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A blue wave has swept Democrats into control of both the House and Senate, dealing a major blow to Donald Trump in the midterm elections. But beyond the congressional shake-up, a handful of state attorney general races could prove just as consequential for the technology industry.

Democrats won five closely watched attorney general races, including a surprise victory in Texas, where Nathan Johnson defeated Republican Mayes Middleton to become the state’s first Democratic attorney general since 1994. In Arizona, incumbent Kris Mayes defeated Republican Warren Petersen, while Wisconsin’s Josh Kaul secured a third term. Michigan’s Eli Savit defeated Republican Doug Lloyd to succeed term-limited Democrat Dana Nessel, and Democrat Nicole Cannizzaro won Nevada’s open seat.

The results could have huge implications for Big Tech. As federal lawmakers have struggled to rein in the industry, state attorneys general have emerged as some of its most powerful watchdogs, using investigations and lawsuits to force changes to products and practices nationwide. And a change in leadership can bring an abrupt shift in enforcement priorities.

“State attorneys general have become the preeminent regulator and regulatory enforcer in the United States over the last 15 or 20 years,” says Stephen Cobb, partner and vice chair of the state attorneys general practice at Foley & Lardner, a Washington, D.C., law firm. “We’ve seen state attorneys general from across the aisle having an increased focus on the technology industries generally,” he adds.

Texas, in particular, could signal a major shift. The state’s attorney general’s office has long been among the most influential Republican-led legal operations in the country, regularly helping spearhead multistate lawsuits. Johnson has promised to refocus the office on consumer protection rather than partisan political battles—a change that could reshape the coalitions bringing legal challenges against technology companies.

Arizona and Michigan are also important players in tech enforcement. Arizona has been a key participant in multistate actions targeting the industry, while Michigan has been “actively engaged in national consumer protection and technology matters,” says Brandon J. Smith, partner at law firm Holtzman Vogel.

“A change in attorney general can mean a significant change in enforcement priorities almost overnight, even without a single change in the underlying law,” Smith says.

Attorneys general already have sweeping authority to investigate technology companies, Smith notes. “The technology industry sometimes underestimates just how much authority state attorneys general already possess,” he adds. Even without new AI-specific legislation, state AGs can investigate tech companies using existing consumer protection, unfair and deceptive practices, and antitrust laws.

At first glance, the Democratic sweep might seem like bad news for Big Tech. But the partisan dynamics of tech regulation are more complicated, Smith cautions.

Republican attorneys general have generally focused on issues such as alleged censorship and consumer safety, while Democrats have placed greater emphasis on privacy and algorithmic discrimination. But both parties have become increasingly aggressive in their scrutiny of the tech industry, meaning that a Republican victory doesn’t necessarily translate into a friendlier regulatory environment.

“Both parties increasingly view big tech as an industry requiring greater scrutiny,” Smith says. “I don’t think technology companies should interpret partisan disagreement as an indication that either side is going to leave them alone.”

That bipartisan pressure has been particularly evident in efforts to protect children online. Josh Golin, executive director of the children’s advocacy nonprofit Fairplay, points to state AG investigations and lawsuits involving Meta, TikTok, Snap, Discord, and Roblox, which he says have helped push companies to change their products and introduce additional safety features. He expects that scrutiny to continue regardless of which party holds office, given the broad political concern over children’s online safety.

Tech companies are “definitely watching because attorneys general have shown that a single state enforcement can change how that national product works,” says K.J. Bagchi, vice president of U.S. policy and government relations at the Chamber of Progress, a tech industry trade association.

But Bagchi argues that the focus on who occupies these powerful offices obscures a larger problem: State attorneys general have become de facto tech regulators partly because lawmakers have failed to act.

“I would warn against a model where litigation is a substitute for legislation,” he says. “Going after single companies is not necessarily the solution, but it is an understandable byproduct of seeing that the legislative process in some states has fallen apart.”

A blue wave has swept Democrats into control of both the House and Senate, dealing a major blow to Donald Trump in the midterm elections. But beyond the congressional shake-up, a handful of state attorney general races could prove just as consequential for the technology industry.

Democrats won five closely watched attorney general races, including a surprise victory in Texas, where Nathan Johnson defeated Republican Mayes Middleton to become the state’s first Democratic attorney general since 1994. In Arizona, incumbent Kris Mayes defeated Republican Warren Petersen, while Wisconsin’s Josh Kaul secured a third term. Michigan’s Eli Savit defeated Republican Doug Lloyd to succeed term-limited Democrat Dana Nessel, and Democrat Nicole Cannizzaro won Nevada’s open seat.

The results could have huge implications for Big Tech. As federal lawmakers have struggled to rein in the industry, state attorneys general have emerged as some of its most powerful watchdogs, using investigations and lawsuits to force changes to products and practices nationwide. And a change in leadership can bring an abrupt shift in enforcement priorities.

