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If you’ve hunted for apartments recently and felt like all the rents were equally high, you’re not crazy: Many landlords now use a single company’s software — which uses an algorithm based on proprietary lease information — to help set rent prices.

Federal prosecutors say the practice amounts to “an unlawful information-sharing scheme” and some lawmakers throughout California are moving to curb it. San Diego’s city council president is the latest to do so, proposing to prevent local apartment owners from using the pricing software, which he maintains is driving up housing costs.

San Diego’s proposed ordinance, now being drafted by the city attorney, comes after San Francisco supervisors in July enacted a similar, first-in-the-nation ban on “the sale or use of algorithmic devices to set rents or manage occupancy levels” for residences. San Jose is considering a similar approach. 

And California and seven other states have also joined the federal prosecutors’ antitrust suit, which targets the leading rental pricing platform, Texas-based RealPage. The complaint alleges that “RealPage is an algorithmic intermediary that collects, combines, and exploits landlords’ competitively sensitive information. And in so doing, it enriches itself and compliant landlords at the expense of renters who pay inflated prices…”

But state lawmakers this year failed to advance legislation by Bakersfield Democratic Sen. Melissa Hurtado that would have banned the use of any pricing algorithms based on nonpublic data provided by competing companies. She said she plans to bring the bill back during the next legislative session because of what she described as ongoing harms from such algorithms. 

“We’ve got to make sure the economy is fair and … that every individual who wants a shot at creating a business has a shot without being destroyed along the way, and that we’re also protecting consumers because it is hurting the pocketbooks of everybody in one way or another,” said Hurtado. 

RealPage has been a major impetus for all of the actions. The company counts as its customers landlords with thousands of apartment units across California. Some officials accuse the company of thwarting competition that would otherwise drive rents down, exacerbating the state’s housing shortage and driving up rents in the process.

“Every day, millions of Californians worry about keeping a roof over their head and RealPage has directly made it more difficult to do so,” said California Attorney General Rob Bonta in a written statement. 

A RealPage spokesperson, Jennifer Bowcock, told CalMatters that a lack of housing supply, not the company’s technology, is the real problem — and that its technology benefits residents, property managers, and others associated with the rental market. The spokesperson later wrote that a “ misplaced focus on nonpublic information is a distraction… that will only make San Francisco and San Diego’s historical problems worse.” 

As for the federal lawsuit, the company called the claims in it “devoid of merit” and said it plans to “vigorously defend ourselves against these accusations.”  

“We are disappointed that, after multiple years of education and cooperation on the antitrust matters concerning RealPage, the (Justice Department) has chosen this moment to pursue a lawsuit that seeks to scapegoat pro-competitive technology that has been used responsibly for years,” the company’s statement read in part. “RealPage’s revenue management software is purposely built to be legally compliant, and we have a long history of working constructively with the (department) to show that.”

The company’s challenges will only grow if pricing software becomes another instance in which California lawmakers lead the nation. Following San Francisco’s ban, the Philadelphia City Council passed a ban on algorithmic rental price-fixing with a veto-proof vote last month. New Jersey has been considering its own ban.

Is it price fixing — or coaching landlords?

According to federal prosecutors, RealPage controls 80% of the market for commercial revenue management software. Its product is called YieldStar, and its successor is AI Revenue Management, which uses much of the same codebase as YieldStar, but has more precise forecasting. RealPage told CalMatters it serves only 10% of the rental markets in both San Francisco and San Diego, across its three revenue management software products. 

Here’s how it works: 

In order to use YieldStar and AIRM, landlords have historically provided RealPage with their own private data from their rental applications, rent prices, executed new leases, renewal offers and acceptances, and estimates of future occupancy, although a recent change allows landlords to choose to share only public data. This information from all participating landlords in an area is then pooled and run through mathematical forecasting to generate pricing recommendations for the landlords and for their competitors. 

The San Diego council president, Sean Elo-Rivera, explained it like this: 

“In the simplest terms, what this platform is doing is providing what we think of as that dark, smoky room for big companies to get together and set prices,” he said. “The technology is being used as a way of keeping an arm’s length from one big company to the other. But that’s an illusion.”

In the company’s own words, from company documents included in the lawsuit, RealPage “ensures that (landlords) are driving every possible opportunity to increase price even in the most downward trending or unexpected conditions.” The company also said in the documents that it “helps curb (landlords’) instincts to respond to down-market conditions by either dramatically lowering price or by holding price.”

Providing rent guidance isn’t the only service RealPage has offered landlords. In 2020, a Markup and New York Times investigation found that RealPage, alongside other companies, used faulty computer algorithms to do automated background checks on tenants. As a result, tenants were associated with criminal charges they never faced, and denied homes.

Impact on tenants

Thirty-one-year-old Navy veteran Alan Pickens and his wife move nearly every year “because the rent goes up, it gets unaffordable, so we look for a new place to stay,” he said. The northeastern San Diego apartment complex where they just relocated has two-bedroom apartments advertised for between $2,995 and $3,215. 

They live in an area of San Diego where the U.S. Justice Department says information-sharing agreements between landlords and RealPage have harmed or are likely to harm renters. 

The department in August filed its antitrust lawsuit against RealPage, alleging the company, through its legacy YieldStar software, engaged in an “unlawful scheme to decrease competition among landlords in apartment pricing”. The complaint names specific areas where rents are artificially high. Beyond the part of San Diego where Pickens lives, those areas include South Orange County, Rancho Cucamonga, Temecula, and Murrieta and northeastern San Diego. 

In the second quarter of 2020, the average rent in San Diego County was $1,926, reflecting a  26% increase over three years, according to the San Diego Union-Tribune. Rents have since risen even more in the city of San Diego, to $2,336 per month as of November 2024 – up 21% from 2020, according to RentCafe and the Tribune. That’s 50% higher than the national average rent.

The attorneys general of eight states, including California, joined the Justice Department’s antitrust suit, filed in U.S. District Court for the Middle District of North Carolina.

The California Justice Department contends RealPage artificially inflated prices to keep them above a certain minimum level, said department spokesperson Elissa Perez. This was particularly harmful given the high cost of housing in the state, she added. “The illegally maintained profits that result from these price alignment schemes come out of the pockets of the people that can least afford it.”

Renters make up a larger share of households in California than in the rest of the country —  44% here compared to 35% nationwide. The Golden State also has a higher percentage of renters than any state other than New York, according to the latest U.S. Census data. 

San Diego has the fourth-highest percentage of renters of any major city in the nation. 

The recent ranks of California legislators, however, have included few renters: As of 2019, CalMatters could find only one state lawmaker who did not own a home — and found that more than a quarter of legislators at the time were landlords.

Studies show that low-income residents are more heavily impacted by rising rents. Nationally between 2000 and 2017, Americans without a college degree spent a higher percentage of their income on rent. That percentage ballooned from 30% to 42%. For college graduates, that percentage increased from 26% to 34%.

“In my estimation, the only winners in this situation are the richest companies who are either using this technology or creating this technology,” said Elo-Rivera. “There couldn’t be a more clear example of the rich getting richer while the rest of us are struggling to get by.”

The state has invested in RealPage

Private equity giant Thoma Bravo acquired RealPage in January 2021 through two funds that have hundreds of millions of dollars in investments from California public pension funds, including the California Public Employees’ Retirement System, the California State Teachers’ Retirement System, the Regents of the University of California and the Los Angeles police and fire pension funds, according to Private Equity Stakeholder Project. 

“They’re invested in things that are directly hurting their pensioners,” said K Agbebiyi, a senior housing campaign coordinator with the Private Equity Stakeholder Project, a nonprofit private equity watchdog that produced a report about corporate landlords’ impact on rental hikes in San Diego. 

RealPage argues that landlords are free to reject the price recommendations generated by its software. But the U.S. Justice Department alleges that trying to do so requires a series of steps, including a conversation with a RealPage pricing adviser. The advisers try to “stop property managers from acting on emotions,” according to the department’s lawsuit.  

If a property manager disagrees with the price the algorithm suggests and wants to decrease rent rather than increase it, a pricing advisor will “escalate the dispute to the manager’s superior,” prosecutors allege in the suit.

In San Diego, the Pickenses, who are expecting their first child, have given up their gym memberships and downsized their cars to remain in the area. They’ve considered moving to Denver.  

“All the extras pretty much have to go,” said Pickens. “I mean, we love San Diego, but it’s getting hard to live here.”  

“My wife is an attorney and I served in the Navy for 10 years and now work at Qualcomm,” he said. “Why are we struggling? Why are we struggling?”  

California Gov. Gavin Newsom is preparing to wage a legal war against President-elect Donald Trump, convening a special legislative session next month to try to “Trump-proof” the state. But it appears Newsom and California legislators won’t initially include artificial intelligence safeguards in that fight, even though AI regulations were a major preoccupation of the Legislature this year.

Trump has promised to immediately rescind President Joe Biden’s executive order that had imposed voluntary AI guardrails on tech companies and federal agencies. The president-elect’s administration could also, immigrant advocates say, use AI tools to assist the mass deportation he has pledged to implement. 

