California lawmakers put the brakes on a few big tech regulation proposals this week and frustrated consumer groups that had their sights on the state taking the lead against artificial-intelligence driven price manipulation and power-thirsty data centers.
The veto session was included within the secretive “suspense file” process where legislators quietly killed legislation based on its likely expense. Killed were proposals that would have prevented software algorithms from setting apartment rental rates and other fees paid by consumers on a daily basis.
Legislative Battles Over AI, Algorithmic Pricing, and Data Centers
Where it once aimed at being a sweeping ban on predictive pricing software, it culminated where legislators had seriously watered down proposed safeguards. One of the proposed bills that would’ve banned price-setting using personal information was gutted so it only applies to grocery stores while exposing other industries’ customers to algorithmic price discrimination.
Not all price-related bills, though, did not meet their demise. Legislation banning contracts from using pricing software algorithms made it through the procedure and will go before the Senate floor for a vote.
Legislators also voted down a proposal that would have exempted utility customers from footing the bill for the energy needs of the AI sector’s gargantuan energy requirements. It would have made data centers publicly report their energy use.
Certain data center oversight did manage to survive the session, such as Senate attempts to restrain utility companies’ ability to pass rising data center expenses on to ratepaying customers and data centers’ mandatory water use reporting.
Recent AI Legislation and Its Impact on Safety, Workers, and Children
Despite the bumps, key AI safety legislation made it out of the appropriations process. Legislation passed by the Senate mandating AI developers of next-gen AI models to weigh catastrophic risks within their technology and offer simple reporting mechanisms for AI systems with the ability to bring about death, injury, or property harm passed.
Three worker-targeting AI surveillance bills made it through, although one was watered down by stripping it of an appeal procedure for employees who feel AI programs were incorrect about their jobs, pay rates, or disciplinary actions.
The effort to limit kids’ exposure to toxic interactions with AI received new momentum after suicidal tragedies were caused by AI chatbots. Legislators passed laws banning the development of companion bots for kids and setting ground rules for AI programs when suicide is discussed.
California Legislators Grapple with AI Regulation After Tragic Events
These came after the recent passing of 16-year-old Adam Raine whose parents sued ChatGPT of being their son’s “suicide coach.” This is similar to the concern raised after a Florida teen committed suicide after a romantic relationship with a Character.ai chat program.
California’s Attorney General joined 43 other states in warning AI companies that they would “use every facet of our authority to protect children from exploitation by predatory artificial intelligence products.”
Additional child protection measures that advanced include bills targeting off-campus cyberbullying, deepfake pornography of minors, and social media warning labels. However, the labeling legislation was significantly weakened, with smaller label requirements, eliminated private lawsuit rights, and delayed implementation.
The state legislature must adopt legislation on these bills by September 12. Legislation passing then goes to Governor Newsom, where it must be signed into effect or vetoed by October 12.
One of those bills that made it through legislation may alter the handling of cases of harm related to AI by removing “the AI made me do it” plea of developers when their technology results in harm.
Even if consumer advocacy groups may be irked by the backdown on prices and energy requirements, the legislative adoption of some of the AI protection and children provisions suggests that Californian legislators are still struggling with balancing innovation and safeguarding the public in the age of artificial intelligence.
The coming weeks will determine whether California maintains its reputation as a tech regulation leader or takes a more industry-friendly approach to AI oversight.
