California's Landmark AI Bill Passes Legislature, Awaits Governor's Approval

Contentious California AI bill passes legislature, awaits governor's signature

California lawmakers passed a hotly contested artificial-intelligence safety bill on Wednesday, after which it will need one more process vote before its fate is in the hands of Governor Gavin Newsom, who has until Sept. 30 to decide whether to sign it into law or veto it. Tech companies developing generative AI - which can respond to prompts with fully formed text, images or audio as well as run repetitive tasks with minimal intervention - have largely balked at the legislation, called SB 1047, saying it could drive AI companies from the state and hinder innovation. Some Democrats in U.S. Congress, including Representative Nancy Pelosi, also opposed it. Proponents include Tesla CEO Elon Musk, who also runs an AI firm called xAI and has said he supports the bill. The measure mandates safety testing for many of the most advanced AI models that cost more than $100 million to develop or those that require a defined amount of computing power. Developers of AI software operating in the state also need to outline methods for turning off the AI models if they go awry, effectively a kill switch. The bill also gives the state attorney general the power to sue if developers are not compliant, particularly in the event of an ongoing threat, such as the AI taking over government systems like the power grid. As well, the bill requires developers to hire third-party auditors to assess their safety practices and provide additional protections to whistleblowers speaking out against AI abuses. The bill's author, Democratic State Senator Scott Wiener, represents San Francisco, home to OpenAI and many of the startups developing the powerful software. He has said legislation is necessary to protect the public before advances in AI become either unwieldy or uncontrollable. Martin Casado, general partner at venture capital firm Andreessen Horowitz, said before the vote that he hoped Newsom would veto it. "It's got the most bipartisan, broad opposition I've ever seen," he said. Alphabet's Google, Microsoft-backed OpenAI and Meta Platforms have expressed their concerns in letters to Wiener. Amazon-backed Anthropic has said the benefits to the bill likely outweigh the costs, though it added there were still some aspects that seem concerning or ambiguous.

Contentious California AI bill passes legislature, awaits governor's signature

California lawmakers passed a hotly contested artificial-intelligence safety bill on Wednesday, after which it will need one more process vote before its fate is in the hands of Governor Gavin Newsom, who has until Sept. 30 to decide whether to sign it into law or veto it. Tech companies developing generative AI - which can respond to prompts with fully formed text, images or audio as well as run repetitive tasks with minimal intervention - have largely balked at the legislation, called SB 1047, saying it could drive AI companies from the state and hinder innovation. Some Democrats in U.S. Congress, including Representative Nancy Pelosi, also opposed it. Proponents include Tesla CEO Elon Musk, who also runs an AI firm called xAI and has said he supports the bill. The measure mandates safety testing for many of the most advanced AI models that cost more than $100 million to develop or those that require a defined amount of computing power. Developers of AI software operating in the state also need to outline methods for turning off the AI models if they go awry, effectively a kill switch. The bill also gives the state attorney general the power to sue if developers are not compliant, particularly in the event of an ongoing threat, such as the AI taking over government systems like the power grid. As well, the bill requires developers to hire third-party auditors to assess their safety practices and provide additional protections to whistleblowers speaking out against AI abuses. The bill's author, Democratic State Senator Scott Wiener, represents San Francisco, home to OpenAI and many of the startups developing the powerful software. He has said legislation is necessary to protect the public before advances in AI become either unwieldy or uncontrollable. Martin Casado, general partner at venture capital firm Andreessen Horowitz, said before the vote that he hoped Newsom would veto it. "It's got the most bipartisan, broad opposition I've ever seen," he said. Alphabet's Google, Microsoft-backed OpenAI and Meta Platforms have expressed their concerns in letters to Wiener. Amazon-backed Anthropic has said the benefits to the bill likely outweigh the costs, though it added there were still some aspects that seem concerning or ambiguous.