While California adopted a number of AI regulations earlier this year, other issues are likely to take priority in Newsom’s special session, legislators told CalMatters.

There are signs, though, that AI could — in the not-so-distant future  — go from abstract concern to prominent political cudgel between the Trump administration and California’s Democratic leaders. It could be another high-profile way to challenge Trump and his newfound tech allies, some of whom have gleefully proclaimed a new, deregulated era for artificial intelligence products.

“I think Newsom and the California Legislature have an opportunity to step into the gap that the federal government is leaving — to create a model environment for safe and rights-respecting technology and deployment,” said Janet Haven, executive director of the Data & Society Research Institute, a nonprofit that studies the social implications of AI and other technologies. “On the other hand, there’s no way to get around the fact that Big Tech is right there, and will be a huge factor in whatever the California Legislature and Newsom want to advance in terms of AI legislation.”

Why California lawmakers and others worry about AI

AI safety advocates told CalMatters they’re not necessarily sweating the apocalyptic AI nightmares imagined by some doomsayers. Instead, they are focused on how AI tools are increasingly used in healthcare, housing, the labor force, law enforcement, immigration, the military, as well as other industries and fields prone to discrimination, surveillance, and civil rights violations — because there’s evidence that such tools can be unwieldy, inaccurate, and invasive. “We have documentation that shows how these AI systems are likely to do all sorts of things—they’re pattern-making systems, they’re not really decision-makers, but the private sector and the public sector are using them as a substitute for decision-makers,” said Samantha Gordon, chief program officer at TechEquity. “That’s not wise.”

Santa Ana Democratic Sen. Tom Umberg told CalMatters that 2024 “was a bit of a testing year” for AI bills. California lawmakers outlawed sexually explicit deepfakes and certain election-related deepfake content, required tech companies to provide free AI detection tools, and stipulated that tech companies must publicly release data about their AI training tools.

Gov. Newsom ultimately signed roughly 20 AI bills into law. But he also controversially vetoed a major bill by San Francisco Democratic Sen. Scott Wiener that would’ve instituted significant testing requirements on AI tools to make sure they avoid catastrophic outcomes such as major cybersecurity or infrastructure attacks, or the creation of weapons that could cause mass death. In his veto message, Newsom wrote that the bill risked curtailing innovation, but he added that he wanted to “find the appropriate path forward, including legislation and regulation.” 

Wiener told CalMatters he’s working on updated legislation that could garner “broader support.” Such a bill would presumably include additional buy-in from the tech sector, which the state is relying on for tax revenues, and which has a notable lobbying presence in Sacramento — Google just racked up the largest quarterly lobbying tab in a decade.

Asked whether to expect more Big Tech lobbying against regulatory efforts in California, Palo Alto Democratic Assemblymember Marc Berman said: “It’s going to be a good time to be a lobbyist. They’re going to do very well.”

Though Wiener’s AI testing bill was batted down, as were a few other noteworthy AI bills that didn’t make it out of the Legislature, California is “far and away the center of AI regulation in the U.S,” said Ashok Ayyar, a Stanford research fellow who co-wrote a comparative analysis of Wiener’s bill against the European Union’s more comprehensive AI efforts.

A lack of federal AI regulation and legislation

California is leading on AI in large part because the competition is basically non-existent.

Congress hasn’t passed meaningful AI legislation. Asked about Trump and the incoming Republican majority, San Ramon Democratic Assemblymember Rebecca Bauer-Kahan said, “There isn’t much regulation to deregulate, to be honest.”

Sans federal legislation, President Biden issued an executive order in October 2023 intended to place guardrails around the use of AI. The order built on five policy principles on the “design, use, and deployment of automated systems to protect the American public.” Biden directed federal agencies “to develop plans for how they would advance innovation in the government use of AI, but also protect against known harms and rights violations,” said Haven. Soon after Biden’s executive order, his administration created the U.S. AI Safety Institute, which is housed within the Commerce Department. 

Biden’s executive order relies on tech companies, many of which are based in California, to voluntarily embrace the administration’s suggestions; it also relies on agencies like the Department of Homeland Security, which includes Immigration and Customs Enforcement and Customs and Border Protection, to be transparent and honest about how they’re using AI technology and not violate people’s civil rights. 

Like most executive orders, Biden’s AI edict is loosely enforceable and fairly easy to reverse.

Trump has already promised to repeal Biden’s executive order on day one of his term; the 2024 Republican platform argues that the executive order “hinders AI Innovation, and imposes Radical Leftwing ideas on the development of this technology.” Homeland Security and other executive branch agencies may be granted far more flexibility when Trump takes office, though advocates say the bar was already low; a June 2024 report from the nonprofit Mijente titled “Automating Deportation” argues the department hasn’t followed through on the Biden administration’s already relatively meager requests.

After Trump clinched the 2024 presidential election, segments of the tech industry were jubilant about what they foresee for the AI industry—including an imminent uptick in government contracts. “Stick a fork in it, it’s over,” Marc Andreessen, the billionaire general partner of venture capital firm Andreessen Horowitz, wrote on X. “The US will be the preeminent AI superpower in the world after all.”

Fully unleashed federal agencies

If mass deportation of undocumented immigrants come to pass, as Trump has promised, that would require a wide variety of technologies, including AI tools. Homeland Security already employs an AI system called the Repository for Analytics in a Virtualized Environment, or RAVEn, a nine-figure government contract. The department also has access to an extensive biometric database, and monitors certain undocumented immigrants outside of detention centers via a surveillance tool that utilizes AI algorithms to try to determine whether an immigrant is likely to abscond. 

“We know from Trump’s first administration that there are going to be fewer guardrails with the use of this tech, and agents will feel even more emboldened,” said Sejal Zota, co-founder and legal director of Just Futures Law, a legal advocacy group focused on immigration, criminal justice and surveillance issues. “That’s one area where we’re going to see increased AI use to support this mass deportation agenda.”

To the best of Zota’s knowledge, there’s little California lawmakers or courts could do to prevent federal agencies from using AI tech against vulnerable populations, including undocumented immigrants. “Is it an issue? Absolutely, it’s an issue,” said Sen. Umberg. “What can we do about it? What can we do about federal agencies using artificial intelligence? We can’t do much.”

Estimates show there are at least 1.8 million undocumented immigrants in California.

Another potential threat to California’s AI regulations is if the majority Republican Congress passes looser AI rules of its own, preempting state law. California lawmakers, including Assemblymember Bauer-Kahan and Sen. Umberg, said they don’t think significant AI legislation will make it to President Trump for his signature. 

Congressional gridlock is one reason Sen. Wiener said he’s pursuing AI regulation in the California Legislature in the first place: “I was very clear that if (the issue) were being handled statutorily at the federal level, I’d be happy to close up shop and go home,” he said. “But it wasn’t happening, and it’s certainly not going to happen under Trump.”

Not everyone believes Congress will remain stagnant on this issue, however, particularly with one party now dominant in Washington. “I wouldn’t underestimate the creativity of this incoming administration,” said Paromita Shah, executive director of Just Futures Law.

Added Haven: “I think it’s possible that with a Republican trifecta, we’ll see an attempt to pass a very weak data privacy law at the federal level that preempts state law. Then it’s a game of whack-a-mole between the state legislature and the federal legislature.”

California’s next AI steps

Newsom has to date signed many AI bills but turned back others he says go too far and risk inhibiting  an industry he has sought to cultivate as a government partner. A spokesperson for Newsom did not directly respond to CalMatters’ questions for this story, instead providing a statement highlighting the state’s role in shaping the future of so-called “generative AI,” a recent and innovative form of the technology behind tools like ChatGPT, DALL-E, and Midjourney: “California has led the nation in protecting against the harms of GenAI while leveraging its potential benefits,” said spokesperson Alex Stack. 

President-elect Trump’s team did not respond to written questions from CalMatters.

Dan Schnur, a political analyst and professor at UC Berkeley and other campuses, predicted the governor will save his political capital for other clashes. “Newsom’s incentive for strengthening his relationship with Silicon Valley is probably stronger than his need for yet one more issue to fight over with Donald Trump,” Schnur said.

Florence G’Sell, a visiting professor at Stanford’s cyber policy center, cautioned Newsom against clinging to the deregulatory side of Silicon Valley. “There is really a very strong movement that wants to highlight the risks of AI, the safety questions,” G’Sell said. “If I were the governor, I wouldn’t be insensitive to this movement and the warnings.” 

Lawmakers are eyeing other avenues to shore up Californians’ redresses against AI technology. Assemblymember Bauer-Kahan previously told CalMatters she plans to reintroduce a stronger version of a bill, which failed to advance past the Legislature last session, to crack down on discriminatory AI practices. Another top AI priority, according to Menlo Park Democratic Sen. Josh Becker, is less sexy, but perhaps just as important: “closely monitor the implementation of this year’s regulatory framework (that we just passed),” he wrote. 

California’s next AI regulatory steps were always going to be intensely analyzed. That’s even more so the case now, with Trump returning to office—a challenge state lawmakers are embracing.

