Newsom orders government to consider AI harm in contract rules

California Gov. Gavin Newsom has signed an executive order for California to independently review federal supply-chain risk designations for businesses. This follows a dispute between AI company Anthropic and the Department of Defense over contract terms. The order aims to regulate AI use by state employees while encouraging its adoption. California agencies must develop AI contract standards, improve government transparency, and issue guidance on AI-generated content. Newsom's move contrasts with federal policies, which took a lighter regulatory approach. This is Newsom's second AI-focused order, reflecting growing interest from unions and tech donors.