California Pursues AI Safety Laws Despite Trump Federal Funding Threats

California lawmakers are pursuing stricter artificial intelligence regulations targeting mental health risks to children and adults, despite an executive order from President Donald Trump asserting federal control over AI regulation. The Trump administration intends to prevent states from imposing controls that could disadvantage U.S. firms against Chinese competition and has ordered federal agencies to investigate restricting grants to states that pass such rules.

Governor Gavin Newsom previously enacted several AI control bills requiring age verification during device setup and mandatory disclosures when users interact with machines. However, Newsom vetoed a stricter measure that would have barred companion chatbots for children if they promoted harmful behaviors, calling the bill too broad. Despite this, Assemblymember Rebecca Bauer-Kahan plans to reintroduce legislation banning minors from using companion chatbots and restricting the sale of AI-powered toys.

Industry representatives and groups like the Chamber of Progress argue that onerous regulations could drive companies out of the state, potentially threatening $10 billion in annual income tax revenue. While OpenAI is exploring enhanced safety protections for teens, the company is also considering a competing ballot measure against a Common Sense Media initiative to limit underage chatbot use. Legislators are also pursuing bill AB 412, which would require transparency regarding copyrighted material used in AI training.