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comprehensive AI law, set to take effect on June companies, and 82 percent of those using AI
30, 2026. Among other things, the law imposes increased their workforce last year. Yet when
highly subjective compliance requirements related faced with having to comply with regulations
to alleged "algorithmic discrimination" against like those in Colorado and California, one-
forms of political expression. A study by the third stated they would scale down AI use and
Common Sense Institute (CSI) projects the law another fifth of owners would be less likely to
will cost Colorado 40,000 jobs and $7 billion in use AI at all, stymying their ability to keep up
economic output by 2030. with the competition.
Drawing upon CSI's methodology, the U.S. The compliance burdens these businesses face
Chamber used a model from REMI, a provider are measurable and steep. CalPrivacy's rules,
of macroeconomic policy analysis models, combined with new privacy and cybersecurity
to extrapolate the effects of SB-205 at the requirements, will saddle small businesses
national level. Applying the impact of Colorado's in California with nearly $16,000 in annual
requirements nationwide could slow small compliance costs. For the 29.2 million small
businesses¡¯ AI investment by 0.17%, potentially businesses located outside California, this means
resulting in the loss of 92,000 jobs. absorbing significant costs just to operate in all
markets?effectively imposing an "interstate
Moreover, CSI also projects a 1% decline in innovation tax" that many of these companies
productivity in Colorado resulting from the law. cannot afford. This means a local coffee shop
On a national level, that decline could cost the owner will think twice about using AI to grow their
U.S. economy up to 713,000 jobs and $53.7 billion business across state lines.
in GDP by 2030. If these states pass additional
regulations, or allow class action lawsuits against Congress Can End This Regulatory Chaos
businesses that use these tools, opening the door
to legal abuse, these numbers could skyrocket. The rising costs of a state patchwork of laws are
deeply threatening to small business growth, as
Fortunately, this past legislative session, well as the broad-based industry adoption of
states like New Mexico and Virginia also AI needed to maintain America's technological
considered and ultimately rejected proposals edge. AI is a tool much like any other technology,
similar to Colorado's. However, the New York and as with any tool, there should be responsible
State Assembly recently advanced a bill to regulations and safeguards in place. States should
the Governor's desk that aims to hamper AI continue to enforce their respective consumer
investment. Other states may follow suit. protection, privacy, and discrimination laws.
Just recently, CalPrivacy, California's privacy Policymakers should also continue to enact
regulator, took a single line from the California targeted laws like the TAKE IT DOWN Act which
Consumer Privacy Act and expanded it into a 10- helps protect Americans against exploitative
page rule on algorithms which is projected to cost deepfake images. At the same time, Congress
businesses over half a billion dollars. Companies needs to follow President Trump's call for a
using AI in sectors like finance, healthcare, single framework and prevent a patchwork of
employment, and education must now navigate sweeping AI proposals like those in Colorado,
extensive red tape, including mandates to give California, and New York that threaten U.S. AI
consumers the choice to opt-out of critical investment and adoption. The path forward is
automated functions in digital economy services, clear: America cannot afford to let a fragmented
functionally breaking those services Americans regulatory landscape undermine its AI leadership.
already depend on. The solution isn't to abandon oversight, but to
establish smart, consistent federal standards
The Data on Small Business: 65% Concerned About that protect consumers while preserving the
a Patchwork; One Third May Scale Back competitive advantage that has made America
the global leader in AI. Congress has both the
In this regulatory environment, 65 percent of small authority and the responsibility to act decisively,
businesses nationwide are concerned about rising creating a unified framework that ends the
litigation and compliance costs from conflicting regulatory chaos, protects small businesses
AI laws and regulations at the state and local from crushing compliance costs, and ensures
level. The data reveal why: small business owners that American innovation?not bureaucratic
are using AI to scale up and compete with larger fragmentation?defines our technological future.
SOUTH CHINA BUSINESS JOURNAL 24
