One million dollars.

That is the maximum civil penalty, per violation, under Senate Bill 53 — the Transparency in Frontier Artificial Intelligence Act, signed by Governor Gavin Newsom on 29 September 2025 and effective since 1 January 2026. It is the first law in the United States written specifically for frontier artificial intelligence. California was first in the nation. The press release said so.

Now hold that number against the companies it governs.

One million dollars is a rounding error at these firms. It is less than what several of them spend on a single senior engineer over a few years. It is not a deterrent, it is a line item — and every general counsel in Silicon Valley knows exactly which line it goes on.

Compare it to what Europe decided a forest is worth.

Under Directive (EU) 2024/1203, which entered into force in May 2024 and which member states were required to write into national criminal law by May 2026, destroying an ecosystem carries a maximum of at least ten years’ imprisonment for a natural person and corporate fines of at least 5 percent of total worldwide turnover, or €40 million, whichever is greater. Not “up to.” At least. And the liability reaches individuals: because criminal conduct under the Directive includes omissions, a chief executive who fails to stop or prevent can be exposed in their personal capacity.

Europe looked at a wetland and wrote a prison sentence.

California looked at a technology whose own builders have publicly estimated a one-in-four chance of catastrophe for the human species, and wrote a fine smaller than a Palo Alto teardown.

I want to be precise, because precision is the only thing that survives contact with a press office. SB 53 is not nothing. It requires published safety frameworks, transparency reports, incident reporting, and whistleblower protections. Those are real. Senator Scott Wiener fought for them and got them.

But a disclosure regime without a penalty regime is a request. And a request is what you make of a friend.

The Record, Not the Rhetoric

The governor’s defenders will say he is a national leader on AI. Look at what actually landed on his desk and what he did with it.

September 2024 — SB 1047, vetoed. This was the bill that would have imposed liability on developers for catastrophic harms and required a shutdown capability for models that went wrong. It passed the legislature overwhelmingly. Andreessen Horowitz lobbied against it. OpenAI lobbied against it. Trade groups representing Google and Meta lobbied against it. Newsom’s veto message called it “well-intentioned” but said it did not account for whether a system was deployed in a high-risk environment. NPR’s correspondent opened his segment with a plainer summary: “California Governor Gavin Newsom has delivered a big win to big tech.”

Wiener’s response was the sentence worth remembering: without such requirements, the industry is left policing itself, and “voluntary commitments from industry are not enforceable and rarely work out well for the public.”

2025 — data center water disclosure, vetoed. Assemblymember Diane Papan’s bill would have required data center operators to report their water sources and use. CalMatters reported that Newsom vetoed it “amid pressure from the tech industry.” Data centers in this state consume billions of gallons to cool AI servers, and the public still does not know how much.

Right now — two more on his desk. Papan came back with AB 2619, nearly identical to the vetoed bill, requiring disclosure under penalty of perjury when a business license is sought or renewed. The Senate passed it 30 to 9. Alongside it sits AB 2469, which would bar local governments from approving new or expanded data centers unless the developer discloses its water plans and covers the full cost of new pipes, treatment, and storage. A Public Policy Institute of California survey found a majority of residents oppose data center construction in their own areas.

Also on his desk — SB 1119, requiring AI companies to verify user age, give parents tools to limit their children’s chatbot time, and submit to independent audits. It passed Monday. Politico reported that Sam Altman personally sought to speak with the governor about it last week. A person familiar with the matter denied that the two spoke directly.

Three bills. One desk. One governor with a presidential campaign in front of him and a donor base behind him.

June 2026 — the state signed a first-of-its-kind partnership giving California agencies access to Anthropic’s Claude at a 50 percent discount, with free workforce training and technical assistance, extended to any city or county that opts in.

Read those two facts next to each other. The state of California is now a discounted customer of the industry it is supposed to regulate. Procurement is not accountability. A vendor discount is not a safety standard. When the regulator becomes the client, the leverage runs in exactly one direction, and it is not toward the public.

I will say the obvious thing about that contract before anyone says it for me, and I will come back to it at the end of this piece.

What This Site Exists to Name

The Age of Nepotism has never meant only family. It has always meant favoritism toward relatives and friends — the network of people who know each other, fund each other, hire each other’s consultants, and arrive at outcomes that no one had to corrupt anyone to reach.

That is the correct lens for California AI policy, because the family angle is not the story here. The friend network is.

In March 2021, when a recall campaign threatened Newsom’s governorship, the venture capitalist Ron Conway organized an open letter opposing it. Seventy-five tech and business leaders signed. Among them: Laurene Powell Jobs. Eric Schmidt. Reid Hoffman. Sean Parker. Marissa Mayer. Paul Graham. Jessica Livingston. Conway took the lead publicly, saying the tech community stood behind the governor.

In 2026, that same Ron Conway is the principal funder of Stop the Squeeze, an anti-tax political action committee formed to fight Proposition 40 — the ballot measure imposing a one-time 5 percent tax on Californians worth more than a billion dollars, backed by the healthcare workers’ union SEIU-UHW after federal healthcare cuts. Politico reported that Conway donated $100,000 to an opposition campaign run by political consultants who have previously worked for Newsom.

The governor opposes Prop 40 as well. He tried and failed to negotiate it off the ballot. He says he is “burdened by the facts,” citing Legislative Analyst’s Office projections of capital flight. Politico’s assessment was blunt: sidelining the measure “could help Newsom avert a home-state backlash ahead of an expected 2028 presidential run while bolstering his credibility in Silicon Valley.”

Then, the day after Prop 40 qualified, Newsom proposed a federal billionaires’ tax — a minimum rate on Americans worth over $100 million, a “modern Buffett rule,” plus a national public equity fund. CalMatters headlined it as his “populist act.”