“One of the things that is somewhat amusing to me is when folks come to me and say, ‘Whatever you do in California is going to set the standard for the country,’ Sen. Umberg said. “As a policymaker, that’s catnip. That’s why I ran for office.”

LAUSD, the nation’s second-largest school district, has approved a ban on phones in classrooms starting January 2025. This decision aligns with a broader trend across California, as lawmakers and schools push for similar restrictions. Governor Gavin Newsom encourages districts to act now, citing the 2019 law empowering them to enforce bans. Read the full story.

After the attempted assassination of Donald Trump in July, the merchandise started showing up on Facebook.

Trump, fist in the air, face bloodied from a bullet, appeared on everything. Coffee mugs. Hawaiian shirts. Trading cards. Commemorative coins. Heart ornaments. Ads for these products used images captured at the scene by Doug Mills for the New York Times and Evan Vucci for the Associated Press, showing Trump yelling “fight” after the shooting. The Trump campaign itself even offered some gear commemorating his survival.

As the Secret Service drew scrutiny and law enforcement searched for a motive, online advertisers saw a business opportunity in the moment, pumping out Facebook ads to supporters hungry for merch.

In the 10 weeks after the shooting, advertisers paid Meta between $593,000 and $813,000 for political ads that explicitly mentioned the assassination attempt, according to The Markup’s analysis. (Meta provides only estimates of spending and reach for ads in its database.) 

Even Facebook itself has acknowledged that polarizing content and misinformation on its platform has incited real-life violence. An analysis by CalMatters and The Markup found that the reverse is also true: real-world violence can sometimes open new revenue opportunities for Meta.

While the spending on assassination ads represents a sliver of Meta’s $100 billion-plus ad revenue, the company also builds its bottom line when tragedies like war and mass shootings occur, in the United States and beyond. After the October 7th attack on Israel last year and the country’s response in Gaza, Meta saw a major increase in dollars spent related to the conflict, according to our review.

Tech advocacy groups and others question whether Facebook should even profit from violence and whether its ability to do so violates the company’s own principles of not calling for violence. The company said advertisers often respond to current events and that ads that run on its platform are reviewed and must meet the company’s standards.

If you count all of the political ads mentioning Israel since the attack through the last week of September, organizations and individuals paid Meta between $14.8 and $22.1 million dollars for ads seen between 1.5 billion and 1.7 billion times on Meta’s platforms. Meta made much less for ads mentioning Israel during the same period the year before: between $2.4 and $4 million dollars for ads that were seen between 373 million and 445 million times.  At the high end of Meta’s estimates, this was a 450 percent increase in Israel-related ad dollars for the company. (In our analysis, we converted foreign currency purchases to current U.S. dollars.)

The American Israel Public Affairs Committee, a lobbying group that promotes Israel, was the major spender on ads mentioning Israel. In the six months after October 7th, its spending increased more than 300 percent over the previous six months, to between $1.8 and $2.7 million dollars, as the organization peppered Facebook and Instagram with ads defending Israel’s actions in Gaza and pressuring politicians to support the country. 

As the war has roiled the region, AIPAC paid Meta about as much for ads in the 15 weeks following October 7th as the entire year before.

“Our effort is directed to encouraging pro-Israel Americans to stand with our democratic ally as it battles Iranian proxies in the aftermath of the barbaric Hamas attack of October 7th,” Marshall Wittmann, a spokesperson for AIPAC, said in an emailed statement. 

(See the data on our Github repo).

Other ad campaigns mentioning Israel supported different sides of the conflict. Doctors Without Borders, for example, used advertising to highlight the humanitarian crisis in Gaza. Other ads defended and promoted Israel. The Christian Broadcasting Network tied the October 7th attack to a claim in an ad that Iran’s “final, deadly goal” was “to establish a modern caliphate—an Islamic-founded, tyrannical government—across the world.”

Meta, the parent company of Facebook and Instagram, takes in the vast majority of its revenue from targeted advertising. The company tracks users online to profile their habits and, when a business or organization wants to reach them, lets those businesses pay to send ads to people who might be interested. Those ads might be tied to something perfectly wholesome, like gardening. But the company’s algorithms don’t distinguish between simple hobbies and something darker.

Meta spokesperson Tracy Clayton said in an emailed statement that Meta did not ultimately profit from political violence, as advertisers broadly back away from advertising during times of strife for fear their ads will be promoted alongside news of the violence. 

Clayton noted Meta’s chief financial officer recently said on an earnings call that it is “hard for us to attribute demand softness directly to any specific geopolitical event” but had seen lower ad spending “correlating with the start of the conflict” in the Middle East, and had seen similar at the start of the war in Ukraine.

“Advertisers responding to current events are nothing new, and it’s seen across the media landscape, including on television, radio, and online news outlets,” Clayton said. “All ads that run on our platform must go through a review process and adhere to our advertising and community standards, and Meta offers an extra layer of transparency by making them publicly available in our Ad Library.”

CalMatters and The Markup used Meta’s own tools to calculate how much Meta makes from spikes in advertising when instances of political violence happen, reviewing thousands of ads through both manual review and with the assistance of an AI model offered by Meta itself. (We also made improvements to Meta Research’s scripts for accessing the Ad Library API, and we’re sharing our changes.)

To examine the assassination attempt merchandise, we ran a simple search of Meta’s Ad Library for ads that mentioned “assassination,” including any in our analysis that also mentioned “Trump” and hundreds of others that didn’t mention the former president by name but were clearly related to the shooting.

“First they jail him, now they try to end him,” one ad read. A conspiratorial ad for a commemorative two-dollar bill claimed “the assassination attempt was their Plan B,” while “Plan A was to make Biden abandon the presidential campaign.” Some ads used clips from the film JFK to suggest an unseen, malevolent force was at work in the shooting.

Gun advocates paid for ads, using the assassination attempt as a foreboding call to action. One ad promoting a firearms safety course noted that “November is fast approaching.” A clothing business said in an ad that, since “the government can’t save you” from foreign enemies, Americans “need to be self-reliant, self-made, and self-sufficient.”

“Because when those bullets zip by, you are clearly on your own,” the ad read.

Most of those ads did not appear to violate Meta’s policies, although some may have broken its ban against showing weapons while alleging “election-related corruption.” But even the ones that didn’t clearly violate Meta’s rules still place the company in an uncomfortable position, as the business takes in advertising dollars from posts tied to grim news cycles. 

CEO Mark Zuckerberg himself commented on the first Trump assassination attempt, saying in an interview that it was “one of the most badass things I’ve ever seen in my life.” Trump has now survived a second apparent assassination attempt, and Zuckerburg’s company has made millions of dollars through political advertising tied to these and other violent acts. 

Katie Paul, director of the Tech Transparency Project, a nonprofit advocacy organization, said “it’s not a surprise” that ads around political violence would pop up after incidents “if Meta is not making any effort even on a good day to effectively enforce their policies.”

“There’s huge problems with their advertising broadly,” she said. “They’re profiting off of a lot of harmful things, really without any sort of repercussions.” 

A Trump-fueled business and cash from war

Many businesses paying for the assassination ads sold pro-Trump gear before the shooting — and some might have spent a similar amount on ads if the shooting never happened.

But for some, the assassination attempt effectively became an entire business strategy, according to the review of Meta advertising data.

A clothing company called Red First, which offers everything from customized shirts for pet owners to flags saying “Hillary belongs in prison,” offered assassination-related merchandise through a network of pages with names like 50 Stars Nation and Red White and Blue Zone.

The company, which operates in California and Vietnam, according to Meta’s required disclosures, has spent more than $1.8 million since February 2023 to promote ads through its various pages. But in the wake of the shooting, the company pivoted to merchandise around the event. 

Red First’s ads were relatively innocuous compared to some that sprang up after the shooting – they promoted Trump, not the shooting, and not the idea of retaliation for it. One shirt showed an illustration of Trump, middle fingers in the air, and the words “you missed bigly.” The company has also offered Kamala Harris merchandise, recently launching a page dedicated to it as well.

But the ads related to the shooting simultaneously sold products, promoted Trump, and let Meta reap advertising cash from the incident.

Many of the thousands of ads posted by the company didn’t explicitly use the word “assassination,” but clearly referenced the event in other ways, using slogans like “he will overcome,” “fight fight fight,” “legends never die,” and “shooting makes me stronger.”

To suss out which ads were related to the shooting, we reviewed more than 4,200 ads from the company’s different pages with the assistance of a large language model named Llama, a Meta AI model. 

We programmed the model to evaluate the text of each ad to determine whether it was related to the assassination attempt, then manually reviewed hundreds of its classifications to ensure it was working as expected.

After our review, we determined that more than 2,600 of those more than 4,200 ads were related to the assassination attempt. The total Red First paid to Meta in the 10 weeks after the shooting for those ads: between $473,000 and $798,000.

Red First lists a phone number and street address in Southern California, but didn’t respond to phone or email, and the listed address is for a mail-opening service.