Contentious California AI bill passes legislature, awaits governor's signature

California lawmakers passed a hotly contested artificial-intelligence safety bill on Wednesday, after which it will need one more process vote before its fate is in the hands of Governor Gavin Newsom, who has until Sept. 30 to decide whether to sign it into law or veto it. Tech companies developing generative AI - which can respond to prompts with fully formed text, images or audio as well as run repetitive tasks with minimal intervention - have largely balked at the legislation, called SB 1047, saying it could drive AI companies from the state and hinder innovation. Some Democrats in U.S. Congress, including Representative Nancy Pelosi, also opposed it. Proponents include Tesla CEO Elon Musk, who also runs an AI firm called xAI and has said he supports the bill. The measure mandates safety testing for many of the most advanced AI models that cost more than $100 million to develop or those that require a defined amount of computing power. Developers of AI software operating in the state also need to outline methods for turning off the AI models if they go awry, effectively a kill switch. The bill also gives the state attorney general the power to sue if developers are not compliant, particularly in the event of an ongoing threat, such as the AI taking over government systems like the power grid. As well, the bill requires developers to hire third-party auditors to assess their safety practices and provide additional protections to whistleblowers speaking out against AI abuses. The bill's author, Democratic State Senator Scott Wiener, represents San Francisco, home to OpenAI and many of the startups developing the powerful software. He has said legislation is necessary to protect the public before advances in AI become either unwieldy or uncontrollable. Martin Casado, general partner at venture capital firm Andreessen Horowitz, said before the vote that he hoped Newsom would veto it. "It's got the most bipartisan, broad opposition I've ever seen," he said. Alphabet's Google, Microsoft-backed OpenAI and Meta Platforms have expressed their concerns in letters to Wiener. Amazon-backed Anthropic has said the benefits to the bill likely outweigh the costs, though it added there were still some aspects that seem concerning or ambiguous.

Contentious California AI bill passes legislature, awaits governor's signature

SAN FRANCISCO (Reuters) - California lawmakers passed a hotly contested artificial-intelligence safety bill on Wednesday, after which it will need one more process vote before its fate is in the hands of Governor Gavin Newsom, who has until Sept. 30 to decide whether to sign it into law or veto it. Tech companies developing generative AI - which can respond to prompts with fully formed text, images or audio as well as run repetitive tasks with minimal intervention - have largely balked at the legislation, called SB 1047, saying it could drive AI companies from the state and hinder innovation. Some Democrats in U.S. Congress, including Representative Nancy Pelosi, also opposed it. Proponents include Tesla CEO Elon Musk, who also runs an AI firm called xAI and has said he supports the bill. The measure mandates safety testing for many of the most advanced AI models that cost more than $100 million to develop or those that require a defined amount of computing power. Developers of AI software operating in the state also need to outline methods for turning off the AI models if they go awry, effectively a kill switch. The bill also gives the state attorney general the power to sue if developers are not compliant, particularly in the event of an ongoing threat, such as the AI taking over government systems like the power grid. As well, the bill requires developers to hire third-party auditors to assess their safety practices and provide additional protections to whistleblowers speaking out against AI abuses. The bill's author, Democratic State Senator Scott Wiener, represents San Francisco, home to OpenAI and many of the startups developing the powerful software. He has said legislation is necessary to protect the public before advances in AI become either unwieldy or uncontrollable. Martin Casado, general partner at venture capital firm Andreessen Horowitz, said before the vote that he hoped Newsom would veto it. "It's got the most bipartisan, broad opposition I've ever seen," he said. Alphabet's Google, Microsoft-backed OpenAI and Meta Platforms have expressed their concerns in letters to Wiener. Amazon-backed Anthropic has said the benefits to the bill likely outweigh the costs, though it added there were still some aspects that seem concerning or ambiguous. (Reporting by Anna Tong in San Francisco; Editing by Matthew Lewis)

