The Safe and Secure Innovation for Frontier Artificial Intelligence Models Act (SB 1047) was seen by many as a necessary safeguard on the technology’s development. Generative AI covers systems that produce new content in text, video, images and music – often in response to questions, or “prompts”, by a user.

But Newsom said the bill risked “curtailing the very innovation that fuels advancement in favour of the public good”. While agreeing the public needs to be protected from threats posed by the technology, he argued that SB 1047 was not “the best approach”.

What happens in California is so important because it is the home of Silicon Valley. Of the world’s top 50 AI companies, 32 are currently headquartered within the state. California’s legislature therefore has a unique role in efforts to ensure the safety of AI-based technology.

But Newsom’s decision also reflects a deeper question: can innovation and safety truly coexist, or do we have to sacrifice one to advance the other?

California’s tech industry contributes billions of dollars to the state’s economy and generates thousands of jobs. Newsom, along with prominent tech investors such as Marc Andreessen, believes too many regulations could slow down AI’s growth. Andreessen praised the veto, saying it supports “economic growth and freedom” over excessive caution.

However, rapidly advancing AI technologies could bring serious risks, from spreading disinformation to enabling sophisticated cyberattacks that could harm society. One of the significant challenges is understanding just how powerful today’s AI systems have become.

Generative AI models, like OpenAI’s GPT-4, are capable of complex reasoning and can produce human-like text. AI can also create incredibly realistic fake images and videos, known as deepfakes, which have the potential to undermine trust in the media and disrupt elections. For example, deepfake videos of public figures could be used to spread disinformation, leading to confusion and mistrust.

AI-generated misinformation could also be used to manipulate financial markets or incite social unrest. The unsettling part is that no one knows exactly what’s coming next. These technologies open doors for innovation – but without proper regulation, AI tools could be misused in ways that are difficult to predict or control.

Traditional methods of testing and regulating software fall short when it comes to generative AI tools that can create artificial images or video. These systems evolve in ways that even their creators can’t fully anticipate, especially after being trained on vast amounts of data from interactions with millions of people, such as ChatGPT.

SB 1047 sought to address this concern by requiring companies to implement “kill switches” in their AI software that can deactivate the technology in the even of a problem. The law would also have required them to create detailed safety plans for any AI project with a budget over US$100 million (£77.2m).

Critics said the bill was too broad, meaning it could affect even lower-risk projects. But its main goal was to set up basic protections in an industry that’s arguably moving faster than lawmakers can keep up with.

California as a global leader

What California decides could affect the world. As a global tech leader, the state’s approach to regulating AI could set a standard for other countries, as it has done in the past. For example, California’s leadership in setting stringent vehicle emissions standards through the California Consumer Privacy Act (CCPA), and its early regulation of self-driving cars, have influenced other states and countries to adopt similar measures.

But by vetoing SB 1047, California may have sent a message that it’s not ready to lead the way in AI regulation. This could leave room for other countries to step in – countries that may not care as much as the US about ethics and public safety.

Tesla’s CEO, Elon Musk, had cautiously supported the bill, acknowledging that while it was a “tough call”, it was probably a good idea. His stance shows that even tech insiders recognise the risks AI poses. This might be a sign the industry is ready to work with policymakers on how best to regulate this new breed of technology.

The notion that regulation automatically stifles innovation is misleading. Effective laws can create a framework that not only protects people, but allows AI to grow sustainably. For example, regulations can help ensure that AI systems are developed responsibly, with considerations for privacy, fairness and transparency. This can build public trust, which is essential for the widespread adoption of AI technologies.

The future of AI doesn’t have to be a choice between innovation and safety. By implementing reasonable safeguards, we can unlock the full potential of AI while keeping society safe. Public engagement is crucial in this process. People need to be informed about AI’s capabilities and risks to participate in shaping policies that reflect society’s values.

The stakes are high and AI is advancing rapidly. It’s time for proactive action to ensure we reap the benefits of AI without compromising our safety. But California’s killing of the AI bill also raises a wider question on the increasing power and influence of tech companies, given they raised objections that subsequently led to its veto.

