California Governor Race: Tech Policy at Stake

Governor Newsom's AI Veto Sets a Precedent, but Candidates Signal Sharp Divergence

Governor Gavin Newsom vetoed SB 1047, a landmark AI safety bill, in 2025, arguing it would stifle innovation and impose burdensome requirements on developers. The decision has become a defining issue in the 2026 governor's race, with leading candidates staking out opposing positions. Democratic frontrunner Toni Atkins has called for stronger oversight, while Republican Brian Dahle champions a hands-off approach to keep California competitive.

The AI safety debate is not going away. Whoever wins the governor's race will shape California's — and the nation's — approach to regulating artificial intelligence.

• Atkins proposes a new state AI commission with enforcement powers, targeting high-risk systems.
• Dahle opposes any new regulations, citing the national conversation around AI safety as overblown.
• Tech advocacy groups are gathering signatures for a ballot initiative that would mandate third-party audits of large AI models, bypassing the legislature entirely.

The veto has galvanized both sides. If the ballot measure qualifies, it could force the issue regardless of who takes office in January 2027, setting up a direct clash between the industry and consumer advocates.

California's Data Privacy Law Needs Strengthening, Say Frontrunners

The California Consumer Privacy Act (CCPA), once a national model, has drawn criticism for weak enforcement and broad exemptions that benefit data brokers and ad-tech firms. Both Atkins and moderate Democrat Phillip Chen have proposed amendments to close loopholes and expand protections. Atkins's plan would cover algorithmic profiling and biometric data, while Chen focuses on simplifying opt-out mechanisms.

California's privacy law was a first step. Now we need to close the loopholes that allow big tech to exploit personal data. — Toni Atkins, in a campaign policy paper

• Under Atkins's proposal, companies would need explicit consent before using data for AI training.
• Chen's bill would create a private right of action for CCPA violations, a provision currently absent.
• Silicon Valley trade groups are lobbying for preemption clauses to prevent a patchwork of local privacy laws across California's counties.

Stronger privacy rules enjoy broad public support, but the details remain contentious. A preemption clause could weaken the legislation's impact, leaving room for industry-friendly carve-outs.

Tech Industry Braces for Higher Taxes and Housing Mandates

Fiscal policy is another arena where the candidates diverge. Atkins supports repealing Prop 13 protections for commercial properties, which could raise taxes on tech companies' real estate holdings. A proposed "tech tax" on data collection — modeled after European digital services taxes — could generate an estimated $5 billion annually for affordable housing initiatives. Republican Dahle opposes both measures, arguing they will drive companies out of state.

The tech industry has profited enormously from California's innovation ecosystem. It's time they contribute more to solve the housing crisis.

• Atkins's housing plan mandates that new tech campuses include on-site affordable units for at least 20% of their workforce.
• Dahle proposes tax credits for companies that build employee housing, but no mandates or new levies.
• Major firms including Google and Apple have warned that higher taxes could lead to relocation of R&D jobs to Texas or Arizona.

The housing crisis directly affects tech recruiting. Combined with tax changes, these policies could reshape Silicon Valley's physical footprint. Some startups are already exploring satellite offices in lower-cost regions.

Key Takeaways

• The governor's race will determine whether California maintains its hands-off approach to AI regulation or adopts stricter oversight with a new enforcement agency.
• Data privacy reforms are likely regardless of the winner, but the scope of changes — especially the inclusion of algorithmic profiling — depends on who takes office.
• Tech companies face a significant financial hit if Prop 13 is modified or a new data tax is enacted, with potential ripple effects on hiring and investment.
• Housing policies could significantly alter the physical footprint of Silicon Valley, potentially driving some firms to expand in other states.
• Voter turnout among tech employees could be decisive; while the sector leans heavily Democratic, some workers favor Dahle's deregulatory stance.
• The outcome will set a national precedent for how states balance the dual goals of fostering innovation and protecting consumers.