Contentious California AI Bill Passes Legislature, Awaits Governor's Signature

SAN FRANCISCO (Reuters) - California lawmakers passed a hotly contested artificial-intelligence safety bill on Wednesday, after which it will need one more process vote before its fate is in the hands of Governor Gavin Newsom, who has until Sept. 30 to decide whether to sign it into law or veto it. Tech companies developing generative AI - which can respond to prompts with fully formed text, images or audio as well as run repetitive tasks with minimal intervention - have largely balked at the legislation, called SB 1047, saying it could drive AI companies from the state and hinder innovation. Some Democrats in U.S. Congress, including Representative Nancy Pelosi, also opposed it. Proponents include Tesla CEO Elon Musk, who also runs an AI firm called xAI and has said he supports the bill. The measure mandates safety testing for many of the most advanced AI models that cost more than $100 million to develop or those that require a defined amount of computing power. Developers of AI software operating in the state also need to outline methods for turning off the AI models if they go awry, effectively a kill switch. The bill also gives the state attorney general the power to sue if developers are not compliant, particularly in the event of an ongoing threat, such as the AI taking over government systems like the power grid. As well, the bill requires developers to hire third-party auditors to assess their safety practices and provide additional protections to whistleblowers speaking out against AI abuses. The bill's author, Democratic State Senator Scott Wiener, represents San Francisco, home to OpenAI and many of the startups developing the powerful software. He has said legislation is necessary to protect the public before advances in AI become either unwieldy or uncontrollable. Martin Casado, general partner at venture capital firm Andreessen Horowitz, said before the vote that he hoped Newsom would veto it. "It's got the most bipartisan, broad opposition I've ever seen," he said. Alphabet's Google, Microsoft-backed OpenAI and Meta Platforms have expressed their concerns in letters to Wiener. Amazon-backed Anthropic has said the benefits to the bill likely outweigh the costs, though it added there were still some aspects that seem concerning or ambiguous. (Reporting by Anna Tong in San Francisco; Editing by Matthew Lewis)

Contentious California AI bill passes legislature, awaits governor's signature

California lawmakers passed a hotly contested artificial-intelligence safety bill on Wednesday, after which it will need one more process vote before its fate is in the hands of Governor Gavin Newsom, who has until Sept. 30 to decide whether to sign it into law or veto it. Tech companies developing generative AI - which can respond to prompts with fully formed text, images or audio as well as run repetitive tasks with minimal intervention - have largely balked at the legislation, called SB 1047, saying it could drive AI companies from the state and hinder innovation. Some Democrats in U.S. Congress, including Representative Nancy Pelosi, also opposed it. Proponents include Tesla CEO Elon Musk, who also runs an AI firm called xAI and has said he supports the bill. The measure mandates safety testing for many of the most advanced AI models that cost more than $100 million to develop or those that require a defined amount of computing power. Developers of AI software operating in the state also need to outline methods for turning off the AI models if they go awry, effectively a kill switch. The bill also gives the state attorney general the power to sue if developers are not compliant, particularly in the event of an ongoing threat, such as the AI taking over government systems like the power grid. As well, the bill requires developers to hire third-party auditors to assess their safety practices and provide additional protections to whistleblowers speaking out against AI abuses. The bill's author, Democratic State Senator Scott Wiener, represents San Francisco, home to OpenAI and many of the startups developing the powerful software. He has said legislation is necessary to protect the public before advances in AI become either unwieldy or uncontrollable. Martin Casado, general partner at venture capital firm Andreessen Horowitz, said before the vote that he hoped Newsom would veto it. "It's got the most bipartisan, broad opposition I've ever seen," he said. Alphabet's Google, Microsoft-backed OpenAI and Meta Platforms have expressed their concerns in letters to Wiener. Amazon-backed Anthropic has said the benefits to the bill likely outweigh the costs, though it added there were still some aspects that seem concerning or ambiguous. Read Comments

California lawmakers pass controversial AI bill opposed by most of...

California lawmakers passed a hotly contested artificial-intelligence safety bill on Wednesday, after which it will need one more process vote before its fate is in the hands of Gov. Gavin Newsom, who has until Sept. 30 to decide whether to sign it into law or veto it. Tech companies developing generative AI - which can respond to prompts with fully formed text, images or audio as well as run repetitive tasks with minimal intervention - have largely balked at the legislation, called SB 1047, saying it could drive AI companies from the state and hinder innovation. Some Democrats in Congress, including Representative Nancy Pelosi, also opposed it. Proponents include Tesla CEO Elon Musk, who also runs an AI firm called xAI and has said he supports the bill. The measure mandates safety testing for many of the most advanced AI models that cost more than $100 million to develop or those that require a defined amount of computing power. Developers of AI software operating in the state also need to outline methods for turning off the AI models if they go awry, effectively a kill switch. The bill also gives the state attorney general the power to sue if developers are not compliant, particularly in the event of an ongoing threat, such as the AI taking over government systems like the power grid. As well, the bill requires developers to hire third-party auditors to assess their safety practices and provide additional protections to whistleblowers speaking out against AI abuses. The bill's author, Democratic State Senator Scott Wiener, represents San Francisco, home to OpenAI and many of the startups developing the powerful software. He has said legislation is necessary to protect the public before advances in AI become either unwieldy or uncontrollable. Martin Casado, general partner at venture capital firm Andreessen Horowitz, said before the vote that he hoped Newsom would veto it. "It's got the most bipartisan, broad opposition I've ever seen," he said. Alphabet's Google, Microsoft-backed OpenAI and Meta Platforms have expressed their concerns in letters to Wiener. Amazon-backed Anthropic has said the benefits to the bill likely outweigh the costs, though it added there were still some aspects that seem concerning or ambiguous.

