This article was compiled with the help of generative AI based on data and analysis that is original to EMARKETER.
Gov. Gavin Newsom's veto of California's landmark AI safety bill SB 1047 underscores the complexities of regulating artificial intelligence, even as OpenAI's shift toward a for-profit model raises new questions about the industry's direction.
"Newsom was saying that he vetoed the bill because it went too far, but also not far enough," our analyst Grace Harmon said on the "Behind the Numbers" podcast. The governor argued smaller AI startups could be equally dangerous as tech giants, though Harmon said politics are likely at play given heavy lobbying against the bill.
California's vetoed AI bill would have required safety testing for advanced AI models, made companies liable for AI-caused harms, and mandated "kill switches" for rogue AI applications.
The veto highlights the difficulty of regulating AI at this early stage.
"The tricky thing is, well, how do you effectively regulate something that doesn't exist yet?" our analyst Jacob Bourne said. "But then the flip side of that is, okay, do you want to wait till disaster strikes and then say, 'Well, we should have done something, but we didn't'? So I think that's really the thing that separates this piece of legislation from other AI legislation."
Meanwhile, OpenAI's plans to evolve into a fully for-profit company could present AI safety issues. OpenAI was originally founded as a nonprofit to ensure advanced AI benefits humanity. However, the enormous costs of developing AI models led to the creation of a for-profit arm in 2019. Since OpenAI spends double its sales revenue, that might incentivize the company to prioritize profits over costly safety measures.
Moving to a for-profit structure could also make OpenAI more susceptible to investors’ demands, who may prioritize financial returns over safety concerns.
EMARKETER forecasts US ChatGPT users will hit 67.7 million in 2024.
OpenAI, valued around $157 billion, plans to become for-profit by 2025. Several top executives departed at the same time of the announcement: Mira Murati, OpenAI's CTO, Bob McGrew, OpenAI's chief research officer, and Barret Zoph, OpenAI's vice president of research.
"If profit becomes more openly a main focus, then I could see some more guardrails being put in place to ensure that investors aren't losing their dollars to missteps," Harmon said.
As for future legislative efforts, a new California AI bill is expected next year. Also, a patchwork of state-level AI laws is likely to emerge.
“What we might see at the federal level is more executive orders, maybe FTC investigations into particular companies. It depends on who is in the White House,” said Bourne.
This was originally featured in the EMARKETER Daily newsletter. For more marketing insights, statistics, and trends, subscribe here.