California doesn’t need to tag AI innovations “out of business” – Orange County Register

California didn’t just become the AI ​​capital of the world by accident. we made it. More than 1,300 AI startups call California home. Because California is where talent, research universities, entrepreneurs, and investors come together to create the next big thing.

No wonder…the city of Sacramento decided now might be a good time to make it harder.

Assembly Bill 412 is one of those bills that sounds reasonable until you ask the people who actually have to comply.

The proposal, introduced by Rep. Rebecca Bauer-Kahan, D-San Ramon, would require developers of generative AI models to identify and disclose the data used to train their systems. Sounds simple enough, but it turns out it’s as easy as finding one particular grain of sand in Huntington Beach. Even many of the largest AI companies admit that the technical challenges are extremely difficult. If a large company says it’s nearly impossible, imagine what it’s like for a startup with 12 employees, a few laptops, and a dream.

Big companies will hire new armies of lawyers.

The little guys? They will hire a moving company.

AB 412 poses significant legal risk to developers who cannot fully document or identify their training data. Every mistake is an opportunity for new litigation. Every unanswered request represents a new financial risk. Large companies may be able to budget for years of litigation and regulatory battles. Startups can’t do that.

It’s not a big choice between launching a product, hiring another engineer, or spending your seed money on legal fees.

This is where this becomes more than just an “AI industry” issue.

Small businesses across California are using AI every day. It helps us write marketing copy, answer customer questions, manage accounting, improve cybersecurity, streamline operations, and increase productivity for all employees. These are no longer Silicon Valley luxuries. It is becoming an everyday business tool on Main Street.

According to the U.S. Chamber of Commerce, 60% of small businesses in California are already using AI, and nearly two-thirds are concerned that the patchwork of state regulations will increase legal and compliance costs.

It’s natural for them to be worried.

Developers facing rising compliance costs aren’t growing some magical money tree in the back of their offices. They will either raise their prices or stop offering their products in California altogether. Neither option is helpful to small business owners who are already dealing with rising labor costs, rising insurance premiums, inflation, and enough government red tape to qualify as a full-time job.

Less competition means higher prices.

The higher the price, the fewer companies can afford these tools.

And fewer companies using AI doesn’t mean California companies are less competitive, it just means they’re less competitive.

That’s the opposite of what we’re trying to achieve.

California has always been successful because it welcomes innovation, rather than regulating it and subjugating it. We became the home of aerospace, entertainment, biotechnology, software, and now artificial intelligence because entrepreneurs believed they could build something special here.

AB 412 sends the opposite message.

This tells innovators that California is becoming a place where starting a company is riskier than launching a product elsewhere.

That’s not leadership. It’s an invitation to the next generation of innovators who are building the future outside of California.