Contentious California AI bill passes legislature, awaits governor's signature

Some Democrats in U.S. Congress, including Representative Nancy Pelosi, also opposed it. Proponents include Tesla CEO Elon Musk, who also runs an AI firm called xAI and has said he supports the bill. The measure mandates safety testing for many of the most advanced AI models that cost more than $100 million to develop or those that require a defined amount of computing power. Developers of AI software operating in the state also need to outline methods for turning off the AI models if they go awry, effectively a kill switch. The bill also gives the state attorney general the power to sue if developers are not compliant, particularly in the event of an ongoing threat, such as the AI taking over government systems like the power grid. As well, the bill requires developers to hire third-party auditors to assess their safety practices and provide additional protections to whistleblowers speaking out against AI abuses. The bill's author, Democratic State Senator Scott Wiener, represents San Francisco, home to OpenAI and many of the startups developing the powerful software. He has said legislation is necessary to protect the public before advances in AI become either unwieldy or uncontrollable. Martin Casado, general partner at venture capital firm Andreessen Horowitz, said before the vote that he hoped Newsom would veto it. "It's got the most bipartisan, broad opposition I've ever seen," he said. Alphabet's Google, Microsoft-backed OpenAI and Meta Platforms have expressed their concerns in letters to Wiener. Amazon-backed Anthropic has said the benefits to the bill likely outweigh the costs, though it added there were still some aspects that seem concerning or ambiguous. (Reporting by Anna Tong in San Francisco; Editing by Matthew Lewis)

California AI Safety Bill That Got Thumbs Up From Elon Musk Awaits Gavin Newsom's Signatures Amid Tech Industry Resistance

On Wednesday, the California legislature gave the green light to a controversial AI safety bill, which has sparked a heated debate among tech companies. What Happened: The SB 1047 calls for safety testing of advanced AI models that cost over $100 million to develop or require substantial computing power. The bill now awaits Governor Gavin Newsom's signature, reported Reuters. The bill has faced opposition from AI firms, who argue that the legislation could deter AI companies from operating in the state and hinder innovation. See Also: Apple's September 9 'Glowtime' Event Featuring iPhone 16 Launch Could Kickstart A 'Historical Period,' Says Wedbush Analyst Dan Ives It authorizes the state attorney general to sue non-compliant developers, especially in the event of an ongoing threat, such as AI taking over government systems. It also necessitates developers to employ third-party auditors to evaluate their safety practices and offers additional protections to whistleblowers. Subscribe to the Benzinga Tech Trends newsletter to get all the latest tech developments delivered to your inbox. Why It Matters: Democratic Senator Scott Wiener (D-Calif.), the bill's author, asserts the legislation is essential to protect the public from potential AI threats. However, tech behemoths like Alphabet Inc., Microsoft Corp., and Meta Platforms Inc. have voiced their concerns in letters to Wiener, the report noted. The bill has stirred up a storm in the tech industry. Previously, Tesla and SpaceX CEO Elon Musk publicly endorsed the bill, stating that it was a tough call but necessary. Nancy Pelosi (D-Calif.) has criticized the bill as well-intentioned but ill-informed. On the other hand, two former OpenAI employees criticized the company's opposition to the bill, warning of potential catastrophic harm to society without adequate safety precautions. Check out more of Benzinga's Consumer Tech coverage by following this link. Image via Shutterstock Read Next: Mark Zuckerberg Reminds People That Facebook Was Far More Exclusive Once Than It Is Today, It Was Limited After All To People With A Certain Type Of Email Address -- 'Real Ones Know' Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Market News and Data brought to you by Benzinga APIs

