I sat in my seat on the Artificial Intelligence Impact Task Force yesterday — dumbfounded. Rare is it that the big guys — the Amazons, Microsofts, Googles and IBMs — get a free pass while the little guys get beat up on. Or so I thought.
And worse yet, the big guys were all from out of state. Meanwhile, our team — the little guys trying to make a difference — are all Colorado companies fielding hardball questions from out-of-state interests. What was going on?
In the last legislative session, Senate Bill 205 was passed. Its goal is to regulate “high-risk AI.” But Colorado-based companies, the relatively small folks like me, got very worried, fast. Because when we read the bill, we saw something that would create nearly impossible to meet regulatory burdens. And the burdens were not just on Colorado’s technology companies, but on all Colorado companies who purchase and use essentially any kind of software to help run their businesses.
The AI Task Force was created to help find a way forward, to create the right protections for consumers, and also to ensure that Colorado’s economy remains strong. And the right AI regulation is important – we need to make sure we control the machines for the benefit of us all and not the other way around.
But Colorado is now being used as a petri dish for high risk regulation – with multiple unintended consequences – by outside interests at the expense of Colorado’s companies and citizens.
Leaders from our local companies — Ibotta, Soona, Iterate.ai and Range Ventures bravely spoke about their existential fears around Senate Bill 205. They explained that they compete with companies from other states, who would not have the same burdens and requirements to disclose competitive information. They talked about how they fight to ensure they make payroll. They talked about their goals to create meaningful companies that employ thousands of Coloradans and pay taxes in the state of Colorado – creating more and better services for the citizens of Colorado.
But they were on the receiving end of the hardest, most pointed questions. The little guys. Without the armies of lawyers and lobbyists. It was shocking.
This is what struck me. Microsoft flew in from Seattle to testify. Amazon is from Seattle, too. IBM came from New York. Google and Salesforce are from California. And they all said pleasant things about small changes they’d like to see in Senate Bill 205, but they mostly commended the bill as a generally sound approach.
And they got mostly softball questions from these lobbying and special interest groups who – just like them – flew in from Washington DC and Oregon. When we look at the advisory board and board of directors of the Center for Democracy and Technology — we see that many of these, and other, large technology companies are in fact serving on their board. This means they are at least advising these groups, and also likely funding them, too.
These very large companies have thousands of lawyers and bureaucrats. “Regulatory capture” is a concept that means large companies can use burdensome regulations to keep smaller competitors at bay. And even if not intentional, it means that these large companies do not endure the costs and consequences of heavy regulation the way smaller companies do – to them, it’s no big deal. But to smaller challengers – the companies without the resources to meet onerous regulations – it’s existential. And they are us. They are the Colorado companies.
Meanwhile, the out-of-state special interests have found a surprising ally. In their case, they are theoretically pursuing regulation in the name of AI safety – when they are really trying to use the AI bill to push an agenda that has nothing to do with AI, but which they cannot win any other way.
Other states didn’t bite. Connecticut had a very similar bill proposed in its legislature. It did not pass. And then California also had an extremely similar bill proposed in its legislature. Same outcome – it failed. Those states’ legislatures understood that such a bill would very likely be damaging to their own companies and their own citizens. They understood that if their companies uniquely had to make all-new kinds of disclosures never required before, that that would only hurt their companies while helping their competitors in other states and countries.
For some reason – this alliance succeeded in Colorado. It is now the only state in the nation with such an “AI” bill. And as such, it is the only state in the nation that will now see upstart companies seeking to become the next Google or Amazon intentionally avoid it as the costs and risks of innovating are higher than in any other state. We are letting out of state interests win over our own.
But fortunately, there’s good news. Gov. Jared Polis, Attorney General Phil Weiser and Senate Majority Leader Rodriguez all recognized that Senate Bill 205 had many flaws and needed substantial revisions. Gov. Polis said so in his signing statement, and the three of them reiterated, with more specificity, what had to change in a letter they published on June 13th of this year.
Subsequently, in a speech at Silicon Flatirons, Attorney General Phil Weiser stated, “It is important not to adopt regulations pushed by incumbent industry leaders, who can easily adapt to them, that have the intended and likely effect of stifling new entry that would benefit consumers and society.”
Colorado is an amazing place with so much natural beauty and so much local talent. We can be the state that fosters innovation, that benefits from innovation, and that gets more high-paying jobs and more corporate taxes paid, creating better services for all of us. We can be the seat of the next Amazon or Google and reap the benefits. Let’s not let ourselves be the petri dish for out-of-state special interests and large technology companies. Rather, let’s create a Colorado Innovation Act that induces more innovation and growth in our state so that our economy may accelerate and thrive.
Seth Sternberg is the CEO and co-founder of Honor, the leading home care technology and operations platform.
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