Dozens of California-based technology companies are fighting back against the state’s proposed AI regulations and oversight requirements. Open Letter First reported to lawmakers POLITICO.
The signatories of the letter, written by venture capital firm Y Combinator, include 41 technology companies developing AI in the state, including companies working in the healthcare and finance sectors.
The letter challenges Senate Bill 1047, a bill sponsored by Senator Scott Wiener that would impose AI safety testing measures on AI models.
The group, represented by Y Combinator, believes the bill “could unintentionally threaten the vitality of California’s tech economy and reduce competition.”
While the companies acknowledge the state’s commitment to the “safe and ethical development of AI” and appreciate the amendments made to the bill so far to reflect stakeholder concerns, they still have “fundamental concerns” about the bill.
The group raised four main concerns: First, Y Combinator criticized the level of burden the law places on companies, arguing that AI developers themselves should not be held liable for misuse of AI.
And they criticized the “problematic” regulatory standards imposed by the bill because AI development is still evolving and “certain metrics” could quickly become arbitrary as future models are rolled out.
The letter noted that because companies outside California don’t face these regulatory standards, AI developers may relocate outside the state, potentially harming the local market.
The groups also objected to the law imposing a “kill switch” on AI models, arguing that such a feature could act as a “de facto ban on open source AI development.”
Finally, they argued that the bill’s provisions were too vague, leaving “fair grounds for judges to interpret” and potentially leading to stricter laws.
Simon Bain, CEO and founder of San Jose-based OmniIndex, echoed the letter’s sentiments: IT ProHowever, the company did not sign the complaint itself.
“Regulators need to stop wasting time on fear-mongering and focusing on kill switches and start looking at the real issues with LLMs today,” Bain said.
He argued that regulators should focus on more relevant issues with AI, such as potential environmental damage and ongoing issues like copyright infringement.
“Focusing on these issues could make California a true leader in the future of AI,” Bain said, “but the state finds itself competing with innovators over pretense of positioning itself on tomorrow’s problems.”
“We’re excited to be working with Synopsys,” said Devrap Ghosh, a manager at California-based Synopsys. IT ProHe acknowledged that building legislative guardrails is paramount in California.
That said, to foster innovation and retain talent in the state, policymakers “need to work with various stakeholders to ensure that regulations do not stifle economic growth and innovation,” Ghosh acknowledged.
California companies are the latest to push back against AI regulations
The rising tensions in California are echoing those seen in Europe. EU AI LawIndustry participants repeatedly expressed concerns about the law’s potential impact on AI development in the state.
Last November, a joint statement from technology policy group Digital Europe said: AI startups could be ‘regulated and wiped out’ by law.
DigitalEurope argued that EU AI law limits organizations’ ability to use underlying models and that the law could have a negative impact on long-term innovation.
Gregor Hofer, CEO of Rapport and Speech Graphics, said there are similarities between the EU AI law and the California bill.
“The reaction to California’s AI bill mirrors the backlash against the EU’s, with stakeholders in both regions expressing similar concerns about the potential negative impacts on innovation and competitiveness,” Hofer said.
“California’s stringent AI laws could deter startups and established companies from conducting cutting-edge research and development in the state by imposing significant compliance costs, which could have a knock-on effect of stifling innovation and competitiveness,” he added.
Members of the European open source community also expressed concerns about the EU AI law, warning that it could have a negative impact on the sector.