California AI Safety Bill Gets Legislature's Approval

California lawmakers passed an artificial intelligence safety bill despite industry opposition. The bill needs one more process vote before it heads to Gov. Gavin Newsome, who has until the end of September to either sign the legislation into law or veto it, Reuters reported Wednesday (Aug. 28). Senate Bill 1047 requires safety testing by AI companies with models that cost more than $100 million to develop or those needing a defined amount of computing power. In addition, AI developers in California must establish ways to shut down their models if something goes wrong. "For over 20 years, I have been an advocate for AI regulation, just as we regulate any product/technology that is a potential risk to the public," Musk wrote, adding the decision was a "tough call" that would likely upset some parties. Industry experts say the bill's implications could be significant for eCommerce. Aditi Godbole, senior data scientist at software company SAP, told PYMNTS that more than 63% of eCommerce platforms use AI models for recommendation engines, dynamic pricing, real-time personalization search, smart collections and conversational building tools. "Many parts of the bill are complex, not well-defined, lack granularity, and are unsuitable for smaller players and startups in the eCommerce space," she said. Among her concerns is the introduction of mandatory AI safety testing, which she said has the potential to hinder innovations for eCommerce functions like personalized shopping. Meanwhile, other states are exploring their own AI legislation. This month, the Texas Senate Business and Commerce Committee had an almost four-hour hearing to collect testimony on AI's far-reaching implications, from improved efficiency in state agencies to concerns about misinformation, biased decision-making and consumer privacy violations.

California lawmakers pass AI safety bill

AI (Artificial Intelligence) letters and robot hand are placed on computer motherboard in this illustration taken, June 23, 2023. -- Reuters file A bill aimed at regulating powerful artificial intelligence models passed California's legislature on Wednesday, despite outcry that it could kill the technology it seeks to control. "SB 1047 -- our AI safety bill -- just passed off the Assembly floor. I'm proud of the diverse coalition behind this bill -- a coalition that deeply believes in both innovation and safety," said Democratic state senator Scott Wiener of San Francisco, who sponsored the bill. The bill had faced a barrage of critics, including Democratic members of US Congress, who argued that threats of punitive measures against developers in a nascent field would throttle innovation. It did, however, win the reluctant support of Elon Musk, who argued that AI's risk to the public justifies regulation. "This is a tough call and will make some people upset," he said on Monday as he stated his support on X. The bill, called the Safe and Secure Innovation for Frontier Artificial Intelligence Models Act, now goes to the desk of California Gavin Newsom for signature, though his position on the proposal is not known. Newsom has until September 30 to sign the bill or put his veto. Dan Hendrycks, director of the Center for AI Safety, said the bill provides "a workable path forward" in enforcing "safeguards to mitigate against critical AI risk". At least 40 states have introduced bills this year to regulate AI, and a half dozen have adopted resolutions or enacted legislation aimed at the technology, according to The National Conference of State Legislatures.