The NRA and violent ads around the globe

The advocacy organization the Tech Transparency Project has charted how the National Rifle Association has paid to promote pro-gun views on Meta and Google’s ad platforms after mass shootings. Despite calls from tech company executives for gun control, those companies profit from NRA spending that spikes after shootings, the group has pointed out. 

After the mass school shooting in Parkland, Fla., the NRA increased its spending on Google and Facebook ads, the Tech Transparency Project noted in one report. In 2018, the year of the shooting, Meta received “more than $2 million in advertising fees from the NRA starting in May of that year,” the report found, which also found that “NRA ad spending reached its highest levels on Google and soared on Facebook” following a week of mass shootings the following year that left dozens of people dead. 

Just days before the January 6th insurrection, the Tech Transparency Project found that Meta hosted ads offering gun holsters and rifle accessories in far-right Facebook groups. 

Internationally, Meta has often lapsed in its pledge to keep violent content off its platforms.  

Meta’s ad policies forbid calling for violence. But when faced with crucial tests of its content moderation practices, the company has repeatedly failed to detect and remove inflammatory ads. A 2018 report, commissioned by Facebook itself, found that its platform had been used to incite violence in Myanmar, and that the company hadn’t done enough to prevent it. 

Alia Al Ghussain, a researcher on technology issues at Amnesty International, said that as troubling as some ads might be in English, ads in other languages may be even more likely to pass Meta’s content moderation. “In most of the non-English-speaking world, Facebook doesn’t have the resources that it needs to moderate the content on the platform effectively and safely,” she said.

Despite later admitting responsibility for violence in Myanmar, the company continues to be faulted for gaps in its international moderation work. Another advocacy organization found in a test that the company approved calls for the murder of ethnic groups in Ethiopia. More recently, a similar test by an advocacy organization found that ads explicitly calling for violence against Palestinians—a flagrant violation of Meta’s rules—were still approved to run by the company. 

“If ads which are presenting a risk of stoking tension or spreading misinformation are being approved in the US, in English, it really makes me fearful for what is happening in other countries in non-English-speaking languages,” Al Ghussain said.

No sooner had Gov. Gavin Newsom cut billions of dollars in spending to close a budget deficit in June than California received an unexpected tax windfall, one that has people in the Capitol speculating about where the avalanche of money came from.

More corporate taxes than expected poured into state coffers this summer, with cash receipts exceeding forecasts by nearly $2 billion since April. An especially big surge came in July, and state officials and accounting experts think the extra receipts came from a small number of companies — most likely one or more Silicon Valley tech firms, with artificial intelligence chipmaker Nvidia a leading candidate.

The influx highlights a growing tension in California between its tendency to further regulate tech companies — the governor has signed six bills governing the use of artificial intelligence so far this year — and its reliance on them for tax revenue.

On a single day, July 16, the state received more than $800 million than expected in corporate tax payments, “by far its single biggest day of collections” for a July going back at least four decades, state deputy legislative analyst Brian Uhler told CalMatters. (He excluded 2020 because the pandemic delayed tax deadlines.) 

This July, the Finance Department said it collected about $1.4 billion in corporate taxes, nearly three times the agency’s forecast of $500 million. In June, corporate taxes were $263 million above forecast, and in May, $752 million over. “The July overage was likely due to large payments by a small number of companies and may not necessarily be indicative of overall corporation tax revenue trends,” the department said in its monthly bulletin.

Tax records are confidential, and representatives from both the Finance Department and the Franchise Tax Board stressed that nobody at the state is allowed to discuss details or information from specific tax returns or payments. 

But the July influx in corporate tax payments was likely related to changes in state tax rules adopted in June, according to state and accounting experts who spoke with CalMatters. The tax changes, intended to help close the deficit, include a suspension of a deduction businesses can claim to offset profit, called the net operating loss deduction, as well as a $5 million limit on how much businesses can claim for research and development and other tax credits.

It’s possible that companies expecting to have outsized profit realized they owed more in taxes and needed to make large estimated tax payments immediately after the changes were enacted, accounting experts said. Corporations that expect to owe taxes are required to make quarterly estimated tax payments and can incur penalties if the payments are late. State analysts believe the new taxes could disproportionately come from “businesses in riskier or more innovative industries — such as the technology, motion picture, and transportation sectors,” as they put it when the changes were proposed.

In California, a red-hot tech company fits the bill of outsized profits and risky innovation: Nvidia, which is raking in record amounts of money because of the artificial intelligence boom. 

As other companies scramble to get ahead in the AI race, they are buying Nvidia’s chips and propelling the company to new heights. On Aug. 28, Nvidia reported second-quarter net income of $16.6 billion, which was more than double its profit from the same period last year — and about the same amount spent by all state and federal campaigns in the last election.

Nvidia’s annual financial report from 2023 shows that it had $1.5 billion in unused California tax credits for research and development. Between the cap on that tax credit and the suspension of the loss deduction the company could have claimed against its rising profit, Nvidia probably realized it would have a larger tax bill, accounting experts told CalMatters. That’s why it may have been the company or one of the companies that made the sizable estimated tax payment to the state.

Nvidia’s most recent quarterly filing provides additional clues: The company paid a total of $7.21 billion in income taxes in the second quarter, a whopping 31-fold increase from the $227 million it paid in taxes in the same period last year. For the first six months of its 2024 fiscal year, Nvidia paid $7.45 billion in income taxes, compared with $328 million in the first half of 2023. Those totals included federal and state  taxes. California has a flat corporate tax rate of 8.84% of a company’s net income, while the federal tax rate is a flat 21%. 

If Nvidia was largely responsible for the July tax windfall, due to an estimated tax payment, the company likely expects a lot of taxable income this year, said Francine McKenna, an independent financial journalist who writes the Dig newsletter and has taught financial accounting at the University of Pennsylvania’s Wharton business school. McKenna said if that’s the case, and because there’s a limit on how much the company can claim in terms of other tax credits, Nvidia will likely make another sizable estimated tax payment in the third quarter.

An Nvidia spokesperson would not comment. Neither would a spokesperson for Gov. Gavin Newsom. 

“I’d expect payments from other companies as well, potentially,” said Brett Whitaker, a former tax executive at Ernst & Young, Nike and Mattel who now teaches corporate tax accounting at Indiana University. “They depend on these credits often to avoid paying tax, so suspending them could drive tax for many.”

Whitaker said most companies try to take advantage of R&D tax credits: “Big Four (accounting) firms have entire teams dedicated solely to this effort.” But he added that the credits are especially commonly used by tech companies and others whose businesses rely on innovation.

It’s hard to tell exactly when those other estimated tax payments will come and how significant they will be, Finance Department spokesperson H.D. Palmer said. 

Estimated tax payments are due in April, June, September and January, but those payments are not always made on time so can come in at any time, according to the Franchise Tax Board. 

A CalMatters examination of Silicon Valley’s biggest tech companies’ financial filings with the federal Securities and Exchange Commission suggests that some of them may also be affected by the tax changes. That means the companies could make estimated tax payments that could be similar in size to the ones the state received in July. 

Apple, Google parent Alphabet and Facebook parent Meta are among the companies whose financial filings show they have past losses, which they could normally deduct, and/or unused research and development tax credits in the state.

As of last Dec. 31, Alphabet had $18.6 billion in old losses in California. The tech giant also had $6.3 billion in research and development credits. As of the same date, Meta had $2.78 billion in past losses in the state, as well as $4.08 billion in unspecified state tax credits from prior periods. And as of Sept. 30, 2023, Apple had $3 billion in research and development credits. All these companies are highly profitable, and whatever deductions and credits they were expecting to use are now either on hold or limited. 

According to the analysis of the budget bill that included the tax changes, California’s deduction suspension and tax-credit limits could increase state revenue by $5.95 billion this fiscal year, $5.5 billion the following fiscal year and $3.4 billion the year after that. 

The tax changes split state lawmakers mostly along party lines when the governor proposed them in his budget earlier this year. Democrats characterized the changes as necessary, while Republicans decried them as a burden on businesses.

Democratic state Sen. Scott Wiener from San Francisco, a supporter of the changes, said in an emailed statement to CalMatters: “It is important not to read too much into any single month revenue numbers, but we believe that tough decisions we made this year will strengthen the state’s fiscal health going forward while protecting our core programs and benefiting the overall economy.”

Sen. Roger Niello, a Republican from Roseville, an opponent of the changes and a former accountant, told CalMatters he checked with his fiscal staff as well as the Legislative Analyst’s Office about the bigger-than-expected corporate tax payments in July. “It’s reasonable to consider that it’s because of tax changes, but they really don’t know,” he said.”It does appear to be from large deposits from a few companies.”

Niello said the state has disallowed the deduction for operating losses in nearly half of the years between 2008 and 2027, citing a finding by the Legislative Analyst’s Office in a May report. The deductions are supposed to help make taxes roughly even for businesses with similar total profits over the course of multiple years. 

Suspending that deduction “appears to be a go-to measure by the state for accounting for revenue shortfalls,” Niello said. “It’s something that businesses cannot rely on now.”

