Early Signals: What California’s AI Policy Means for Business

On June 17, 2025 the California on Frontier AI Policy, prepared by an expert working group at the request of Governor Gavin Newsom was released. This comprehensive forward-looking policy comes after Newsom vetoed previous legislation attempting to regulate AI systems in 2024. Newsom asked the working group to recommend a framework for a proposed law that would balance the needs of safety while allowing for innovation.

The report focuses on the most advanced forms of AI, known as “frontier” models like those powering large language models (e.g., OpenAI’s GPT series or Meta’s Llama), multi-model AI systems (e.g., Alexa and Google Assistant) and emerging AI agents (e.g., self-driving cars and chatbots). The report illustrates that regulation through legislative action, perhaps to come in the next year, is necessary as AI capabilities are expanding quickly. Unfortunately, so are the risks of using AI for malicious purposes such as cyber-attacks, bioweapons and misinformation campaigns. Risks also include less malicious intents or unintentional violations of privacy law, intellectual property rights and trade secrets.   

The writers of this report are not alone in this view, as other states as well as Congress are concurrently considering legislation regarding AI. And while not yet part of any formal rules or law, the report gives businesses and employers an early insight into what regulators may adopt and what risks they may want to attempt to mitigate now. Reviewing current uses of AI, both internally and by vendors, in all areas of operation including compliance, employment, IT and leadership may be beneficial.

This e-Bulletin was prepared by Jennifer Trowbridge of Procopio and is a member of the Corporations Committee of the Business Law Section of the California Lawyers Association.] The views expressed herein are those of the authors and do not necessarily reflect the views of Procopio.