California lawmakers are continuing to promote a bill that will reinforce the power of giant AI companies by burying small AI companies and non-commercial developers in red tape, copyright demands and potentially, lawsuits. After several amendments, the bill hasn’t improved much, and in some ways has actually gotten worse. If A.B. 412 is passed, it will make California’s economy less innovative, and less competitive.
The Bill Threatens Small Tech Companies
A.B. 412 masquerades as a transparency bill, but it’s actually a government-mandated “reading list” that will allow rights holders to file a new type of lawsuit in state court, even as the federal courts continue to assess whether and how federal copyright law applies to the development of generative AI technologies.
The bill would require developers—even two-person startups— to keep lists of training materials that are “registered, pre-registered or indexed” with the U.S. Copyright Office, and help rights holders create digital ‘fingerprints’ of those works—a technical task with no established standards and no realistic path for small teams to follow. Even if it were limited to registered copyrighted material, that’s a monumental task, as we explained last month when we examined the earlier text of A.B. 412.
The bill’s amendments have made compliance even harder, since it now requires technologists to go beyond copyrighted material and somehow identify “pre-registered” copyrights. The amended bill also has new requirements that demand technologists document and keep track of when they look at works that aren’t copyrighted but are subject to exclusive rights, such as pre-1972 sound recordings—rights that, not coincidentally, are primarily controlled by large entertainment companies.
The penalties for noncompliance are steep—up to $1,000 per day per violation—putting small developers at enormous financial risk even for accidental lapses.
The goal of this list is clear: for big content companies to more easily file lawsuits against software developers, big and small. And for most AI developers, the burden will be crushing. Under A.B. 412, a two-person startup building an open-source chatbot, or an indie developer fine-tuning a language model for disability access, would face the same compliance burdens as Google or Meta.
Reading and Analyzing The Open Web Is Not a Crime
It’s critical to remember that AI training is very likely protected by fair use under U.S. copyright law—a point that’s still being worked out in the courts. The idea that we should preempt that process with sweeping state regulation is not just premature; it’s dangerous.
It’s also worth noting that copyright is governed by federal law. Federal courts are already working to define the boundaries of fair use and copyright in the AI context—the California legislature should let them do their job. A.B. 412 tries to create a state-level regulatory scheme in an area that belongs in federal hands—a risky legal overreach that could further complicate an already unsettled policy space.
A.B. 412 is a solution in search of a problem. The courthouse doors are far from closed to content owners who want to dispute the use of their copyrighted works. There are multiple high-profile litigations over the copyright status of AI training works that are working their way through trial courts and appeal courts right now.
Scope Creep
Rather than narrowing its focus to make compliance more realistic, the latest amendments to A.B. 412 actually expand the scope of covered works. The bill now demands documentation of obscure categories of content like pre-1972 sound recordings. These recordings have rights that are often murky, and largely controlled by major media companies.
The bill also adds “preregistered” and indexed works to its coverage. Preregistration, designed to help entertainment companies punish unauthorized copying even before commercial release, expands the universe of content that developers must track—without offering any meaningful help to small creators.
A Moat Serving Big Tech
Ironically, the companies that will benefit most from A.B. 412 are the very same large tech firms that lawmakers often claim they want to regulate. Big companies can hire teams of lawyers and compliance officers to handle these requirements. Small developers? They’re more likely to shut down, sell out, or never enter the field in the first place.
This bill doesn’t create a fairer marketplace. It builds a regulatory moat around the incumbents, locking out new competitors and ensuring that only a handful of companies have the resources to develop advanced AI systems. Truly innovative technology often comes from unknown or small companies, but A.B. 412 threatens to turn California—and anyone who does business there—into a fortress where only the biggest players survive.
A Lopsided Bill
A.B. 412 is becoming an increasingly extreme and one-sided piece of legislation. It’s a maximalist wishlist for legacy rights-holders, delivered at the expense of small developers and the public. The result will be less competition, less innovation, and fewer choices for consumers—not more protection for creators.
This new version does close a few loopholes, and expands the period for AI developers to respond to copyright demands from 7 days to 30 days. But it seriously fails to close others: for instance, the exemption for noncommercial development applies only to work done “exclusively for noncommercial academic or governmental” institutions. That still leaves a huge window to sue hobbyists and independent researchers who don’t have university or government jobs.
While the bill nominally exempts developers who use only public or developer-owned data, that’s a carve-out with no practical value. Like a search engine, nearly every meaningful AI system relies on mixed sources — and developers can’t realistically track the copyright status of them all.
At its core, A.B. 412 is a flawed bill that would harm the whole U.S. tech ecosystem. Lawmakers should be advancing policies that protect privacy, promote competition, and ensure that innovation benefits the public—not just a handful of entrenched interests.
If you’re a California resident, now is the time to speak out. Tell your legislators that A.B. 412 will hurt small companies, help big tech, and lock California’s economy in the past.