In addition to the tax changes, California tech firms have navigated various legislative fights and new regulations this year. The biggest battle was over a bill to force them to test powerful artificial intelligence models for their potential to enable cyberattacks, the creation of weapons of mass destruction, and other threats to infrastructure. Several big tech companies opposed the legislation, saying it would hinder innovation, while prominent whistleblowers said it would help mitigate the reckless pursuit of tech profits. The measure, from Wiener, cleared the Legislature only to be vetoed by Newsom this past weekend. The governor also signed into law bills that would protect voters from deepfakes and allow victims of doxxing to sue their attackers in civil court.

California Gov. Gavin Newsom today vetoed the most ambitious — and contentious — bill approved by the Legislature this year to regulate artificial intelligence.

The legislation, Senate Bill 1047, would have required testing of AI models to determine whether they would likely lead to mass death, endanger public infrastructure or enable severe cyberattacks.

Newsom in his veto letter criticized the bill for potentially “curtailing the very innovation that fuels advancement in favor of the public good.” He also said it would have needlessly regulated AI used in low-risk situations and that it was written without enough research.

“A California-only approach may well be warranted — especially absent federal action by Congress — but it must be based on empirical evidence and science,” he wrote.

The bill applied only to the costliest AI models, needing $100 million or more to develop, and Newsom objected to that threshold, saying cheaper tech can still be harmful.

The governor wrote that he will work to “find the appropriate path forward, including legislation and regulation” to address AI risks.

Opponents argued that the bill would harm the state economy and AI industry. They included Google, Meta, OpenAI, and eight members of the California congressional delegation. The state Chamber of Commerce praised the veto , saying the legislation would put “California’s place as the global hub of innovation at tremendous risk.”

The bill’s sponsor, San Francisco Democratic Sen. Scott Wiener, called the veto “a missed opportunity for California to once again lead on innovative tech regulation” and protect public safety. His bill’s supporters include 59% of California voters, according to one poll, along with billionaire Elon Musk, the Screen Actors Guild, Service Employees International Union, the National Organization for Women, and whistleblowers who worked at companies that make AI.

One backer, Teri Olle of advocacy group Economic Security California, said a veto by the governor means “we forfeit the opportunity to lead.”

Newsom signed into law this month roughly a dozen other AI bills, including legislation to protect voters from deepfakes and creatives from unauthorized digital replicas of their likenesses. He also signed bills requiring businesses to share information about how they train generative AI models and to help users determine whether media was made by AI.

All told, California lawmakers passed more than 20 bills to regulate artificial intelligence this year. 

Speaking in May at a generative AI symposium, Newsom said it’s important to respond to calls for oversight by some AI developers — but also warned that he didn’t want to overregulate an important industry. California is home to 35 of the top 50 AI companies, according to Forbes, and Silicon Valley-based companies receive more AI investment than those in any other region, according to Crunchbase.

People in the industry are not of one mind about SB 1047, with some startups like Anthropic joining whistleblowers in supporting it. That mirrors a debate this year about whether to prohibit the weaponization of robots. A bill to do so was co-sponsored by a leading robot maker, Boston Dynamics. Newsom vetoed the legislation despite that support, saying police needed an exemption.

Newsom’s veto of SB 1047 keeps California from aligning its AI regulation with that of the European Union. An EU representative told CalMatters earlier this year that the union’s AI Act, said to be the most comprehensive such regulation, could be mostly replicated in California if the state enacted SB 1047 as well as a bill that required watermarks on AI-generated imagery and another to protect people from automated discrimination. The latter two bills failed to pass the Legislature.

Regardless of the governor’s decision, the debate over Wiener’s bill got many people engaged with AI policy who are not normally part of that conversation, said Alondra Nelson, former director of the White House Office of Science and Technology Policy.

Nelson was disappointed the bill didn’t address civil rights threats from AI or the need to protect people from AI in the workplace. But she liked its testing requirement, which matched a stipulation in the White House’s Blueprint for an AI Bill of Rights, which Nelson helped craft.

Nelson said she hopes that coalitions formed to support SB 1047 will help advance future AI legislation. San Ramon Democratic Assemblymember Rebecca Bauer-Kahan, who worked with Nelson to draft an unsuccessful bill protecting against AI-fueled discrimination, said she plans to reintroduce a similar bill next year after an AI Civil Rights Act with similar provisions was introduced in Congress this week. She also hopes to see continued work to pass regulations like SB 1047.

“California has been one the of the few places in the U.S. where we are still demonstrating that we can and are willing to govern technology,” she said.

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Apple launched California identity cards and driver’s licenses for iPhones today, making the digital IDs easier to present — but for now they are only accepted at select airports and a small number of businesses selling age-restricted items such as alcohol, tobacco, fireworks, or guns.

Drivers are still legally required to carry their physical licenses, even if they get a digital one. And they cannot use digital licenses at offices of the Department of Motor Vehicles, which issues them, since the agency only accepts them online, through an app.

In the near future, however, use of digital IDs are expected to spread both in government and the private sector, with sales terminals rolling out to enable more stores to accept them, more California state agencies accepting them, and the Biden administration urging the federal government to do the same.

Apple vice president Jennifer Bailey called the launch “an important milestone in the rollout of IDs in Apple Wallet” in a press release issued by Gov. Gavin Newsom’s office.

Smartphones that operate on Google’s Android operating system got the ability to add a California ID or driver’s license to Google Wallet last month. California is the fifth state to get Google Wallet identification and seventh state to get Apple Wallet identification.

Few businesses and virtually no state agencies make use of mobile ID to verify identity, but that’s changing fast. Verifone, whose sales terminals accept payments from Apple or Google smartphones, is working with the California DMV and the company TruAge to make in-person age verification commonplace at businesses throughout the state. 

“There’s only a handful of them available in the state today but the plan is for several thousand to be rolled out in the very near future,” mostly by merchants,  said DMV director Steven Gordon.

Digital IDs also work online. Apple started allowing apps such as rental car service Turo to verify people’s age with digital IDs last year and Google’s Chrome web browser started testing its Digital Credential API for verifying identities online last month.

Californians could carry digital IDs on smartphones previously but only by installing additional software; the state last year launched the California DMV Wallet app on Apple and Google devices. The app and new wallet integration are part of the state’s digital ID strategy, which includes plans to follow a federal standard for remote verification of a person’s identity and to integrate with Login.gov, an identity and sign-on service that has been adopted by more than 50 federal agencies, including the Internal Revenue Service and Department of Homeland Security. Login.gov started working with state governments in 2022 and expanded those offerings last month.

The Biden administration is reportedly working on an executive order that aims to reduce fraudulent benefit claims by accelerating this integration, pushing more state governments to adopt digital driver’s licenses and IDs and requiring all federal agencies to use Login.gov. Apple and Google declined to answer when asked if they’re part of  talks to draft language in the executive order.

Curbing AI with digital IDs

For now, though, adoption is limited: The California DMV is the only California agency that accepts mobile identification cards — and even then only digitally — and the Transportation Security Administration is the only federal agency that accepts them, when screening passengers at roughly 25 airports nationwide, including Los Angeles and San Francisco international airports.

“We do hope that we’re going to be able to find a sister agency at the state level to start using this,” said Gordon, who previously worked at tech company Cisco Systems and oversaw DMV modernization efforts during the COVID-19 pandemic.

The California Department of Technology, which created the state’s digital ID strategy,  is working on integrating the strategy and one of its key components, the “Identity Gateway,” with state services, including transit discount programs and eligibility verification for programs like CalFresh food benefits and veteran services. The ultimate goal, department spokesperson Bob Andosca told CalMatters, is to begin pushing state agencies to adopt digital IDs in the near future in order to allow Californians to “access all state services through one digital ID system.”

In addition to speeding access to government services, remote identity verification with digital IDs and services like Login.gov or California’s Identity Gateway can reduce the number of private tech companies state governments interact with. That potentially includes less reliance on artificial intelligence software.

A September 2023 analysis by the group Electronic Privacy Information Center found that roughly half of AI contracts signed by state agencies involve fraud detection. In the most high profile case to date, the California Employment Development Department wrongfully denied unemployment benefits to at least 600,000 people because AI provided by Thomson Reuters falsely identified their claims as fraudulent. Digital IDs allow state agencies to verify that people are who they say they are when they apply for benefits online, potentially eliminating the need for fraud detection tools like the one used by EDD.

State-issued IDs for iPhones were first introduced in 2021 and are now available in Arizona, Colorado, Georgia, Hawaii, Maryland, and Ohio. The IDs are also in the works for eight additional states and their use expands to Japan, the first country outside the U.S., next year.

Apple and state officials have tried to make the process of adding a digital ID relatively simple. To add an ID card or driver’s license to your Apple Wallet, launch the Wallet app and then tap the plus button in the top right corner. Then take a picture of the front and back of your physical ID card or driver’s license. You will then be prompted to do a series of face and head movements, allowing your smartphone to scan your face to match it to the picture on your ID card. After your phone does its facial matching, the state needs to do its own, so you will be prompted to take a selfie that gets encrypted and sent to the DMV for a face recognition search of a database containing photos of ID cards and licenses. The state also receives a fraud score from Apple based on how a person uses their iPhone and the settings they choose.