Controversial California AI regulation bill finds unlikely ally in Elon Musk

By Ryan Macasero, The Mercury News The Tribune Content Agency With a make-or-break deadline just days away, a polarizing California bill to regulate the fast-growing artificial intelligence industry from progressive state Sen. Scott Wiener has gained support from an unlikely source. Elon Musk, the Donald Trump-supporting, often regulation-averse Tesla CEO and X owner, this week said he thinks "California should probably pass" the proposal, which would regulate the development and deployment of advanced AI models, specifically large-scale AI products costing at least $100 million to build. The surprising endorsement from a man who also owns an AI company comes as other political heavyweights typically much more aligned with Wiener's views, including San Francisco Mayor London Breed and Rep. Nancy Pelosi, join major tech companies in urging Sacramento to put on the brakes. "This is a tough call and will make some people upset," Musk wrote on X, formerly Twitter. "For over 20 years, I have been an advocate for AI regulation, just as we regulate any product/technology that is a potential risk to the public." The billionaire co-founded OpenAI, the developer of the wildly popular Chat GPT, in 2015 and founded xAI - headquartered in Burlingame, incorporated in Nevada - in 2023. Wiener's office said if the law is passed, it would apply to any AI firms doing business in California, regardless of where they are incorporated or headquartered. Musk has in the past blasted California for stifling progress through regulation - pointing to the state's slow-moving high-speed rail project as an example. Still, it's not the first time he's said AI development should be regulated. He's voiced concerns about the potential for AI to cause "civilizational destruction." Now, Pelosi, Breed and others are the ones making the argument the proposal - Senate Bill 1047 - will stifle innovation and create unneeded bureaucracy. "While we want California to lead in AI in a way that protects consumers, data, intellectual property and more, SB 1047 is more harmful than helpful in that pursuit," Pelosi said in a recent statement. "California's Artificial Intelligence bill, SB 1047, would have significant unintended consequences that would stifle innovation and will harm the U.S. AI ecosystem." Opponents worry AI testing requirements and safety provisions in the bill will create compliance costs that could make it difficult for startups and other small businesses. Proponents have said the bill would only affect large companies. Breed - whose city has struggled to rebound from the economic impact of the coronavirus pandemic and who has touted San Francisco as the AI capital of the world - said in a letter to Wiener this week that the industry is "core to our city's economy and future." "I share your desire to ensure that AI develops in a safe and sustainable way, and I agree with the overall intent of your legislation," Breed said. "However, I believe more work needs to be done to bring together the industry, government, and community stakeholders before moving forward with the bill." All of the jockeying comes as the clock ticks toward Aug. 31. The bill, which has so far enjoyed bipartisan support from state lawmakers, must advance by then if it is to hit Gov. Gavin Newsom's desk this year. Newsom has yet to signal whether he would sign it into law. At a press conference on Monday, Wiener, a San Francisco Democrat, urged his colleagues to vote for what he called "a light-touch measure." "I want to be clear, as I've always been clear, that I am very supportive of AI innovation," he said. "(It) has the potential to make the world a better place, but as with any powerful technology, there are also risks. And we should try to get ahead of those risks instead of playing catch-up." The lawmaker has amended his original proposal in response to criticism from opponents and turned San Francisco-based Anthropic into an ally in the process. This week, CEO Dario Amodei wrote to Newsom in support of the bill. "Last week the bill emerged from the Assembly Appropriations Committee and appears to us to be halfway between our suggested version and the original bill: many of our amendments were adopted while many others were not," Amodei said. "In our assessment the new SB 1047 is substantially improved, to the point where we believe its benefits likely outweigh its costs." Anthropic cited the adoption of safety and security protocols with "flexible policies" for managing catastrophic risk. Still, AI giants Open AI and Meta are holding firm in their opposition. In an Aug. 21 letter, Open AI Chief Strategy Officer Jason Kwon wrote to Wiener warning of a possible tech exodus if the bill is passed. "Many of the industry's leading developers, entrepreneurs and researchers live and work here, making California home to both AI's biggest players and a thriving ecosystem of start-ups and other smaller companies," Kwon said. "If the bill is signed into law... there 'is a real risk that companies will decide to incorporate in other jurisdictions or simply not release models in California,'" he said, quoting comments from San Jose Rep. Zoe Lofgren, another opponent. Rob Sherman, vice president and chief privacy officer for Meta, previously said "the bill's fundamental flaw is that it fails to take this full ecosystem into account and assign liability accordingly, placing disproportionate obligations on model developers for parts of the ecosystem over which they have no control." Wiener, however, doesn't believe the bill will harm California's robust tech economy. "Similar predictions in the past have consistently proven false," he said. "California remains the global epicenter of technological innovation."

California advances AI legislation that would regulate large models

Legislation in California that aims to reduce the risks of artificial intelligence (AI) passed a vote in the state's lower legislative house on Wednesday. The proposal would require companies to test their models and publicly disclose their safety protocols. It's to prevent the models from being manipulated to, for example, wipe out the state's electric grid or help build chemical weapons, which are scenarios experts say could be possible in the future with such rapid advancements in the industry. The first-in-nation AI safety legislation could pave the way for US regulation of the technology. The measure squeaked by in the California Assembly on Wednesday and requires a final Senate vote before reaching the governor's desk. California Governor Gavin Newsom then has until the end of September to decide whether to sign the legislation, which is among hundreds being voted on this week, into law, veto it, or allow it to become law without his signature. Supporters said it would set some of the first much-needed safety ground rules for large-scale AI models in the US. The bill targets systems that require more than $100 million (€90 million) in data to train. No current AI models have hit that threshold. OpenAI, Google and Meta have opposed the legislation, but the AI company Anthropic has said the legislation's "benefits likely outweigh its costs". California is home to 35 of the world's top 50 AI companies and could soon deploy generative AI tools to address highway congestion and road safety, among other things. Newsom, who declined to weigh in on the measure earlier this summer, had warned against AI overregulation.

