California Governor Gavin Newsom has signed a landmark executive order imposing new regulations on artificial intelligence for companies seeking state contracts. The directive aims to prevent misuse of AI, including illegal content creation, discriminatory outputs, and violations of civil rights.
Under the order, state agencies must develop best practices for watermarking AI-generated images and videos to help Californians distinguish real from synthetic content. Companies flagged as supply-chain risks may be reviewed before being allowed to contract with the state. Within 120 days, the Department of Technology and other state bodies are required to issue specific vetting and certification recommendations for AI-related contracts.
Governor Newsom said, “California’s always been the birthplace of innovation. But we also understand the flip side: in the wrong hands, innovation can be misused, putting people at risk. California leads in AI, and we’re going to use every tool we have to ensure companies protect people’s rights, not exploit them or put them in harm’s way.”
This move builds on California’s broader AI framework, including the Transparency in Frontier AI Act, which requires developers of advanced AI models to disclose safety frameworks, risk assessments, and incident reports. Earlier measures also addressed AI companion technologies with protections for youth and mental health.
The state’s approach positions California as a leader in AI governance, even as federal authorities call for a unified national framework. Observers say the new rules could influence how AI companies operate in the United States and set a precedent for other states considering AI regulation.
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