“State attorneys general have become the preeminent regulator and regulatory enforcer in the United States over the last 15 or 20 years,” says Stephen Cobb, partner and vice chair of the state attorneys general practice at Foley & Lardner, a Washington, D.C., law firm. “We’ve seen state attorneys general from across the aisle having an increased focus on the technology industries generally,” he adds.

Texas, in particular, could signal a major shift. The state’s attorney general’s office has long been among the most influential Republican-led legal operations in the country, regularly helping spearhead multistate lawsuits. Johnson has promised to refocus the office on consumer protection rather than partisan political battles—a change that could reshape the coalitions bringing legal challenges against technology companies.

Arizona and Michigan are also important players in tech enforcement. Arizona has been a key participant in multistate actions targeting the industry, while Michigan has been “actively engaged in national consumer protection and technology matters,” says Brandon J. Smith, partner at law firm Holtzman Vogel.

“A change in attorney general can mean a significant change in enforcement priorities almost overnight, even without a single change in the underlying law,” Smith says.

Attorneys general already have sweeping authority to investigate technology companies, Smith notes. “The technology industry sometimes underestimates just how much authority state attorneys general already possess,” he adds. Even without new AI-specific legislation, state AGs can investigate tech companies using existing consumer protection, unfair and deceptive practices, and antitrust laws.

At first glance, the Democratic sweep might seem like bad news for Big Tech. But the partisan dynamics of tech regulation are more complicated, Smith cautions.

Republican attorneys general have generally focused on issues such as alleged censorship and consumer safety, while Democrats have placed greater emphasis on privacy and algorithmic discrimination. But both parties have become increasingly aggressive in their scrutiny of the tech industry, meaning that a Republican victory doesn’t necessarily translate into a friendlier regulatory environment.

“Both parties increasingly view big tech as an industry requiring greater scrutiny,” Smith says. “I don’t think technology companies should interpret partisan disagreement as an indication that either side is going to leave them alone.”

That bipartisan pressure has been particularly evident in efforts to protect children online. Josh Golin, executive director of the children’s advocacy nonprofit Fairplay, points to state AG investigations and lawsuits involving Meta, TikTok, Snap, Discord, and Roblox, which he says have helped push companies to change their products and introduce additional safety features. He expects that scrutiny to continue regardless of which party holds office, given the broad political concern over children’s online safety.

Tech companies are “definitely watching because attorneys general have shown that a single state enforcement can change how that national product works,” says K.J. Bagchi, vice president of U.S. policy and government relations at the Chamber of Progress, a tech industry trade association.

But Bagchi argues that the focus on who occupies these powerful offices obscures a larger problem: State attorneys general have become de facto tech regulators partly because lawmakers have failed to act.

“I would warn against a model where litigation is a substitute for legislation,” he says. “Going after single companies is not necessarily the solution, but it is an understandable byproduct of seeing that the legislative process in some states has fallen apart.”

Naman Ramachandran / Variety:
NBCUniversal, Hornbill Capital Back EloElo, Parent of Indian Microdrama Platform Story TV, in $80 Million Funding Round  —  NBCUniversal and India-focused investment firm Hornbill Capital have co-led an $80 million Series C round in EloElo Group, the Bengaluru-based company behind Indian microdrama platform Story TV.

Most strategic surprises aren’t really surprises. Somebody inside the company almost always saw the signal early. The question is why the organization didn’t do anything useful with those insights while there was still time.

I think of an organization’s early warning capacity as having three parts. Sensing is whether you pick up leading indicators while the signals are still weak. Discipline is whether there’s a consistent process, with dedicated time and people to attend to these signals. Acting is whether you know how to move during what I call the window of optimal warning: late enough that the signal is credible, early enough that you can still shape the outcome.

Depending on how well developed each of these three factors are, you can begin to anticipate where your organization is likely to get into trouble. 

High sensing, weak process, low acting. People see the change and raise the alarm, but nothing happens until it’s too late. 

Kodak is a wildly misunderstood textbook case of this. Kodak didn’t miss digital photography, it invented it. A Kodak engineer, Steve Sasson, built one of the first digital cameras in 1975. In 1981, an internal market intelligence study concluded that digital would eventually displace film, and that Kodak had roughly a decade to prepare. The sensing was excellent. What failed was having the courage to reshape a very profitable core business in the face of the digital inflection point.   

Even worse, under the leadership of Antonio Perez, the company went all-in on printing just as screens were becoming good enough that nobody needed to print any more.  Perez built the printer business at HP but had been passed over for the CEO job.  Many observers thought that billions in investment in printing was mostly a desire for revenge.  As reported by the New York Times in 2011, “Ken Luskin, a disgruntled Kodak investor who runs Intrinsic Value Asset Management, said Mr. Perez’s turnaround strategy was the story of how “a company has been run into the ground by one guy’s ego needs.  He said, ‘I’m going to rub this in Hewlett-Packard’s face.’ This is why they are doing this.”

Kodak filed for bankruptcy in 2012.

