The U.S. Department of Justice announced Friday it had intervened in a lawsuit filed by Elon Musk's artificial intelligence company xAI challenging a Colorado law designed to regulate AI systems. The federal intervention creates a potential conflict between state and federal approaches to AI oversight.

In its court filing, the Justice Department argued that Colorado's AI regulation violates the 14th Amendment's equal protection clause. The department contends the law improperly requires companies to prevent unintended discriminatory effects while simultaneously permitting some forms of discrimination intended to promote diversity.

The legal challenge comes as the AI industry continues rapid expansion and workforce changes. Tech leaders including Musk have expressed support for universal basic income programs as companies increasingly deploy AI systems that may displace human workers. Some lawmakers remain skeptical of such proposals despite growing automation across industries.

Meanwhile, new AI-focused businesses continue attracting significant investment. ComfyUI, which develops tools for AI-generated media creation, recently raised $30 million and achieved a $500 million valuation. An Instacart co-founder has launched a hedge fund utilizing AI for investment decisions, while a Stanford professor seeks $1 billion in funding for an AI-focused physiology startup.

The Colorado case highlights ongoing tensions between federal and state authorities over AI regulation. The Trump administration has signaled preference for federal oversight rather than allowing individual states to develop their own AI governance frameworks.