Today's technology companies are increasingly sandwiched between the regulatory requirements of the European Union (E.U.) and those of California. While the U.S. federal government may adopt a light touch, pro-innovation approach, California's state legislation can undermine this with a regulatory approach with impacts far beyond its borders.
A new California bill imposes a rigorous regulatory regime on Artificial Intelligence (AI), making it the latest technology caught in this potentially innovation-stifling squeeze between Brussels and Sacramento. The term "Brussels Effect" often refers to the outsize influence of E.U. policy—particularly in technology—as a de facto global standard. But now, companies are also experiencing the "Sacramento Effect," where California's stringent regulations effectively set de facto federal policy for the rest of the country.
