California just passed new AI and social media laws. Here’s what they mean for Big Tech
Governor Gavin Newsom speaks at Google San Francisco office about ‘Creating an AI-Ready Workforce’ that new joint effort with some of the world’s leading tech companies to help better prepare California’s students and workers for the next generation of technology, in San Francisco, California, United States on August 7, 2025.
Tayfun Coskun | Anadolu | Getty Images
California Gov. Gavin Newsom signed a series of bills Monday targeting child online safety as concerns over the risks associated with artificial intelligence and social media use keep mounting.
“We can continue to lead in AI and technology, but we must do it responsibly — protecting our children every step of the way,” he said in a release. “Our children’s safety is not for sale.”
The latest legislation comes as the AI craze ushers in a wave of more complex chatbots capable of deep, intellectual conversation and encouraging behaviors. Across age groups, people are leaning on AI for emotional support, companionship and in some cases, romantic connections.
A recent survey from Fractl Agents found that one in six Americans rely on chatbots and worry that losing access would stunt them emotionally and professionally. More than a fifth of respondents reported having an emotional connection with their chatbot.
Many lawmakers have called for laws requiring Big Tech to better protect against chatbots promoting unsafe behaviors such as suicide and self-harm on their platforms.
The bills signed into law by Newsom on Monday are intended to address some of those concerns.
The changes
One of the laws passed by California implements a series of safeguards geared toward AI chatbots.
SB 243 is the first state law of its kind and requires chatbots to disclose that they are AI and tell minors every three hours to “take a break.” Chatbots makers will also need to implement tools to protect against harmful behaviors and disclose certain instances to a crisis hotline.
The law allows California to maintain its lead in innovation while also holding companies accountable and prioritizing safety, Newsom said in a release.
In a statement to CNBC, OpenAI called the law a “meaningful move forward” for AI safety standards.
“By setting clear guardrails, California is helping shape a more responsible approach to AI development and deployment across the country,” the company said.
Another bill signed by Newsom, AB 56, requires that social media platforms including Instagram and Snapchat to add labels that warn users of the potential mental health risks associated with using those types of apps. AB 621, meanwhile, heighten penalties for companies whose platforms distribute deepfake pornography.
The other key law, known as AB 1043, requires that device makers, like Apple and Google, implement tools to verify user ages in their app stores. Some Big Tech companies have already endorsed the law’s safeguards, including Google and Meta.
Last month, Kareem Ghanem, Google’s senior director of government and affairs and public policy, called AB 1043 one of the “most thoughtful approaches” to keeping children safe online.
The impact to big tech
The new laws require a series of changes to many long-standing business models. But D.A. Davidson’s Gil Luria said companies should experience a “distributed” impact from these new measures, since all businesses are forced to accommodate the rules.
“For AI chats the timing is beneficial since these companies are still working out their business models and will now accommodate a more restrictive approach at the outset,” he said.
Other countries have already enacted rules tougher restrictions on AI. Last year, the European Union passed the AI Act that includes fines for companies that violate the laws’ framework that includes a social scoring systems.
Utah and Texas have also signed laws implementing AI safeguards for minors. The Utah law, for example, requires that Apple and Google to verify user ages and it requires parental permission for those under 18 to use certain apps. These laws have also raised questions over whether harsh restrictions violate free speech or bans are the most effective solution.
California isn’t the first jurisdiction to pass laws like these, but Newsom’s signings carry significance due to the size of the state’s population and the fact that many tech companies are based in the San Francisco Bay Area.
WATCH: Why it’s time to take AI-human relationships seriously
Upgrade CEO Renaud Laplanche speaks at a conference in Brooklyn, New York, in 2018.
Alex Flynn | Bloomberg via Getty Images
Upgrade, the online lender started by LendingClub founder Renaud Laplanche, has raised a new round of funding that values the startup at $7.3 billion.
