California's A.B. 412: A Startup Killer That Could Empower Big Tech's AI Monopoly

California legislators have introduced a controversial bill, A.B. 412, requiring AI developers to track and disclose every registered copyrighted work used during AI training. While this may seem like a step toward transparency, it poses an impossible standard for small AI startups and developers, ultimately strengthening the grip of large tech firms.

A Burden That Small Developers Can’t Bear

The AI landscape is on the brink of domination by major companies with substantial resources. While big tech firms dominate headlines, numerous small AI companies with fewer than 10 employees are striving to innovate in niche markets. This bill imposes a heavy burden on even the smallest developers—identifying copyrighted materials used in training is a daunting task, particularly when the U.S. Copyright Office's registration system is cumbersome and not machine-readable.

For smaller startups, these onerous requirements could be a death sentence, forcing them to divert precious resources from innovation to compliance. The threat of lawsuits from copyright trolls will likely deter new entrants into the market.

A.I. Training Is Like Reading And It’s Very Likely Fair Use

A.B. 412 is based on a false premise—that accessing open web content without payment is unacceptable. In reality, fair use principles should apply to much of this activity. Courts have historically recognized that certain forms of online content reproduction are transformative and legal. The U.S. copyright system aims to balance innovation with creator rights, yet A.B. 412 prematurely imposes a vague standard that could hinder this balance.

A.B. 412 Is A Gift to Big Tech

Ironically, A.B. 412 will not prevent AI development; instead, it will consolidate it among the largest corporations. Big tech firms have the resources to navigate legal complexities and comply with the bill’s requirements, while smaller developers may be forced out of the market or into partnerships that compromise their independence. This will lead to less competition and fewer innovations, with a tech landscape increasingly dominated by a handful of massive companies.

If this bill passes in California, it could require developers to research and compensate copyright owners before even starting their projects. This would benefit only a few companies that can afford to license enough material for deep learning models, stifling opportunities for startups and locking in profits for established giants for decades to come.

If you reside in California and wish to voice your concerns about A.B. 412, you can contact your legislators through this website.