Compare this to Fujifilm, which faced the same signals. Under CEO Shigetaka Komori, it squarely faced the reality of the decline of chemical film processing revenue.  It cut deeply and redeployed its chemistry and imaging know-how into medical imaging, pharmaceuticals, cosmetics, and display materials. Same scenarios, completely opposite outcomes.

The fix:  Deploy what I call “tripwires.”  These are leading indicators that, if they all start to point to a similar scenario, your leadership team agrees, ahead of time, on what it will do. To the extent you can, have the debate, the politics and the emotional reckoning before your hand is forced. 

Low sensing, high acting. The organization can mobilize impressively, but only after a change is plain to the whole market.

Microsoft in mobile fits the pattern. When the iPhone launched in 2007, Microsoft’s leadership publicly dismissed it as an expensive niche device. The company’s sensing was tuned to its existing customers (enterprises and PC makers) not to consumers reshaping how technology would fit into their lives.

Once the shift was undeniable, Microsoft acted with real force. It rebuilt its mobile platform from scratch as Windows Phone in 2010 and bought Nokia’s handset business in 2013. But iOS and Android had already locked in developers and users. In 2015, Microsoft wrote off most of the Nokia deal.

Under Satya Nadella, Microsoft got ahead of the shift to cloud and later AI. The same company, with better sensing, played a very different game.

The fix: Mandate that your leaders get out to the edges: non-customers, startups, adjacent industries, and your own front line. Your best customers will be the last source to tell you how the world is changing.

Low discipline, decent sensing and acting. A handful of people carry the early warning function informally. It works brilliantly until they leave, burn out, or get overruled.

Intel under Andy Grove is illustrative. Grove literally wrote the book on strategic inflection points, and Intel’s 1980s exit from memory chips into microprocessors is one of the great pivots in business history. Notably, middle managers had already been shifting factory capacity toward microprocessors before the top team made it official. What saved Intel then was a set of rules that steered capacity allocation at the front lines into the business that would become its future.

But that capability was never fully institutionalized. Paul Otellini, stepping down as CEO in 2013, acknowledged that Intel had passed on making the chip for the original iPhone because the price Apple wanted was below Intel’s forecasted cost. Intel is still reeling from the repercussions. 

The fix: Name owners, protect their time, and put signal reviews on a fixed calendar. If your early warning system disappears if two people depart, you don’t have a system.

Low on all three. Strategy runs on outdated assumptions, the organization only learns about change when it shows up in the numbers and often leadership is more interested in their own short-term gains than the long run health of the organization.

Toys “R” Us was once the category killer that put neighborhood toy stores out of business. Its model rested on assumptions that scale in physical stores was its advantage, and that online was a side channel. 

In 2000, it handed its online sales to Amazon under a 10-year exclusive deal, effectively outsourcing its view of how customers were starting to shop. The partnership collapsed into litigation within a few years. Facing flat sales and falling profits, the Board put the company up for sale in 2004.  A 2005 leveraged buyout then loaded the company with debt, which left little room to experiment just as discounters and e-commerce reshaped toy buying. The company filed for bankruptcy in 2017 and liquidated its U.S. stores in 2018.  The private equity investors did just fine. 

The fix: Well, if your owners don’t care about preparing for the future, as Warren Buffett has argued, probably the best thing you can do is figure out what they do want and build a system around that. Or, as Eric Ries has suggested, turn to a different governance structure for your firm.   

Assuming that your leadership is interested in the longer term, write down the five assumptions your strategy depends on, and pick one leading indicator to monitor for each. It’s a minimum viable early warning system but it’s better than nothing.

If you recognized your own organization in one of these patterns, here’s where I’d start.

Diagnose before you prescribe. Most companies respond to a nasty surprise by buying more data, which only helps if sensing is the problem. Kodak didn’t need more information, it needed more courage and less ego. Find out which of the three capabilities is weakest, and invest there first.

Ask the people furthest from headquarters. In my experience, front-line employees almost always rate their organization’s sensing capabilities lower than senior leaders do and are often astonished at the cluelessness of the folks at headquarters.

Make your assumptions explicit. Every strategy rests on beliefs about customers, technology, regulation, and competitors. If they aren’t written down, nobody notices when they change. Revisit them on a schedule, not just in a crisis.

Decide in advance, then act on less than certainty. The window of optimal warning closes precisely because the evidence keeps getting better. If you wait until you’re sure, you will be sure, and late. Agree now on what you’d do if a key signal crossed a threshold, and set aside a small budget for cheap experiments that test signals before major commitments.

Finally, try one question with your team: What’s the weak signal you’re most worried we’re missing, and what’s the first thing you could do to start watching it? The answers will tell you a lot about what your organization already knows but hasn’t yet said out loud.

More than half of internet traffic is no longer human. The Nobel laureate has two answers that don’t depend on anyone else’s platform.

U.S. stocks surged across the board with the Dow gaining more than 1,300 points and the S&P 500 and Nasdaq each up more than 1.3 percent around mid-day.