Once it’s set up, smartphone IDs promise to be easier to use than physical ones. To present one, hold your phone near a reader at a government facility (like the airport or DMV) or at a private business (like a liquor store) to establish a connection between the reader and your phone. Then a prompt pops up on the phone showing what information the other party is requesting, such as date of birth and legal name. You approve the exchange by authenticating on the device (via face or fingerprint scan or with your passcode) and your identifying information is then shared. A history of such exchanges is stored on your smartphone and is not made available to Apple or the state authority that issued the device, according to Apple.

Until mobile IDs are more widely accepted, the DMV still recommends that you carry a physical ID card. If drivers don’t carry physical licenses with them, they’re breaking the law, said California Highway Patrol spokesperson Jaime Coffee.

New privacy worries as digital ID acceptance grows in California

California’s previous mobile ID technology, the DMV smartphone app, is currently used by more than half a million people. The app can not only present a mobile ID but also read one, including the new ones from Apple and Google wallets, through the included ID reader, used to verify a person’s identity, age, or driving privileges. Apple also offers a reader for mobile IDs that are on iPhones or Android devices.

The ID reader is the only way DMV currently accepts digital IDs.

But the hope, DMV director DMV director Gordon said, is that Apple and Google offering digital IDs in California leads more citizens to carry them and more stores and financial institutions to accept them, both in person and online.

He also thinks digital IDs can improve access to state and local government services by allowing people to do things such as verify their identity when signing on to websites to pay taxes. He envisions DMV employees in the field handing out mobile IDs on the spot to homeless people in order to quickly replace lost ID cards, allowing them access to government services they would otherwise be locked out of. He also thinks mobile IDs can make life safer for the public and police alike with wireless ID sharing during traffic stops.

The DMV is hosting hackathons in Silicon Valley in October and November to explore different ways to use digital IDs.

For all their promise, the new IDs also raise new privacy concerns. Electronic Frontier Foundation director of engineering Alexis Hancock criticized California’s DMV Wallet app earlier this year for a lack of protections to control what information you share. Such protections would, for example, allow a person buying beer to digitally verify that they are over 21 but not share their address with the store. 

Hancock thinks it’s imperative that lawmakers put rules into place governing the use of mobile IDs. One example: banning the creation of databases that track a person’s movement wherever identification or age verification takes place  — databases that don’t exist today but which could conceivably be enabled by digital IDs.

That kind of list and potential surveillance could impact a lot of people in states where it’s become common to verify age before gaining access to adult content. The California Legislature this year failed to pass a bill that would have made it illegal to store, retain, or share information obtained when verifying a person’s age or track their online activity. But the bill also would have required businesses that sell things such as fireworks, spray paint or pornography to verify a person’s age. Some privacy advocates opposed the law, but more than 20 U.S. states have considered age verification laws, according to the Free Speech Coalition.

Apple and Google generally employ strong security protections, Hancock said, and it’s in their economic interest to do so, but “you can’t just trust companies at their word to not try to exploit that (sort of information). We have learned that lesson multiple times in the past.

“My general worry around these programs,” she continued, “hinges on the fact that what happens when you present such information so freely, and the more frequently you present this information digitally, the greater the chance of said information being leaked in some sort of way, shape, or fashion.”

Hancock is also concerned about agreements signed between tech providers and state agencies. A review of contracts between Apple and Georgia and Arizona by CNBC concluded that the company exerts a high degree of control over state government agencies, requiring them to provide digital ID cards free of charge and pay for systems used to issue digital ID credentials. Similar provisions are found in agreements between tech giants and the state of California. 

Following a public records request, CalMatters obtained a memorandum of understanding signed in 2022 by an Apple executive and Digital ID program director Greg Fair, a California Department of Technology employee. That agreement requires the government to pay for staff and computer systems necessary to maintain Apple Wallet ID cards. It also requires the state to treat digital IDs the same as physical ones, tells the government how to market digital IDs, and makes the state offer a digital option when people get a new ID or replace a lost or stolen one.

A subsequent contract signed in August 2023 requires the state supply Apple with monthly reports. The contents of those reports are unknown since this portion of the contract is redacted.

The Google contract signed in July also details continuing work on new features such as selective disclosure, getting an ID without the possession of a physical card, sharing an ID across devices, and “adding multiple credentials (such as for a parent and child).”

Both contracts state that Apple and Google will not share information about someone with third parties, including law enforcement, without the person’s consent. They also state that both companies will work with state agencies to prevent fraudulent ID issuance and report suspected instances of  digital ID fraud.

After reviewing the documents, Hancock said the contents confirm her fear that the state gives too much control to Apple by agreeing to do things such as suggest a digital option when people renew their physical driver’s license and give Apple prior approval power over marketing. 

“They [Apple] steer the shift of public perception around digital ID,” she said. “A lot of communications about how this gets presented to California citizens is controlled by Apple.”

Both the DMV and Login.gov have histories of making mistakes when attempting to modernize government services.

Last year, a federal Government Services Administration investigation found that Login.gov misled other government agencies to believe it complied  with a federal remote identity verification standard. It hadn’t, according to  a former director of Login.gov, due to concern of the technology’s discriminatory impact. 

At the California DMV, a 2019 Los Angeles Times investigation found problems during rollout of a voter registration program paired with vehicle registration. Among them: the DMV inadvertently shared personal information and 100,000 inaccurate documents with local election officials across the state of California.

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Project 2025, the 900-page conservative playbook for the next Republican president, issues an ultimatum for California: track and report abortion data to the federal government or risk losing billions in Medicaid funding for reproductive health. 

California is one of only three states that do not report abortion data to the Centers for Disease Control and Prevention. 

Project 2025’s proposed federal mandate directly conflicts with the state’s strong protections for patient privacy and could dismantle the legal and ethical foundations that have made California a refuge for those seeking reproductive care.

The blueprint, crafted by Donald Trump allies and leaders in his first administration, clearly targets states with abortion protections like California, seeking the kind of data that could be used to target abortion-seekers or even criminally punish out-of-staters who come to the state for reproductive health services.

“Because liberal states have now become sanctuaries for abortion tourism, [the Department of Health and Human Services] should use every available tool, including the cutting of funds, to ensure that every state reports exactly how many abortions take place within its borders, at what gestational age of the child, for what reason, the mother’s state of residence, and by what method,” reads the chapter on abortion reporting. 

Roger Severino, who served as the Department of Health and Human Services’ director of the Office for Civil Rights under Trump, authored Project 2025’s abortion surveillance plan. He is now the vice president of domestic policy at the Heritage Foundation, the conservative think tank behind Project 2025. He declined an interview with CalMatters.

As Project 2025 and reproductive health have become major campaign themes, Trump continues to distance himself from the right-wing plan. He’s repeatedly called some of the project’s proposals “abysmal” and has said “I have no idea who is behind it.” Paul Dans, the Project 2025 director and a former top adviser in Trump’s administration, resigned from the Heritage Foundation in July after Trump began to disengage from the plan. 

In yesterday’s presidential debate, Vice President Kamala Harris explicitly warned about Project 2025’s plans to monitor “your pregnancies, your miscarriages.”

On the stage, Trump denied supporting a national abortion ban, in part because the fall of Roe led to his desire for each state to implement its own policy. “This is an issue that’s torn our country apart for 52 years,” Trump said on the debate stage. “Every legal scholar, every Democrat, every Republican, liberal, conservative, they all wanted this issue to be brought back to the states where the people could vote. And that’s what happened.” 

Harris’ home state has a long history of protecting reproductive rights. The state legalized abortion in 1967, six years before the landmark Roe v. Wade decision, and has since enacted numerous laws to ensure access to abortion care. 

The California Constitution includes an explicit right to privacy, which has been interpreted by state courts to guarantee the right to choose an abortion.

California, along with Maryland and New Hampshire, does not require abortion providers to report patient data to the federal government, as Severino points out. The California Department of Public Health said  just days after Roe v. Wade was overturned that it does not report abortion data to the federal government because it is not required to do so. The states that do collect data generally use it for public health analysis that can help improve abortion access by identifying gaps and needs

Under Project 2025, all 50 states would be required to submit to the federal government data such as the reason for the abortion, fetus’ gestational age, the birthing parent’s state of residence, whether the procedure was surgical or pill-induced, and more.  

Cat Duffy, a policy analyst at the National Health Law Program, said the intention of collecting this data “is not one of scientific exploration.”

“It’s to create a culture of fear, which will spread, not just to abortion seekers, but pregnant people as well, who will be afraid of going to the doctor and what they tell the doctor,” she said.

Medi-Cal and access to critical care

Medicaid – known as Medi-Cal in California – is the single largest payer of maternity care in the country. So, if California fought the proposed abortion reporting requirements, billions of dollars in Medicaid funding that provides critical reproductive healthcare services would be at risk. 

