Regulation of AI in California and Tech Companies' Response

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California is pushing a bill to hold tech companies accountable for potential harms caused by AI models, forcing them to prevent misuse or face lawsuits. The state's effort aligns with increasing pressure on legislators to regulate AI, as seen with President Biden's executive order requiring transparency on AI model safety. The bill passed the Senate and is moving towards becoming law, leading to fierce opposition from AI companies like Meta. Critics claim the bill hampers innovation, but proponents argue it will ensure AI safety, prevent shortcuts, and not harm smaller AI groups. This regulatory move stems from Silicon Valley's history of rapid growth without scrutiny, prompting lawmakers to proactively address concerns around AI technologies.

The Federal Reserve held borrowing costs at a 23-year high yesterday, and Terraform Labs has agreed to pay $4.47bn in a case brought by the US Securities and Exchange Commission. Plus, tech companies launch a fight against a proposed California law to introduce a ‘kill switch’ on AI models.

Mentioned in this podcast:

Fed officials signal just one interest rate cut before end of 2024

Silicon Valley in uproar over Californian AI safety bill

US inflation falls to 3.3% in May in boost to markets

Terraform Labs to pay $4.5bn in SEC fraud case

The FT News Briefing is produced by Fiona Symon, Sonja Hutson, Kasia Broussalian and Marc Filippino. Additional help from Breen Turner, Sam Giovinco, Peter Barber, Michael Lello, David da Silva and Gavin Kallmann. Our engineer is Monica Lopez. Our intern is Prakriti Panwar. Topher Forhecz is the FT’s executive producer. The FT’s global head of audio is Cheryl Brumley. The show’s theme song is by Metaphor Music.

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