State of AI Governance, 2025 – Takshashila Institution
AI Analysis
The 2025 State of AI Governance report highlights the geopolitical race to lead in AI, with countries prioritizing innovation over accountability. The US, EU, and China are taking distinct approaches to AI governance, impacting global power dynamics.
Key Takeaways
- The US has shifted focus to infrastructure and global competition, with states leading regulation.
- The EU is advancing its AI Act but faces industry pushback for rule simplification.
- China is balancing government control with economic growth, pushing AI diffusion across sectors.
- AI governance is fracturing along geopolitical lines, with major powers prioritizing innovation.
- The report underscores the volatility and complexity of AI policy in 2025.
Why It Matters
AI governance is crucial for maintaining global stability and security, especially as AI technologies increasingly influence military and defense systems. The differing approaches by major powers could lead to fragmented global standards, impacting international cooperation and competition in AI-driven defense technologies.
State of AI Governance, 2025 – Takshashila Institution
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About the State of AI Governance Report
AI is rapidly changing economies, job markets, and global power structures. As countries compete to lead in AI, the rules and systems for managing it have become more complicated and divided. Our annual report serves as a compass for navigating the rapidly changing AI governance landscape, giving policymakers, analysts, and interested citizens evidence-based insights into what’s working, what’s shifting, and what’s coming next.
This is the second State of AI Governance Report from the Takshashila Institution. Building on last year’s edition [State of AI Governance, 2024], this report looks at how AI governance has changed in 2025 across countries, companies, and international groups. We review major policy changes, check how accurate our past predictions were, and highlight new trends in rules, innovation, and global competition.
To find out more about our work, visit the [Takshashila website].
Some of our work on AI governance is linked below:
- [A Survey of Military AI Technologies]
- [A Primer on AI Chips]
- [AI Adoption - Think Tasks, not Jobs]
- [Building India’s Data Centres]
- [Takshashila Policy Advisory - Working Paper on Generative AI and Copyright (Part 1)]
- [A Pathway to AI Governance]
Executive Summary
The year 2025 was defined by high volatility in AI policy. As industry leaders balanced “bubble” anxieties and circular investments against the promise of massive productivity gains, governments have pivoted toward a high-stakes geopolitical innovation race. The race to lead in AI is reshaping global power, and the rules governing it are fracturing along geopolitical fault lines. In 2025, every major power chose innovation over accountability, betting that winning the AI race matters more than governing it responsibly. This report analyses how the AI governance landscape evolved in 2025 amid the rapidly evolving technological landscape.
Countries
In the past year, major countries have handled AI in different ways. In the US, the Trump administration rolled back most Biden-era safety rules and focused more on infrastructure and global competition. Meanwhile, individual states took over as main regulators, resulting in a patchwork of laws across the country.
The EU has continued building the framework for implementing its wide-ranging AI Act, while also committing resources and outlining strategies to promote European innovation and technological sovereignty. Pushback from industry and some member states has led to calls for simplification of rules through the Digital Omnibus proposal.
China kept refining its governance model, aiming to balance government control and economic growth. 2025 has seen a massive push for diffusion of AI across sectors and also building domestic capabilities in critical parts of the AI