CHAT Act

What happened: On September 4, 2025, Senator Husted (R-OH) introduced S.2714, the 'Children Harmed by AI Technology Act' (CHAT Act), which was referred to the Senate Committee on Commerce, Science, and Transportation. The bill is in the earliest legislative stage — it has one sponsor, one cosponsor, and no committee markup or hearings. A companion bill (HR7218) was introduced in the House and referred to the Energy and Commerce Committee. The bill has seen no action since introduction, and with the 119th Congress now in its second year, the legislative window is narrowing. The money trail: The CHAT Act does not authorize or appropriate any government funding. It imposes compliance costs on private-sector covered entities. The cost mechanism is regulatory: every company operating a 'companion AI chatbot' must implement commercially available age verification, freeze existing accounts for re-verification, and maintain ongoing safeguards against sexually explicit communication and suicidal ideation with minors. There is no federal funding to offset these costs — the entire burden falls on the companies. Structural winners and losers: The clearest loser is Replika ($YOU), the only U.S.-listed pure-play companion AI chatbot company. Replika's entire business model — building emotionally intimate AI relationships — falls directly within the bill's definition of 'companion AI chatbot.' The mandate to freeze existing accounts and require government-grade age verification creates an existential operational choke point. C3.ai, BigBear.ai, and Palantir face more attenuated risk: their enterprise AI platforms are not primarily companion chatbots, but broad definitions in the bill could sweep in customer-service and engagement chatbots that simulate interpersonal interaction. Microsoft's Azure AI business is large enough that companion chatbot workloads are a rounding error, but the bill signals regulatory headwinds for the broader conversational AI market. No clear winners emerge; this is a cost-imposition bill. Competitive landscape: The Presidential Memorandum on domestic petroleum production (April 20, 2026) has no connection to AI chatbot regulation. No executive actions conflict with or amplify this bill. The bill's momentum is essentially stalled — one action in seven months, no committee markups, and the 119th Congress is past the midpoint. Passage probability is low for the current session, but the bill's reintroduction in the 120th Congress (2027-2029) is likely, especially if high-profile incidents with minors and AI chatbots occur. Timeline: The next steps would be committee hearings in the Commerce Committee (Senate) and Energy and Commerce Committee (House). Neither has been scheduled. If the bill were to move, it would need committee markup, full floor votes in both chambers, and presidential signature. With the 2026 midterm elections approaching, legislative bandwidth is shrinking. The practical timeline for enactment is 2027 or later, if at all.