Follow the structure and not the speech. He opposes taxing billionaires in the state where he has the power to do it. He proposes taxing them in a jurisdiction where he holds no office and no vote. He captures the populist energy of the moment at zero cost to a single person who has ever written him a check.

And when he leaves in January, the network does not lose anything. It replaces him.

The leading tech-backed candidate for governor is San Jose Mayor Matt Mahan — Mark Zuckerberg’s Harvard classmate, who in 2014 co-founded a startup with Ron Conway and Salesforce CEO Marc Benioff, and whose backers reportedly include Reid Hoffman, Sergey Brin, Michael Moritz, and Palantir co-founder Joe Lonsdale, with a multimillion-dollar independent expenditure committee running statewide advertising on his behalf.

Same names. New governor. This is what a machine looks like when it is functioning correctly.

None of this is illegal. That has always been the most disturbing part, and it is the reason this publication exists. Nobody had to break a law. The letter was public. The donations were disclosed. The consultants were hired in the open. The discount was announced in a press release with a quote from the governor about doing things “the California way: responsibly, transparently, and in service of people.”

Corruption requires a crime. Nepotism only requires a rolodex.

To Be Fair, and Then to Be Clear

The governor is not silent about artificial intelligence. In May 2026 he signed an executive order directing agencies to study ways of cushioning AI-driven layoffs. At the Center for American Progress he said “the pitchforks are here,” and blamed Silicon Valley billionaires’ influence in the Trump White House. His wife, Jennifer Siebel Newsom, publicly condemned “a tech oligarchy running our country right now that is unchecked, where there’s no accountability and transparency.”

So the language is available. The vocabulary exists in that household.

What is missing is the noun.

In February 2026, the AFL-CIO — 2.3 million members — went to Sacramento to say publicly that Newsom “has hesitated to regulate AI” and would need a stronger record to earn union support for a presidential run. Liz Shuler did not go to Sacramento to praise a jobs study.

I have searched the public record and I have not found a single instance of this governor naming a single technology executive and calling for that person to be investigated, charged, or held personally answerable for anything. Not for surveillance. Not for the deployment of AI in targeting and weapons systems. Not for what these systems are doing to children, to workers, to the water table, or to the electrical grid.

Economic harm is the safe subject. It has no defendant. You can give a speech about job displacement for twenty minutes and never say a name, and no one at the fundraiser flinches.

Personal criminal liability has a defendant. It has an address. It has a lawyer who is also your donor’s lawyer.

That is the whole difference, and it is the only difference that matters.

What We Should Be Demanding

Not a study. Not a framework. Not a task force. Not another first-in-the-nation announcement with a penalty cap you could pay out of petty cash.

One — sign the three bills on the desk. AB 2619 and AB 2469 on data center water disclosure. SB 1119 on children and chatbots. Every one of them is a disclosure requirement, which is the mildest form of regulation that exists. If a governor cannot sign a bill requiring a company to say how much of California’s water it is drinking, the question of what he would do to a company that kills someone answers itself.

Two — raise the penalty to a real number. Amend SB 53’s cap. Europe’s floor is 5 percent of worldwide turnover or €40 million, whichever is greater. Adopt the same structure. A percentage of global revenue is the only penalty that scales with the defendant, and scaling with the defendant is the entire point.

Three — put a natural person on the hook. No fine will change the behavior of a firm whose shareholders absorb it. The United Kingdom has already built the mechanism: section 250 of the Crime and Policing Act 2026, in force since 29 June 2026, attributes any criminal offence committed by a senior manager within the scope of their authority to the organisation itself. The reverse duty exists too, under the Online Safety Act, where a senior manager who fails to take all reasonable steps to prevent an offence commits one personally.

Four — preserve the evidence. Mandatory retention of internal risk assessments, red-team results, safety evaluations, and any decision to override a safety recommendation. Destruction or suppression should be its own crime with its own sentence. Every accountability regime in my lifetime has failed at exactly this point. The documents are the case.

Five — attach conditions to the contract. If the state is going to buy AI services at a discount, the discount should be conditioned on the vendor’s safety disclosures, incident reporting, and cooperation with state investigations. Procurement leverage is real leverage. Right now California is spending it on a coupon.

Six — disclose the network. Any executive order, veto, or procurement decision touching an AI company should be accompanied by a public statement of every donor, consultant, behested payment, and personal financial relationship connecting the officeholder to that company or its investors. Not because any single one proves anything. Because the pattern is the thing, and the pattern is only visible when it is listed in one place.

The Disclosure I Owe You

I use Claude, made by Anthropic, as a research and editing tool. I have said so in my book and I am saying so here.

That is the same Anthropic that just signed a 50 percent discount agreement with the State of California — one of the arrangements I criticized four paragraphs ago. It is also the company whose chief executive gave the 25 percent figure that anchors much of my argument, and which, unlike OpenAI, supported SB 1047 when Newsom vetoed it.

I have a relationship with a company inside the story. I am telling you what it is, in the piece, where you can weigh it.

That is all any of us are asking of the governor. Not perfection. Not purity. Not the abandonment of an industry that employs millions of Californians and includes many decent people I have known for thirty years.

Just this: tell us who your friends are, and then show us that it did not matter.

He has one term left, measured now in weeks. Three bills are sitting on his desk. Whatever he does with them is the record he takes to Iowa and New Hampshire and South Carolina, and it is the record we are entitled to read to him when he arrives.

A million dollars is not a law. It is a receipt.

Vahid Razavi is the author of The Age of Nepotism, Ethics in Tech and Lack Thereof, and No Ethics in Big Tech, and the director of the documentary Forever Peace Now. NoEthicsInBigTech.com | ForeverPeaceNow.com