Could California be the AI capital of the world?

The future is AI, and the biggest brands are doing a great job of letting us know that. AI is poised to have a major effect on several markets and regions around the globe, and it’s been anyone’s guess which companies will have the biggest effect on the world. However, instead of thinking about specific companies, we should think about the locations where the companies reside. One location that should be under everyone’s radar is the U.S. state of California. Indeed, it’s possible that California could be the AI capital of the world.

Location location location! It’s all about where you are. We typically fixate on the companies offering us AI tools. ChatGPT compared to Gemini compared to Claude compared to Meta AI, and so on. It makes sense to think about them because each one brings their own flavor of AI. However, if you zoom out and look at which regions on the planet have more and larger AI companies, you’ll see that there are places that have an advantage. For example, cities in Africa don’t have quite as much control over the AI market as the U.S., as there are more AI-focused companies in the latter location.

As such, AI-focused laws in the U.S. will have more of an effect on the global AI market than those in Africa. Right now, the biggest regions in the AI market are the U.S., Europe, and China with more regions looking to rise through the ranks.

And then, there’s California; let’s talk about the companies in the state

California is a land of opportunity, being fertile soil for millions of people to grow their careers. It’s been like this for years for tons of industries, and it looks like AI is one of them. With so many people, companies, and governments interested in taking AI by the horns, it’s hard to imagine that such a small geographic area (relatively speaking) has any kind of sway over the AI market, but it’s much more of a heavy hitter than most might think.

As stated before, it’s important to not only think about specific companies. What’s important is which places have the highest population of these companies, and California is packed to the gills. The state’s governor, Gavin Newsom, stated that most of the biggest AI companies in the world reside in California, and there’s little reason to doubt that.

The state is the home to OpenAI, Google, Apple, Meta, xAI, Anthropic, Perplexity, MidJourney, and Nvidia among many more. These are the biggest AI-involved companies on the planet. There are numerous AI companies around the world, maybe even hundreds, but these companies can’t hold a candle to the sheer weight that exists in the Golden State.

To put this into perspective, Newsom said that 32 of the top 50 AI companies are in California. That’s 64% of the top 50 companies.

Control in California

Does this give California some almighty power over the AI market like each company is an Infinity Stone? That’s tough to say at this moment, but we can’t deny that the state has some sway over the market. Recently, there was just a bit of drama involving the state and its aforementioned governor.

Newsom vetoed a bill (SB 1047) that would have brought some strict regulations to the companies producing AI tools within California. This bill was targeted at larger companies, so the companies listed above would have been in that bill’s crosshairs. He vetoed the bill, but he highlighted some holes that plagued it.

One bill, one piece of paper would have had a massive effect on the biggest AI companies on the planet, and that’s not something that should be overlooked. If the state’s government decides to impose a law, all of those companies would be affected. ChatGPT, DALL-E, MidJourney, Gemini, Claude, Perplexity, Apple Intelligence, Grok, Meta AI, and other products would be majorly affected.

Next, let’s talk about the jobs

AI has started taking jobs throughout several industries, but the technology is also creating jobs. There are job openings for AI experts, and we’ve seen a high demand all around the world. According to a new report from Superside, California holds the title as the state “with the greatest passion for AI.”

The report finds that, at the time of writing this article, there are more than 3,600 openings for AI jobs in the state. New York is in a distant 2nd place as far past job openings are concerned with just over 2,400 openings.

With so many job openings, it could make California the AI capital of the world. Not only are the biggest AI companies located in that state, but it could be the place to go if you want to work in AI. The fact that the state is such a hub for big businesses made it a shoo-in to be the biggest place for AI.

Could this be a bad thing?

There’s an old saying about having all of your eggs in one basket. Well, a commanding number of the biggest AI companies are all in one place. Other regions like Europe and China are fighting to dethrone the U.S. in how many AI companies there are. This is where a bit of a conflict comes in.

Regulators and other governmental bodies have the delicate task of bringing restrictions and rules to AI companies while allowing them enough breathing room to properly innovate. The more freedom that a region has to innovate, the more possibility of new AI companies sprouting up in that region. Why would a person want to start a company in Location A if there are more restrictions and laws compared to Location B? People can migrate to the places with the least restrictions.

This only makes it more tempting for the California government to deprioritize regulation in lieu of boosting its standing in the AI market. This isn’t to say that the state’s government will do that, but the temptation is always in the air.

How about being too strict?

On the other side of that, if California tightens the vice too much, then it could have a negative effect on a major part of the AI market. There’s a chance that innovation could be slowed. Sure, AI has had some pretty bad effects on the creator economy, but the technology is also poised to bring some good into this world.

We’re not just talking about using ChatGPT to do your homework for you. We’re talking about helping medical workers be more productive, providing educational tools to kids in impoverished countries, helping farmers better track weather systems, and much more.

The major companies residing in California are in the best position to make AI the force to push humanity into the future we’ve been dreaming about. Those companies need guardrails (they DEFINITELY do!), but they also need breathing room to push AI forward.

It’s just like with businesses

California’s position is similar to large corporations (the types of corporations that rack up antitrust lawsuits). They hold so much sway over certain industries that, if they make a change, the industry has to change with them.

Well, California could have that sort of sway over AI. The California government holds a ton of influence in its hands, and a single decision could have significant consequences for the AI market. That’s pretty scary. Just like how there shouldn’t be monolithic companies monopolizing industries, it’d be better if so many major AI companies weren’t all situated in one place.

As time goes on, California will be a leader in the AI landscape, and other regions will work to catch up. Let’s hope that this doesn’t lead to any undesirable consequences.