California to Regulate State Use of Generative AI

California Gov. Gavin Newsom has signed an executive order to impose rules on the use of generative AI in state government, a move that could see other states follow suit.

The order directs state agencies to conduct a risk analysis of threats to critical infrastructure from generative AI use and establishes a framework for agencies to analyze AI's impact on vulnerable communities. The state will also conduct ongoing evaluations to assess AI's impacts across government as the technology evolves.

“This is a potentially transformative technology – comparable to the advent of the internet – and we’re only scratching the surface of understanding what generative AI is capable of,” said Newsom in a statement.

Also to be established under the order are local government-approved sandboxes to test AI projects and pilots.

The order provides AI training for employees and calls for a report on AI's benefits and harms.

The Newsom administration said it will work to implement the provisions of the order over the next year and engage with both the legislature and stakeholders to develop policy recommendations.

The order engages the University of California at Berkeley and Stanford University, two world-leading research institutions on generative AI. The parties will also host a joint summit in 2024 on the impacts of generative AI on California and its workforce.

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California is home to a bounty of top AI companies – 35 out of 50 globally are based in the state − and Newsom wants to ensure responsible AI is being developed there. AI leaders such as Google, Meta and OpenAI - all California companies - have been rushing to roll out generative AI capabilities in their products.

“We recognize both the potential benefits and risks these tools enable. We’re neither frozen by fears nor hypnotized by the upside. We’re taking a clear-eyed, humble approach to this world-changing technology,” he said.

The executive order comes a week before tech leaders are expected to head to Washington for Senate Majority Leader Chuck Schumer's first AI Insight Forum. Expected attendees include Google CEO Sundar Pichai, Meta CEO Mark Zuckerberg, OpenAI CEO Sam Altman, Microsoft CEO Satya Nadella, Nvidia CEO Jensen Huang, IBM CEO Arvind Krishna and Tesla/SpaceX/X CEO Elon Musk. Labor and civil rights advocates reportedly are also expected to attend the Sept. 13 closed-door event.

In January, California legislators moved to regulate the use of AI in business. Legislation AB-331 would impose assessment requirements on the private sector’s use of automated decision tools. Businesses using these tools would have to assess how much data is being collected and what safeguards are in place. This bill is now held in suspense, meaning it has been killed for the year.