CA for the Consumer

Revisiting this blog post due to recent changes in law. California has always been a consumer-oriented state protecting its residents from corporate hegemony. Guardrails in the form of regulations and reporting requirements exist so that corporations don’t exploit consumers.

AI —- as we are finding out —- will affect most consumer-oriented industries. A handful of engineers in Silicon Valley are having an outsized impact on humanity especially if you spend most of your waking hours on devices. You are their product.

Governor Newsom recently signed several bills. A few highlights include:

AB 2655 (Defending Democracy from Deepfake Deception) Signed by Governor Newsom

AB 2839  (Elections: deceptive media in advertisements) Signed by Governor Newsom. Temporarily blocked by federal judge saying it violates 1st amendment

AB 2355 (Political Reform Act of 1974: political advertisements: artificial intelligence) Signed by Governor Newsom

SB 942 (California AI Transparency Act) signed by Governor Newsom

AB 2885 (Definition of AI) signed by Governor Newsom

AB 2013 (AI Training Data Transparency) signed by Governor Newsom

I previously referenced these more stringent AI bills which didn’t get enacted.

AB 2930 (Algorithmic Discrimination) Didn’t make it for vote

SB 1047 (“Safe and Secure Innovation for Frontier Artificial Intelligence Act”) vetoed by Governor Newsom

AB 3211 (Provenance, Authenticity and Watermarking Standards) Didn’t make it for a vote

AB 1791 (Digital Content Provenance) Didn’t make it for a vote

Newsom’s veto of SB 1047 was the biggest news. SB 1047 established liability for developers of large-scale AI models that cause catastrophic harm. If the developers failed to take appropriate safety measures, they would incur massive liabilities and likely go out of business. The legislation applied only to models costing at least $100 million to train and operate in California. This would put guardrails around the largest tech companies such as Meta doing business in California. A bill like SB 1047 could be revisited once a need arises. The State of California remains vigilant around consumer protection.

Will these new laws encourage more businesses to leave California? It’s possible given current trends.

Texas Open for Business

California is becoming too expensive for business owners to achieve state compliance as more regulations get rolled out. In a battle of opposites in terms of state legislation, Texas continues to reduce regulations and the need for corporate reporting —- with the hope of attracting businesses and thousands of new economy jobs. The TXSE (Texas Stock Exchange) is getting rolled out in the near future.

SpaceX —- worth over 200 billion dollars —- a 200x unicorn is likely to go public on the TXSE now that it’s headquartered in Texas.

The less obvious narrative happening in the tech industry is one of greed —- perhaps, with the ultimate intention of technology doing more good than evil. A lot of good will come from AI —- after some experiments go awry. The state of Texas realizes the opportunity to beat California by enticing innovators to bring thousands of jobs. The lynchpin would be Nvidia setting up shop in Austin.

Which State has the Momentum?

The new California laws make sense, but the public sentiment amongst entrepreneurs and wealthy West Coasters is dropping fast.

There are millions of transplanted people in Texas who are not business owners. They ‘work to live’ versus that Silicon Valley adage of ‘living to work.’ Cost of living is not cheap, but a lot cheaper than where most of these people came from.

Protecting residents’ quality of life should be just as important as providing corporate welfare for companies shifting to Texas. A new quality of life barometer should apply to personal devices (where most people spend their time instead of America’s national parks). California is watching closely the AI technologies getting rolled out in Silicon Valley. Texas is also paying attention.

Federal AI Regulation is needed for the sake of preserving American democracy and ensuring the livelihoods of future generations. It will be interesting to see how these two states do in the coming years.