Musk's AI Safety Push Could Have Other Companies Following Suit

Elon Musk's endorsement of a controversial California artificial intelligence (AI) safety bill signals the legislation's far-reaching implications for the eCommerce sector, potentially forcing companies to overhaul their AI-driven customer service and sales algorithms. On Monday (Aug. 26), the Tesla CEO threw his support behind Senate Bill 1047, a polarizing piece of legislation that would mandate safety testing for large-scale AI models. The bill, authored by Democratic state Sen. Scott Wiener, aims to mitigate catastrophic risks associated with AI, such as malicious actors' development of biological weapons. "For over 20 years, I have been an advocate for AI regulation, just as we regulate any product/technology that is a potential risk to the public," Musk wrote on X, the social media platform he owns. He acknowledged the decision was a "tough call" that would likely upset some parties. If passed, the bill could impact how eCommerce companies deploy AI in their operations. Businesses might need to redesign their AI-powered recommendation systems, chatbots and pricing algorithms to comply with new safety standards, potentially slowing innovation and increasing costs. Industry experts warn that the bill's implications could be profound for eCommerce. Aditi Godbole, senior data scientist at software company SAP, told PYMNTS, "Today, more than 63% of eCommerce platforms use AI models for crucial functions such as recommendation engines, dynamic pricing, real-time personalization search, smart collections and conversational building tools." Godbole highlights potential challenges for businesses in complying with the proposed regulations. "Many parts of the bill are complex, not well-defined, lack granularity, and are unsuitable for smaller players and startups in the eCommerce space," she said. One concern is the introduction of mandatory AI safety testing. "This could potentially slow down innovation for critical functions in the eCommerce field, such as personalized shopping experiences or recommendation models," Godbole said. "Any new feature development will have to go through mandatory safety testing and has to pass strict compliance and safety regulations before it goes live." Robert Hodgins, fund manager at Sand Hill Road Technologies Fund, echoed these concerns while pointing out potential benefits. "While safety in AI is undeniably important, new regulations could slow down how quickly these companies roll out innovative features, especially those personalized shopping experiences that consumers have come to love," Hodgins told PYMNTS. He added, "The real challenge will be for these companies to find a way to comply with the regulations without losing their edge. If they're not careful, these safety measures could become roadblocks to the fast-paced innovation that keeps them competitive." However, Hodgins also sees a potential upside: "By prioritizing AI safety, companies might actually build stronger trust with their customers, which could pay off in the long run." The bill's requirements could disproportionately affect smaller companies and startups, potentially stifling innovation in the sector. "Companies developing a more efficient product categorization algorithm for eCommerce might struggle to meet the ambiguous AI safety testing standards, despite its potential to revolutionize how businesses organize their catalogs," Godbole added. Musk's stance puts him at odds with tech industry heavyweights like Marc Andreessen and OpenAI, who argue the bill's vague and burdensome regulations could stifle innovation, particularly in open-source models. It also sets him apart from several prominent Democrats in Congress, including Reps. Zoe Lofgren, Ro Khanna, and former Speaker Nancy Pelosi, who have opposed the bill. The endorsement comes at a critical juncture for SB 1047, which must clear the Legislature by week's end to reach Gov. Gavin Newsom's desk. For Tesla and other tech-driven companies, the potential regulations could necessitate a reevaluation of AI-powered customer service chatbots, recommendation engines, and dynamic pricing algorithms. These tools, which have become integral to modern eCommerce, may require extensive testing and potential modifications to comply with the proposed safety standards. Ironically, Musk's own companies have recently embraced generative AI technology. X recently launched Grok, a tool allowing users to create and share AI-generated images, raising concerns about the potential flood of misinformation and deepfakes on the platform.