The state didn’t immediately release figures showing how many Californians rely on Medi-Cal for family planning or how much money would be at stake. But Medi-Cal’s family planning funds pays for about 39 percent of all births in the state. In total, Medi-Cal covers about 14.2 million Californians, according to a June 2024 report. Medi-Cal brought in $85 billion in federal funds in fiscal year 2021–2022. 

Medicaid operates as a state-federal partnership, with the federal government paying a percentage of the costs. And in exchange, states have to comply with minimum requirements set forth by the federal government.

Some examples of minimum requirements include providing mandatory benefits such as transportation to medical appointments; maintaining programs for preventing and detecting Medicaid fraud; and reporting immunization figures and annual pediatrician visits. Project 2025 seeks to establish abortion surveillance as another minimum requirement.

Duffy estimates Medi-Cal spends multiple billions annually on reproductive health, considering the costs of comprehensive services like contraceptives, counseling, reproductive health education, prenatal care, labor and delivery, postpartum care, STI and cancer testing, and infertility treatments.

“If a state like California decided to not comply with those abortion reporting requirements, it could lose billions of dollars and would likely hamstring the ability of the state to provide sexual and reproductive healthcare services,” Duffy said. “Because while I think that there are states that would try to compensate with state funds, it’s just a lot of money to make up and that it could potentially be really devastating.”

Duffy noted that the proposal could increase surveillance of individuals seeking abortions, particularly targeting vulnerable populations. The fear of being monitored or reported could deter these groups from seeking necessary healthcare, increasing health risks, she said, adding that it can also heighten the risk of legal repercussions for both patients and providers, further marginalizing those already facing systemic inequalities. 

“Those disproportionately impacted by the provisions in Project 2025 are the same folks that are disproportionately impacted by abortion bans: It’s communities of color, it’s young people, it is LGBTQ+ individuals.”

Fear of being monitored—in the clinic and beyond

Josie Urbina, an OB-GYN at San Francisco General Hospital and a research fellow at the University of California, San Francisco, said some individuals are more prone to pregnancy complications due to social determinants like low socioeconomic status, living in urban areas, or exposure to toxins. These factors, along with pre-existing conditions such as diabetes, heart disease, high blood pressure, and chronic stress, contribute to poor outcomes. 

Research from the University of California also found that while receiving an abortion does not negatively affect women’s health, being denied one leads to worsened financial, health, and family outcomes. 

“And what we’ve seen sometimes for some of our patients who have these comorbidities is that they’re more susceptible to stillbirth, hemorrhage, preeclampsia and eclampsia,” Urbina said.  “And that can lead to complications that are life threatening, where a patient loses their life because of the severity of the medical condition that worsens with the progression of a pregnancy.”

In recent years, abortion has increasingly become criminalized in the United States, with a wave of restrictive laws and policies sweeping across state lines. Following the overturning of Roe v. Wade, many states enacted strict abortion bans, with some imposing severe penalties, including lengthy prison sentences, for healthcare providers who perform abortions.

These bans also create a chilling effect on those seeking care, as well as on the medical professionals who may fear prosecution. This trend has resulted in a patchwork of abortion access across the country, as the legality of the procedure and the risk of criminalization vary dramatically depending on geographic location.

Hayley Tsukayama, associate director of legislative activism at the Electronic Frontier Foundation, said that the language used in Project 2025’s abortion surveillance proposal is framed to “overhaul” the medical system in a way where there will be more integrated data sharing, including intimate information ending up in the hands of data brokers where there’s room for possible data misuse.

“There isn’t a lot of talk about consent or patient knowledge in this document. So it certainly opens up doors to the possibility of more data sharing and possibly more scrutiny on the way that data flows,” she said. “The data that will be collected can get sent to data brokers who can re-identify information pretty quickly and paint a picture of your life.”

This has already happened with period-tracking apps that share data with Facebook and Google without users’ consent. If abortion data were similarly exposed, it could lead to serious privacy violations and unintended consequences, including harassment, discrimination, or even legal action against patients, Tsukayama said. 

 “We’re already in a supercharged, data-driven ecosystem,” she said. “And we’re going to see that increase.”

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California legislators just sent Gov. Gavin Newsom more than a dozen bills regulating artificial intelligence, testing for threats to critical infrastructure, curbing the use of algorithms on children, limiting the use of deepfakes, and more.

But people in and around the AI industry say the proposed laws fail to stop some of the most worrisome harms of the technology, like discrimination by businesses and government entities. At the same time, the observers say, whether passed bills get vetoed or signed into law may depend heavily on industry pressure, in particular accusations that the state is regulating itself out of competitiveness in a hot field.

Debates over the bills, and decisions by the governor on whether to sign each of them, are particularly important because California is at the epicenter of AI development, with many legislators making pledges this year to regulate the technology and put the state at the forefront of protecting people from AI around the world.

Without question, Senate Bill 1047 got more attention than any other AI regulation bill this year — and after it passed both chambers of the legislature by wide margins, industry and consumer advocates are closely watching to see whether Newsom signs it into law.

Introduced by San Francisco Democratic Sen. Scott Wiener, the bill addresses huge potential threats posed by AI, requiring developers of advanced AI models to test them for their ability to enable attacks on digital and physical infrastructure and help non-experts make chemical, biological, radioactive, and nuclear weapons. It also protects whistleblowers who want to report such threats from inside tech companies.

But what if the most concerning harms from AI are commonplace rather than apocalyptic? That’s the view of people like Alex Hanna, head of research at Distributed AI Research, a nonprofit organization created by former Google ethical AI researchers based in California. Hanna said 1047 shows how California lawmakers focused too much on existential risk and not enough on preventing specific forms of discrimination. She would much rather lawmakers consider banning the use of facial recognition in criminal investigations since that application of AI has already been shown to lead to racial discrimination. She would also like to see government standards around potentially discriminatory technology adopted by contractors.

“I think 1047 got the most noise for God knows what reason but they’re certainly not leading the world or trying to match what Europe has in this legislation,” she said of California’s legislators.

Bill against AI discrimination is stripped

One bill that did address discriminatory AI was gutted and then shelved this year. Assembly Bill 2930 would have required AI developers perform impact assessments and submit them to the Civil Rights Department and would have made use of discriminatory AI illegal and subject to a $25,000 fine for each violation. 

The original bill sought to make use of discriminatory AI illegal in key sectors of the economy including housing, finance, insurance, and health care. But author Rebecca Bauer-Kahan, a San Ramon Democrat, yanked it after the Senate Appropriations Committee limited the bill to assessing AI in employment. That sort of discrimination is already expected to be curbed by rules that the California Civil Rights Department and California Privacy Protection Agency are drafting. Bauer-Kahan told CalMatters she plans to put forward a stronger bill next year, adding, “We have strong anti-discrimination protections but under these systems we need more information.”

Like Wiener’s bill, Bauer-Kahan’s was subject to lobbying by opponents in the tech industry, including Google, Meta, Microsoft and OpenAI, which hired its first lobbyist ever in Sacramento this spring. Unlike Wiener’s bill, it also attracted opposition from nearly 100 companies from a wide range of industries, including Blue Shield of California, dating app company Bumble, biotech company Genentech, and pharmaceutical company Pfizer.

The failure of the AI discrimination bill is one reason there are still “gaping holes” in California’s AI regulation, according to Samantha Gordon, chief program officer at TechEquity, which lobbied in favor of the bill. Gordon, who co-organized a working group on AI with privacy, labor, and human rights groups, believes the state still needs legislation to address “ discrimination, disclosure, transparency, and which use cases deserve a ban because they have demonstrated an ability to harm people.”

Still, Gordon said, the passage of Wiener’s bill marked important progress, as did the passage of  Senate Bill 892, which sets the standards for contracts government agencies sign for AI services. Doing so, author and Chula Vista Democratic Sen. Steve Padilla told CalMatters earlier this year, leverages the government’s buying power to encourage safer and more ethical AI services.

While some experts criticized Wiener’s bill for what it failed to do, the tech industry has gone after it for what it does. The measure’s testing requirements and associated enforcement mechanisms will kneecap fast-moving tech companies and create a chilling effect on code sharing that inhibits innovation, big tech companies like Google and Meta have said.

Given the industry’s power in California, this criticism is the proverbial elephant in the room, said Joep Meindertsma, CEO of Pause.ai. Pause.ai is a proponent of regulating AI, endorsing Wiener’s bill and even organizing protests at the offices of California-based companies including Meta and OpenAI. So Meindertsma was happy to see so many regulatory bills clear the legislature this year. But he worries they will be undermined by the tension between a desire to regulate AI and a desire to win the race — among not jut companies but entire countries — to have the best AI. Regulators in California and elsewhere, he said, want to have it both ways.

“The market dynamic between countries that are trying to stay ahead of the competition, trying to avoid regulating their companies too much over fear of slowing down while the others keep racing, that dynamic is the issue that I feel is the most toxic in the entire situation,” he said.

There are already signs that industry pressure could prevail, at least against Wiener’s bill.

Several Democratic members of California’s Congressional delegation have called on Newsom to veto the bill. Former House Speaker Nancy Pelosi, who represents San Francisco, has also come out against it. 

