California sets its own AI rules for state contractors, pushing back against federal policy

California Governor Gavin Newsom signed an executive order on Monday requiring companies with state contracts to implement safeguards against AI misuse. Specifically, companies must ensure their AI systems don't generate illegal content, reinforce harmful biases, or violate civil rights. To prevent misinformation, state agencies will also be required to watermark AI-generated images and videos.

The order includes a separate provision for handling federal directives: if the U.S. federal government designates a company as a supply chain risk, California will conduct its own review and potentially continue working with that vendor. This comes in the wake of the Pentagon's designation of Anthropic as a supply chain risk, which bars government contractors from using Anthropic's technology for U.S. military work.

Within 120 days, California's procurement and technology agencies are expected to develop recommendations for new AI certifications. These would let companies demonstrate compliance with responsible AI practices and public safety protections.

The executive order reinforces California's push to chart its own course on AI regulation, independent of the Trump administration, which has repeatedly tried to block independent state-level AI laws.