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CUPERTINO, Calif. (AP) — Reporters are a skeptical bunch, so it was unusual to hear so many of them raving about their firsthand experience with Apple’s next Big Thing: the high-priced headset called Vision Pro, a device infused with totally virtual reality as well as augmented reality that projects digital images on top of real-world settings.

But after wearing the Vision Pro during a half-hour demonstration meticulously orchestrated by Apple, I joined the ranks of those blown away by all the impressive technology Apple has packed into the goggles-like headset. Still, that excitement was muted by a disquieting sense of having just passed through a gateway that eventually will lead society down another avenue of digital isolation.

THE POTENTIAL UPSIDES

But first the good stuff: Vision Pro is a highly sophisticated device that is fairly easy to set up and incredibly intuitive to use. The setup requires using an iPhone to automatically take some assessments of your eyes and ears. If you wear prescription glasses (I wear contacts) some additional calibration will be needed, but Apple promises that won’t be complicated.

Once that’s all done, you will quickly find that putting on the Vision Pro is also simple, thanks to a knob on the side that makes it easy to ensure a the headset fits comfortably. And unlike other headsets, the Vision Pro isn’t an awkward-looking piece of nerdware, although the goggles aren’t exactly chic, despite looking a bit like something you might see people wearing on a ski slope, jet fighter or race car.

Controlling the Vision Pro is astoundingly easy. Users just press a button above the right goggle to pull up a virtual screen of apps, including familiar standbys for photos, messaging, phone calls, video streaming and web browsing. Opening an app just requires looking straight at it, then pinching a thumb and finger together. The same app can be closed with a finger pinch or can be moved to the side by holding two fingers together and moving them in the direction where you want to place it.

Not surprisingly, Apple’s well-curated demonstration cast the Vision Pro in the best-possible light. The headset clearly seems like it could be quite popular for business purposes, improving productivity, collaboration and video conferencing, especially in an era when more work is being done remotely.

Without causing the disorienting effects common in other virtual-reality headsets, the Vision Pro can immerse you in stunning visuals, 3-D displays of faraway places. It can insert you into videos of past memories recorded with one of the device’s 12 cameras (the demo included heartwarming scenes of a child’s birthday party and a campfire scene). It can make watching a 3-D movie, such as the latest Avatar film, feel like you are sitting in an IMAX theater while relaxing on your own couch. It can thrust you into surreal moments (at one point, I watched in wonder as a butterfly first shown in a virtual screen depicting a prehistoric era seemingly fluttered across the room and landed in my outstretched hand as I sat on a couch).

And the demo featured just enough glimpses of the way sporting events appear through the goggles to realize that the powers that be in professional and collegiate football, basketball, baseball and hockey are bound to find ways to incorporate the technology into subscription services that make viewers feel like they are sitting in the front row.

To Apple’s credit, the Vision Pro is also designed in a way that allows users to still see those around them, if they so choose.

THE POTENTIAL DOWNSIDES

My mixed feelings about Apple’s first foray into mixed reality ironically stems from just how well-designed the Vision Pro is by a company that has been behind this sort of game-changing technology on numerous occasions during the past 40 years, ranging from the Macintosh computer to the iPhone.

It feels like this may be another instance in which Apple has accomplished something that has eluded other tech companies by cracking the code to make both virtual- and augmented-reality more compelling and less disorienting than a variety of other ho-hum headsets have done over the past decade or so.

The only reason the Vision Pro isn’t going to be an immediate sensation is its cost. When it hits the U.S. market early next year, it will sell for $3,500, which makes it probable it will start out as a luxury item unaffordable to most households — especially because the headset isn’t going to supplant the need to buy a new iPhone or smartphone running on Android every few years.

