California's privacy agency backs down on AI regulations for Big Tech

In a significant shift, California's Privacy Protection Agency has decided to scale back its efforts to regulate artificial intelligence and automation. This change occurred following mounting pressure from business groups, lawmakers, and Governor Gavin Newsom, all of whom cited concerns that the proposed regulations could hamper innovation and impose excessive costs on businesses. Initially, the agency proposed rules that would require companies to conduct risk assessments before utilizing behavioral advertising, an approach that targets individuals based on comprehensive data gathered from their online activities. However, the approved changes mean that these behavioral advertising practices will no longer be subjected to regulation. Created after the passage of Proposition 24 in 2020, the California Privacy Protection Agency is notable for being the first of its kind in the United States, tasked with safeguarding the data privacy of California residents. The board's decision to retract its regulatory proposals represents a pivotal moment in the ongoing discussion surrounding privacy and technology regulation. The adjustments made by the board are estimated to reduce compliance costs for businesses significantly, from $834 million to $143 million, with predictions indicating that nearly 90% of affected businesses may be exempt from these regulations. While supporters of the original, more comprehensive rules are disappointed by the dilution of regulatory measures, proponents assert that the retreat is in line with ensuring growth and competition in the tech industry. Some board members have expressed concerns that simply relying on industry to define what constitutes adequate risk assessments could lead to a situation where businesses influence the standards that they will be evaluated against. The governor's intervention, along with pushback from business interest groups, indicates a considerable divide between the privacy agency's mission and the pressures derived from the industry's needs. Despite these rollbacks, the agency is still mandated to oversee certain automated decision-making rules by 2027 and has expressed commitment towards supporting other legislative measures that enhance privacy protections. New proposals include legislation aimed at safeguarding the privacy of individuals who connect devices to their brains and preventing unauthorized collection of location data. This ongoing legislative engagement reflects an effort to balance privacy interests against the burgeoning influence and power of technology companies in California and beyond.