The company said in a press release on Thursday that it raised $165 million in a round led by Neuberger Berman, with participation from LuminArx Capital Management. Laplanche, who created Upgrade in 2016, said it’s the first time the company has raised money since 2021.
“We’ve been cash flow positive over the past three years, so we didn’t have to do a new round,” Laplanche said in an interview.
Upgrade got its start offering relatively small personal loans, operating in a similar market as LendingClub. The company has since expanded deeper into financial services with checking and savings accounts, a credit card, credit health monitoring and a buy now, pay later offering. In 2023, Upgrade acquired BNPL travel company Uplift for $100 million.
Revenue has more than doubled since the company’s last fundraise, Laplanche said, and annualized revenue passed $1 billion in May.
Laplanche, who took LendingClub public in 2014, said Upgrade is looking to IPO but wanted additional capital for its balance sheet in the meantime. He said the company is also establishing a new valuation as it begins to offer employee liquidity.
“We were probably 12 to 18 months away from an IPO at this stage,” he said. “So we wanted to go ahead and make sure everyone could sell a little bit of stock now without having to wait for the IPO.”
Although consumer lending is still dominated by traditional banks like JPMorgan Chase, Laplanche said the majority of Upgrade’s customers are migrating from the legacy banks to take advantage of more automated and faster services.
“This year, we’re focusing mostly on making the customer experience make sense across multiple products and making sure that the customer who might have joined Upgrade through a BNPL product has a very seamless experience,” Laplanche said.
The company has also been focusing on home improvement and auto financing, areas that surpassed $2 billion and $1 billion, respectively, in total loan originations earlier this year.
Competition is rising across the board.
Chime, which offers an array of online banking services, went public in June. SoFi has been gaining popularity. And fintech companies including PayPal and Square parent Block have been adding more banking services to their portfolios.
Within BNPL, there’s Affirm and Klarna, which held its IPO last month.
Laplanche said Upgrade’s focus in BNPL has been in the travel industry, through relationships with airlines, cruise lines, car rental companies and hotels.
“It’s a pretty specific industry that’s different from retail, where Klarna and Affirm are stronger,” he said.
Technology
PayPal’s crypto partner mints a whopping $300 trillion worth of stablecoins in ‘technical error’
A Paypal logo is seen displayed on a smartphone next to cryptocurrency coins.
Sopa Images | Lightrocket | Getty Images
Paxos, the blockchain partner of PayPal, mistakenly minted $300 trillion worth of the online payment giant’s stablecoin on Wednesday in what the company called a “technical error.”
Market watchers had spotted the enormous injection of the PayPal PYUSD stablecoin on Etherscan — a block explorer and analytics platform for the Ethereum blockchain.
Paxos had mistakenly minted the stablecoins as part of an internal transfer, before it “immediately identified the error and burned the excess PYUSD,” the company said in a social media statement.
“This was an internal technical error. There is no security breach. Customer funds are safe. We have addressed the root cause,” it added. PayPal didn’t respond to an inquiry from CNBC outside of regular business hours.
Transactions on Etherscan showed that the mistake had been fixed after about 20 minutes.
PYUSD is advertised as a dollar-pegged stablecoin that is fully backed by U.S. dollar deposits, U.S. treasuries and similar cash equivalents. Therefore, PayPal says the tokens are always redeemable for U.S. dollars on a 1:1 basis.
However, the technical error highlights that the dollar peg is guaranteed by PayPal and its independent third-party attestation reports, rather than intrinsically tied to the minting of a stablecoin.
There aren’t enough dollars in global circulation to back $300 trillion PYUSD, which would theoretically require more than double the world’s estimated total GDP.
Paxos’ error comes at a time when stablecoins are becoming more mainstream as its adopted by an increasing number of banks and payment platforms.
PYUSD is currently the sixth-largest stablecoin in the world with a market capitalization of over $2.6 billion, according to data from CoinMarketCap.
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