The most likely scenario is that Vision Pro in some ways is Apple’s testbed for mixed reality that will encourage the development of more apps especially designed to take advantage of the technology. The next ripple effect will be an array of other products equipped with similarly compelling technology at lower price points that stand a better chance sucking more people — including children — into a realm that threatens to deepen screen addictions to the detriment of real-world interactions among humans.

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Michael Liedtke has been covering Silicon Valley for The Associated Press for 23 years.

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As California contemplates how to create more and better high-paying jobs, our dominance in high-technology industries provides a unique set of tools to provide residents with economic opportunity. But the Golden State risks squandering its advantages without new approaches to developing and retaining innovative talent, particularly as high-tech industries are drawn to incentives in other locations.

The foundation of knowledge-based economic development in California has long been bolstered by its research and development credit. First created in 1987, it provides firms conducting qualified research activities with a 15% tax credit on overall expenses and a 24% tax credit on basic research, including wages paid to employees engaging in or supervising R&D.

While the specific effects of the credit on investment are difficult to quantify, various studies have demonstrated the effectiveness of similar research credits, and local firms have cited its influence on their planning.

In 2015, the Milken Institute analyzed the effectiveness of the R&D credit in our report on “California’s Innovation-Based Economy.” Our report suggested benefits surrounding expanding the credit, particularly to help offset high local operating costs. As many of those costs have continued to rise, however, state leaders have prioritized short-term concerns at the expense of sustaining the state’s long-term comparative innovation advantage.

When the state confronted a projected $54 billion deficit during the early stages of the pandemic, leaders placed a three-year cap on business tax incentives, including the R&D credit. Despite protecting the state’s fiscal outlook by increasing general fund revenues, this move increased cost uncertainty for businesses at a time when economic volatility was already high.

For three decades, this incentive had helped businesses lower the risks inherent to investing in product and process improvements, but the policy change signaled a diminished commitment to innovation-led growth.

There were already signs that California’s edge in high-tech employment was starting to diminish. In industries where R&D is a cornerstone of firms’ ability to compete for market share – such as information and computer science; architecture and engineering; life and physical sciences; and arts, entertainment, and media – the proportion of state residents employed in 2015 was 26% higher than it was nationwide (8.7% to 6.9%, respectively) according to the U.S. Bureau of Labor Statistics. By May 2020, California’s edge had dropped to 20% over the national average (8.9% to 7.4%). And since last year, several high-profile high-tech companies have announced their departures from the state.

California is now at an inflection point, with a projected surplus of $31 billion but no clear commitment to restore the R&D credit. The analysis in the Milken Institute’s new report: “Sustaining California’s Innovation Economy Through Investments in R&D” illustrates the continued value of R&D in terms of supporting high-wage jobs growth in California as well as providing the investment necessary to capture a broader range of innovation hubs.

By comparing the state’s R&D credit with similar incentives in other states, we also seek to promote a conversation about ensuring that innovation-oriented firms choose to pursue growth opportunities in the Golden State.

Our new report provides three main suggestions for consideration by state leaders:

• Reintroduce the net operating loss provision. Relatively newer firms – including startups at the pre-revenue stage and companies that have not yet turned a profit – don’t generate enough income for the credit to provide a clear incentive for investment in R&D.

• Offer refundable and tradeable R&D credits for small businesses. Small businesses create a disproportionate share of new jobs and can be major sources of innovation and entrepreneurship.

• Provide additional incentives to invest in basic research. Providing incentives for the private sector to invest in basic research – including sponsorship of academic research that can take longer to bear fruit commercially – helps reduce marginal research costs and provides job pathways for graduates.

As firms and businesses reorient to the realities of booming remote work and employees leaving the workforce, California cannot rest if it wants to maintain its competitive innovation advantage while minimizing the number of businesses expanding R&D operations elsewhere.

Through bold actions, state leaders can also send a clear signal of their commitment to support for the state’s most innovative firms. Not only will this restore competitiveness by providing incentives for in-state R&D, but these investments can also generate new assets – from jobs to patents and licensing income – that support more inclusive economic opportunities around the state.

Matt Horton & Aaron Melaas | Calmatters

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