Sacramento, California — California Governor Gavin Newsom vetoed a landmark bill aimed at establishing first-in-the-nation safety measures for large artificial intelligence models Sunday.

The decision is a major blow to efforts attempting to rein in the homegrown industry that is rapidly evolving with little oversight. The bill would have established some of the first regulations on large-scale AI models in the nation and paved the way for AI safety regulations across the country, supporters said.

Earlier in September, the Democratic governor told an audience at Dreamforce, an annual conference hosted by software giant Salesforce, that California must lead in regulating AI in the face of federal inaction but that the proposal “can have a chilling effect on the industry.”

The proposal, which drew fierce opposition from startups, tech giants and several Democratic House members, could have hurt the homegrown industry by establishing rigid requirements, Newsom said.

“While well-intentioned, SB 1047 does not take into account whether an AI system is deployed in high-risk environments, involves critical decision-making or the use of sensitive data,” Newsom said in a statement. “Instead, the bill applies stringent standards to even the most basic functions — so long as a large system deploys it. I do not believe this is the best approach to protecting the public from real threats posed by the technology.”

Newsom on Sunday instead announced that the state will partner with several industry experts, including AI pioneer Fei-Fei Li, to develop guardrails around powerful AI models. Li opposed the AI safety proposal.

The measure, aimed at reducing potential risks created by AI, would have required companies to test their models and publicly disclose their safety protocols to prevent the models from being manipulated to, for example, wipe out the state’s electric grid or help build chemical weapons. Experts say those scenarios could be possible in the future as the industry continues to rapidly advance. It also would have provided whistleblower protections to workers.

The legislation is among a host of bills passed by the legislature this year to regulate AI, fight deepfakes and protect workers. State lawmakers said California must take action this year, citing hard lessons they learned from failing to rein in social media companies when they might have had a chance.

Proponents of the measure, including Elon Musk and Anthropic, said the proposal could have injected some levels of transparency and accountability around large-scale AI models, as developers and experts say they still don’t have a full understanding of how AI models behave and why.

The bill targeted systems that require more than $100 million to build. No current AI models have hit that threshold, but some experts said that could change within the next year.

“This is because of the massive investment scale-up within the industry,” said Daniel Kokotajlo, a former OpenAI researcher who resigned in April over what he saw as the company’s disregard for AI risks. “This is a crazy amount of power to have any private company control unaccountably, and it’s also incredibly risky.”

The United States is already behind Europe in regulating AI to limit risks. The California proposal wasn’t as comprehensive as regulations in Europe, but it would have been a good first step to set guardrails around the rapidly growing technology that is raising concerns about job loss, misinformation, invasions of privacy and automation bias, supporters said.

A number of leading AI companies last year voluntarily agreed to follow safeguards set by the White House, such as testing and sharing information about their models. The California bill would have mandated that AI developers follow requirements similar to those commitments, said the measure’s supporters.

But critics, including former U.S. House Speaker Nancy Pelosi, argued that the bill would “kill California tech” and stifle innovation. It would have discouraged AI developers from investing in large models or sharing open-source software, they said.

Newsom’s decision to veto the bill marks another win in California for big tech companies and AI developers, many of whom spent the past year lobbying alongside the California Chamber of Commerce to sway the governor and lawmakers from advancing AI regulations.

Two other sweeping AI proposals, which also faced mounting opposition from the tech industry and others, died ahead of a legislative deadline in August. The bills would have required AI developers to label AI-generated content and ban discrimination from AI tools used to make employment decisions.

The governor said earlier this summer he wanted to protect California’s status as a global leader in AI, noting that 32 of the world’s top 50 AI companies are located in the state.

He has promoted California as an early adopter as the state could soon deploy generative AI tools to address highway congestion, provide tax guidance and streamline homelessness programs. The state also announced last month a voluntary partnership with AI giant Nvidia to help train students, college faculty, developers and data scientists. California is also considering new rules against AI discrimination in hiring practices.

Earlier in September, Newsom signed some of the toughest laws in the country to crack down on election deepfakes and measures to protect Hollywood workers from unauthorized AI use.

But even with Newsom’s veto, the California safety proposal is inspiring lawmakers in other states to take up similar measures, said Tatiana Rice, deputy director of the Future of Privacy Forum, a nonprofit that works with lawmakers on technology and privacy proposals.

“They are going to potentially either copy it or do something similar next legislative session,” Rice said. “So it’s not going away.”
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SAO PAULO/BRASILIA BRAZIL — Brazil’s Supreme Court said on Friday that social platform X still needs to pay just over $5 million in pending fines, including a new one, before it will be allowed to resume its service in the country, according to a court document. 

Earlier this week, the Elon Musk-owned U.S. firm told the court it had complied with orders to stop the spread of misinformation and asked it to lift a ban on the platform. 

But Judge Alexandre de Moraes responded on Friday with a ruling that X and its legal representative in Brazil must still agree to pay a total of $3.4 million in pending fines that were previously ordered by the court. 

In his decision, the judge said that the court can use resources already frozen from X and Starlink accounts in Brazil, but to do so the satellite company, also owned by Musk, had to drop its pending appeal against the fund blockage.  

The judge also demanded a new $1.8 million fine related to a brief period last week when X became available again for some users in Brazil. 

X, formerly known as Twitter, did not immediately respond to a request for comment. 

According to a person close to X, the tech firm will likely pay all the fines but will consider challenging the fine that was imposed by the court after the platform ban.  

X has been suspended since late August in Brazil, one of its largest and most coveted markets, after Moraes ruled it had failed to comply with orders related to restricting hate speech and naming a local legal representative. 

Musk, who had denounced the orders as censorship and called Moraes a “dictator,” backed down and started to reverse his position last week, when X lawyers said the platform tapped a local representative and would comply with court rulings. 

In Friday’s decision, Moraes said that X had proved it had now blocked accounts as ordered by the court and had named the required legal representative in Brazil. 
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