Democratic midterm wins set stage for tougher tech and AI scrutiny

Democrats won both chambers of Congress — the U.S. House of Representatives and Senate — ushering in a new era of congressional leadership in the second half of U.S. President Donald Trump's second term. Though votes are still being tallied in a number of races, Tuesday's broad and deep victories — not only at the federal level — will lead to a sea change in congressional oversight, potential regulation and state-level activity. Democratic victories in a number of state governor races also suggest the environment has swung from a brief era of tech deregulation to more oversight and potential guardrails to rapidly evolving AI and digital technology.

Given the Democratic takeover of both chambers of Congress in 2027, the agenda will shift next year. Committee gavels will provide Democrats with subpoena power, the ability to set hearing agendas, markup authority and control of oversight.

A new Congress in 2027

After nearly two years of a hands-off approach under the Trump administration to AI guardrails, Democratic leadership of key committees will likely lead to more scrutiny of Big Tech. Potential priorities under the Senate Committee on Commerce, Science, and Transportation could include AI governance and accountability, federal privacy legislation, children's online safety, platform regulation and FTC oversight. The Senate Committee on the Judiciary could set an agenda for surveillance and law enforcement access to data and renewed attention to the intersection of AI, competition and civil rights.

In the House, the Committee on Energy and Commerce could aim to be active in federal privacy legislation, while the House Committee on Oversight and Government Reform could give the chairman authority to investigate executive branch activity and agency decision-making, as well as oversight related to the federal procurement of technology, AI use and other federal data practices, like that of Elon Musk's Department of Government Efficiency. 

"Expect the blue wave that swept through the states to ripple through Washington," said Goodwin Partner and IAPP Westin Emeritus Fellow Omer Tene. "We're likely to see renewed momentum for AI regulation focused on safety and automated decision-making, drawing on the regulatory models emerging from blue states like California, Colorado, Illinois and New York." 

Democrats are expected to focus more on cybersecurity issues and potential guardrails for AI. However, the party may not be fully on the same page. The progressive wing of the Democratic coalition, like Sen. Bernie Sanders, D-Vermont, and Rep. Greg Casar, D-Texas, want to curb the development of "super intelligence," and place a moratorium on development of new data centers. Moderate Rep. Scott Peters, D-Calif., told Politico that the AI "discussion so far is ... pretty populist, pretty devoid of fact, and I think we have to be more realistic about it." 

Yet, with the ability to set the agenda for congressional hearings once again, Democratic lawmakers could demand testimony from Big Tech executives on topics ranging from social media addiction and issues around AI and the impacts of data centers. According to Politico, several major Washington law firms have started hiring lawyers to help their clients manage new congressional scrutiny. 

Rep. Frank Pallone, D-NJ, who is in line to lead the House Energy and Commerce Committee next year, said that, among other priorities, he aims to help lead a "bold agenda" to "rein in Big Tech." He's also exploring the personalized pricing industry, recently expanding inquiries into various businesses across the economy. 

Agencies, particularly the U.S. Federal Trade Commission, will face a new reality as well. "Expect intense scrutiny of the FTC," said Tene, "not just what it does to police AI and privacy practices, but what it chooses not to do." 

It's not just the federal level, states have shifted, too

Though the impact of the election will dramatically alter the composition of U.S. Congress, the state landscape will undergo a shift as well. 

"The blue wave wasn't limited to federal elections," said Stauss founder David Stauss, CIPP/E, CIPP/US, CIPT, FIP. "Democrats flipped governor and attorney general positions as well as several state legislation chambers." He noted that several existing state-level majorities increased, which could mean that "privacy and AI legislation that had previously stalled could get a fresh look. At a minimum, we should anticipate more activity in this space." 

State attorneys general could become more active, though it is not clear how the newly elected Texas attorney general, Nathan Johnson, a Democrat, will continue to pursue the privacy settlements reached under current Attorney General Ken Paxton.  

IAPP Managing Director, Washington, D.C., Cobun Zweifel-Keegan, CIPP/US, CIPM, also pointed to Colorado, which has previously passed AI legislation. "Another race I'm watching is Colorado's 8th District," he said. "Gabe Evans was on the Energy and Commerce Committee but lost his reelection bid to Manny Rutinel. Rep. Rutinel happens to be one of the primary authors of the Colorado AI Act, so I wouldn't be surprised to see him join the E&C Committee and bring his focus on AI oversight with him to Washington." 

Stauss pointed out that "AI regulation has become a bipartisan issue." With a growing backlash across parties against the construction and proliferation of data centers, the rapid advancement of AI development and growing use of surveillance technology, such as Flock cameras, both parties are paying increased attention. 

"Several Republican-controlled states have passed AI laws over the last two years, although the laws passed in Democratic-controlled states were more far-reaching," said Stauss. "Another factor worth keeping an eye on is the Trump administration's role in state lawmaking. Last year, the administration played a role in killing bills in states like Utah and Florida. Will the administration have that same type of power in 2027?"

On digital governance: How will businesses respond?

In looking ahead to the 2028 presidential election, OpenAI lobbyist Chris Lahane, who served as press secretary for then-vice president Al Gore, said, "The candidate who can articulate a compelling third path between those who would let AI advance without speed limits, and those who would keep control over the technology in the hands of a self-appointed elite, will have an opportunity to define a new contract for this new era." 

Could that sentiment apply to how businesses view the balance of AI guardrails and innovation as well?

Among the takeaways in the newly published IAPP Digital Risk Report 2026, when polled last spring, respondents ranked the deprioritization of digital governance as a significant risk factor. "The pursuit of competitive edge and comparative advantage has resulted in risk management functions being increasingly tasked as enabling risk taking, as well as being stewards of risk mitigation and management," the report stated. 

It also found that the "dual threat of political deprioritization of governance and compliance, coupled with fragmented governance and norms, indicate that professionals are burdened not just by the volume of regulation but also by the complicated, if not conflicting, nature of multinational compliance." 

In the short term, Tene said, "I don't see the midterm election results significantly changing corporate behavior." 

"Companies' approach to AI innovation and data governance is driven primarily by economic forces, which, despite persistent inflation, have been extraordinarily strong, fueled in no small part by the high-octane AI boom. A market correction could prompt companies to pause and recalibrate the balance between innovation and governance," he said. "Until then, expect the bulls to keep charging ahead, regulatory headwinds notwithstanding." 

And though Democrats will control the legislative branch, they'll still have to work with President Trump or have a veto-proof majority for any potential legislation.