proposed rulemaking to implement the law. If adopted as proposed, the rule would substantially expand the outbound investment program, particularly with respect to artificial intelligence (“super intelligence”) and biotechnology, as well as by broadening the definition of “covered foreign persons” to include companies subject to the direction or control of persons from countries of concern, even where those persons only hold minority ownership interests.
Because the COINS Act passed with strong bipartisan support, a Democratic Congress likely will not revisit its framework but instead will exercise oversight through the Senate Banking and House Financial Services committees—likely to be chaired by Senator Elizabeth Warren (D-MA) and Rep. Maxine Waters (D-CA), respectively—to ensure the Treasury Department to fully implement it on schedule (under the COINS Act, regulations are due around mid-March 2027). We also expect congressional scrutiny of waivers or other executive action the Administration leverages in its broader trade negotiations with China. Investors and technology companies with China exposure should expect congressional pressure to prevent the Administration from narrowing the scope of the COINS Act through rulemaking.
Surging AI data center demand for high-bandwidth memory has diverted semiconductor wafer capacity away from traditional DRAM chips for consumer electronics, leading to rising memory chip prices as the shortage continues into 2027. As consumers experience the increased cost of laptops, phones, cars, and other consumer electronics, Democrats may use the opportunity to link the AI infrastructure buildout to rising costs-of-living. We expect oversight of how chip companies allocate capacity between high-margin AI customers and consumer markets, as well as how the Administration’s proposed semiconductor tariffs would worsen the shortage. We may also see bipartisan support for expanded domestic production of memory chips, either through CHIPS Act funding or the Section 48D tax credit. Whether some members of Congress will push the Administration to ease export controls and other trade restrictions to relieve prices remains to be seen.
The Administration’s approach to critical mineral supply chains has focused on direct U.S. government equity stakes in domestic and foreign mining and processing companies, allied sourcing agreements, and stockpiling efforts, including Project Vault, a $12 billion strategic reserve financed through the Export-Import Bank and private sector investments. Democrats share the Administration’s goal of reducing dependence on Chinese critical mineral supply and processing, so a Democratic Congress is unlikely to unwind these programs. Some Democrats have even expressed support for public equity investments in strategic industries. The new Democratic majority, however, will again likely focus on governance, demanding transparency in how the Administration works with the private sector, with particular emphasis on potential conflicts of interest.
Representative Hank Johnson (D-GA) is poised to take the gavel of the House Judiciary IP Subcommittee, and we expect that under his leadership the Subcommittee will focus on the intersection of IP and AI, including copyright and fair use, patent subject-matter eligibility, and remedies for patent Infringement.
Similarly, as a longtime champion of creators, if Senator Adam Schiff (D-CA) takes the gavel of the Senate Judiciary IP Subcommittee, he will likely focus on the intersection of copyright and AI, including AI training transparency and creator compensation. Stopping foreign IP theft and online piracy may also continue to be Schiff priorities. With the retirement of Senator Thom Tillis, who held the Republican leadership position since 2019, the Senate Republican IP agenda is still taking shape.
While several states have moved forward with comprehensive privacy legislation, Congress has yet to enact a comprehensive federal privacy statute. House Republicans introduced the SECURE Data Act in 2026 to broadly preempt state privacy laws, but Democrats in the next Congress could develop an alternative framework that pairs narrow preemption with a private right of action for data owners. However, comprehensive privacy legislation is unlikely to become law while Republicans control the White House.
Congress has continued to advance bipartisan bills aimed at addressing risks of social media platforms, AI chatbots, gaming platforms, and video streaming services, particularly for minors. In August, the Senate Commerce Committee advanced several children’s online safety and AI bills, including Sen. Ted Cruz’s (R-TX) CHATBOT Act, which among other requirements, would require providers of AI chatbots to offer family accounts and obtain verifiable parental consent for teens, and the Kids Online Safety Act (KOSA), sponsored by Senators Marsha Blackburn (R-TN) and Richard Blumenthal (D-CT), which would require online platforms to implement certain guardrails to protect users under the age of 17. A Democratic Congress would likely focus on online safety legislation that imposes a “duty of care” on platforms and, unlike the Kids Internet and Digital Safety (KIDS) Act passed by the Republican House, would only narrowly preempt state laws that offer stronger protections.
Democrats will also likely pressure the FTC to enforce the TAKE IT DOWN Act, which establishes notice-and-takedown requirements for nonconsensual intimate images.
Democrats may also be willing to debate whether AI developers and online platforms are shielded from liability for generative AI outputs under Section 230 of the Communications Act. Bipartisan legislation was introduced in the House this Congress to repeal Section 230 altogether.
App store competition and merger enforcement are top issues for congressional Democrats that will likely receive attention in the next Congress. The Senate Judiciary Antitrust subcommittee may revisit the bipartisan Open App Markets Act, which enjoys strong bipartisan support, including from the current chair and ranking member of the subcommittee. The bill would require major mobile app stores to allow customers to pay for apps outside of the store’s in-app environment, purchase apps through third-party stores, and install apps not purchased through an app store. The bill’s Democratic sponsor, Senator Richard Blumenthal (D-CT) is likely to chair the Antitrust Subcommittee, and its Republican sponsor, Senator Lee, will likely serve as ranking member of the full Judiciary Committee. The legislation passed out of committee in 2022 in a bipartisan 20–2 vote but did not receive a floor vote.
On antitrust enforcement, Democrats will likely investigate whether the Administration has settled or softened merger reviews and monopolization cases in exchange for political or financial considerations and will press the Justice Department and FTC to continue pending monopolization cases against major technology platforms. House and Senate Democrats, including likely House Judiciary Committee Chairman Jamie Raskin (D-MD), have also introduced the Antitrust Accountability and Transparency Act, which would require courts to more closely scrutinize proposed merger settlements agreed to by the DOJ and FTC.
Certain consumer protection measures also enjoy bipartisan support. Legislation is pending in both chambers of Congress to prohibit the use of AI and algorithmic systems to inform individualized prices based on personal data. The FTC has also addressed this practice of “surveillance” pricing by proposing new enforcement guidelines. A public comment period closed in September, and final FTC guidance would offer a federal analogue to legislation in multiple states that targets surveillance pricing.
As Democrats take control, tech companies should identify opportunities to engage with key Members of Congress, especially incoming chairs, regarding their legislative priorities. Messaging should be refreshed and companies should develop relationships with incoming lawmakers. Companies should also designate an internal team and take steps to prepare for potential investigations.
Covington’s Public Policy team will monitor these and other tech policy developments in the new Congress, and we are available to assist clients with their preparations and outreach.
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