Newsom vetoes divisive AI regulation bill as California endures tech recession

(The Center Square) - California Gov. Gavin Newsom vetoed a contentious AI regulation bill that would have created a new department to oversee the models developed by the state’s nascent AI industry. Earlier, Newsom foreshadowed his veto by sharing his concern that the bill would have a “chilling effect” on the technology industry, which in California has been in a jobs recession since 2022.

SB 1047 would have created major guidelines and regulations for large AI models, created the California Board of Frontier Models to oversee these models, and funded a California government AI.

“California is home to 32 of the world's 50 leading Al companies, pioneers in one of the most significant technological advances in modern history,” said Newsom in a veto letter. “While well-intentioned, SB 1047 does not take into account whether an Al system is deployed in high-risk environments, involves critical decision-making or the use of sensitive data.”

“Instead, the bill applies stringent standards to even the most basic functions - so long as a large system deploys it,” continued Newsom. “I do not believe this is the best approach to protecting the public from real threats posed by the technology.”

Newsom’s veto letter also noted that he already has created a “ partnership ” with AI leaders for analyzing AI risks and proposing AI-related legislation through an executive order.

The California technology sector has lost approximately 100,000 jobs between mid-2022 and mid-2024, suggesting the industry is in major decline in the state.

In a press release announcing the veto, Newsom noted that he has signed a large number of AI regulation bills, which reflects a strategy he often employs to turn groups’ policy losses into partial victories; Newsom has a track record of signing a number of smaller bills in support of a policy, but vetoing the main or larger bills that would have significantly moved the needle.

"The California tech economy has always thrived on competition and openness,” said Todd O’Boyle, Senior Director of Technology Policy at Chamber of Progress, a technology advocacy group. “The end of SB 1047 means that California can continue to lead the world on innovation.”

The Chamber of Progress opposed SB 1047, but supported one bill the governor signed that requires that political advertisements note if they are using AI-generated or altered content.

Another bill Newsom signed mandates watermarking for AI-generated content, with privacy and first amendment concerns focusing on the potential harm to free speech and personal freedom, and technology experts focusing on current technological limitations that make such legislation difficult, if not impossible, to implement at the moment.