In recent weeks, Newsom seems to have leaned into AI, raising questions over how much appetite he has to regulate it. The governor showed great interest in using AI to solve problems in the state of California, signing an agreement with AI powerhouse Nvidia last month, launching an AI for tax advice pilot program in February, and on Thursday introducing an AI solution aimed at connecting homeless people with services. When asked directly about Wiener’s bill in May, Newsom equivocated, saying that lawmakers must strike a balance between responding to calls for regulation and overdoing it.

The sleeper hits of this year’s AI legislation

Some bills that were more targeted — and significantly less publicized — than Wiener’s 1047 did find success in the legislature. 

SB 942, would require companies to supply AI detection tools at no charge to the public so they can tell the difference between AI and reality. It was introduced by Democratic Sen. Josh Becker of Menlo Park. 

SB 896 by Democratic Sen. Bill Dodd of Napa would force government agencies to assess the risk of using generative AI and disclose when the technology is used.

Other AI bills passed this legislative session are designed to protect children, including one that makes it a crime to create child pornography with generative AI and another that requires the makers of social media apps to turn off algorithmic curation of content to users under age 18 unless they get permission from a parent or guardian. Children would instead by default see a chronological stream of recent posts from accounts they follow. The bill also limits notifications from social media apps during school hours and between midnight and 6 am.

A trio of bills passed last week aim to protect voters from deceptive audio, imagery, and video known as deepfakes. One bill goes after individuals who create or publish deceptive content made with AI and allows a judge to order an injunction requiring them to either take down the content or pay damages. Another bill requires large online platforms such as Facebook to remove or label deepfakes within 72 hours of a user reporting it, while yet another requires political campaigns to disclose use of AI in advertising.

Also on Newsom’s desk are bills that would require creatives to get permission before using the likeness of a dead person and prohibit use of digital replicas in some instances. Both of those bills were supported by the actors union SAG-AFTRA.

Which bills didn’t pass

In lawmaking what fails to pass, like Bauer-Kahan’s anti AI discrimination bill, is often just as important as what advances.

Case in point: AB 3211, which would have required AI makers to label AI-generated content. It sputtered out  despite support from companies including Adobe, Microsoft, and OpenAI. In a statement shared in social media on Tuesday, bill author Democratic Assemblymember Buffy Wicks of Oakland said it’s unfortunate that the California Senate did not take up her bill that “was model policy for the rest of the nation.” She said she plans to reintroduce it next year.

The labeling bill and Bauer-Kahan’s bill are two of three measures flagged as key by European Union officials who advised California lawmakers behind the scenes to adopt AI regulation in line with the EU’s AI Act, which took five years to create and went into effect this spring. Gerard de Graaf, director of the San Francisco EU office, visited the California Legislature to visit with authors of AB 3211, AB 2930, and SB 1047 in pursuit of the goal of aligning regulation between Sacramento and Brussels.

In an interview with CalMatters this spring, de Graaf said those three laws would accomplish the majority of what the AI Act seeks to do. This week, de Graaf had high praise for his California counterparts, saying he thinks state lawmakers did some serious work to pass so many different AI regulation bills, that they’re at the top of their game, and that they succeeded in being a world leader in AI regulation this year. 

“This requires a thorough understanding and that’s not present in many legislatures around the world and in that sense California is a leader,” he said. “The fact that California achieved as much as it did in a year is not an insignificant feat and this will presumably continue.”

Despite advising lawmakers about two bills that failed to pass the possibility of Senate Bill 1047 facing a veto, de Graaf said he sees convergence with EU AI policy in the passage of a bill that requires AI developers to disclose information about datasets used to train AI models.

The fact that the bill meant to protect citizens from discriminatory AI didn’t pass is a really disappointing reflection of the power of tech capital in California politics, said UC Irvine School of Law professor Veena Dubal, whose research has dealt with technology and marginalized workers.

“It really feels like our legislature has been captured by tech companies who by their very structure don’t have the interest of the public at the forefront of their own advocacy or decision making, because they’re profit making machines,” she said.

She thinks events of the past legislative session show that California will not be a leader in regulating generative AI because the power of tech companies is too unwieldy, but she does see signs of promise in bills passed to protect kids from AI. She’s encouraged by digital replica bills supported by SAG-AFTRA passed, a reflection of worker strikes in 2022, and that lawmakers made clear that using generative AI to make child pornography and curate content for kids without parental consent should be illegal. What’s more challenging it seems is passing laws that require any degree of accountability. It shouldn’t be debatable whether people deserve protections from civil rights violations, and she wants lawmakers to label other uses of AI unacceptable, like using AI to evaluate people in the workplace.

“The fact that those laws (protecting kids) passed isn’t surprising, and my hope is that their passage paves a way for stopping or banning use of AI or automated decisionmaking in other areas of our lives in which it is clearly already wrecking harm,” she said.

Lea esta historia en Español

Nearly four years after California voters approved better wages and health benefits for ride-hailing drivers and delivery workers, no one is actually ensuring they are provided, according to state agencies, interviews with workers and a review of wage claims filed with the state.

Voters mandated the benefits in November 2020 when they approved Proposition 22. The ballot initiative was backed by gig-work companies that wanted to keep their workers classified as independent contractors and were resisting a 2019 state law that would have considered them employees. Prop. 22 stipulated that gig workers would remain independent contractors but be treated better.

The state Industrial Relations Department, which handles wage claims, now tells CalMatters it does not have jurisdiction to resolve those related to Prop. 22, citing a July 25 California Supreme Court ruling that upheld the law and therefore maintains that gig workers are not employees. That effectively passes enforcement responsibility on to the state attorney general, whose office was noncommittal when asked about its plans, saying that it does not adjudicate individual claims but does prosecute companies that systematically violate the law.

The lack of enforcement leaves in limbo workers who in many cases have already been waiting for months or years for the state to resolve their complaints. Workers have filed 54 claims related to Prop. 22 since it went into effect in December 2020. At least 32 of them are unresolved, state records obtained by CalMatters show, although at least two of those are due to workers not following through. 

Of the unresolved claims, one goes back to 2021, several are from 2022 and 2023, and about half are from this year, through May.

Emails included with the claims show that the Industrial Relations Department told one worker it was severely understaffed, and seven others, starting in 2022, that it did not have jurisdiction to help them since they were independent contractors rather than employees.

Although the number of claims filed with the state represent just a fraction of the more than 1 million gig workers in California, they give a glimpse into what happens when workers turn to the state for help instead of the companies that backed Prop. 22. 

Workers say in the claims, and in interviews with CalMatters, that companies such as Uber, Lyft and Instacart failed to provide higher wages and health care stipends under the law, and that the companies’ representatives sometimes act confused or take a long time to handle their requests for Prop. 22 benefits. The gig companies have touted the law as something that has boosted pay and benefits, and have said it has helped gig workers hang on to work they can do whenever they want.

Laura Robinson is among the workers who have had to aggressively pursue what they believe they’re owed under the law. For the past year, she has filed claims with the state and fought two different gig-work companies for different benefits promised under Prop. 22. 

She was making a delivery for Instacart a year ago, she said, when a driver making a U-turn hit her, totaling her car. Now, she said, she has lingering back pain, and has only been able to make a total of a few deliveries over the past several months.

Robinson, who lives in Irvine, tried to get Instacart to retroactively provide her with occupational accident insurance as required under Prop. 22. 

When she first contacted Instacart about the collision, “four or five different (representatives) told me on chat ‘we don’t provide insurance,’ but I told them this is California,” Robinson said. “Finally someone said ‘oh yeah, I know what you’re talking about.’ ” Robinson had some difficulties documenting the accident, because, she said, the responding Torrance Police Department officer rode away on his motorcycle without writing a report. But after about seven months, she finally heard back from Zurich, Instacart’s insurance provider. She received a lump sum, and monthly payments for the time that she has been largely unable to work, according to bank statements and emails from Zurich to her, which she shared with CalMatters.

Instacart spokesperson Charlotte Healow said all the company’s shopper support agents should know about “shopper injury protection” and that there is information in the app about how to go about filing claims. But Robinson showed CalMatters several screenshots of her chats with support agents who either thought she was asking about health insurance or who told her someone would email her back about her situation — which eventually happened, though it took a few tries.

Robinson said she had also struggled to get a smaller gig platform, food delivery app Curri, to comply with the law. Under Prop. 22, ride-hailing and delivery gig companies are supposed to pay her 120% of minimum wage for the time she spends driving, making up for any shortfall in the pay she receives, but Curri had not done so, she said. Not knowing where to turn, she asked a few different state agencies for help, including the attorney general’s office. She even lodged a complaint with the Federal Motor Carrier Safety Administration’s National Consumer Complaint Database. After several months, the Industrial Relations Department scheduled a hearing for her case for Aug. 29. Last week, the department told her the company decided to settle and pay her what it owed, according to emails and a release she signed that she shared with CalMatters. Curri’s marketing director referred CalMatters to the company’s legal department, which did not return three emailed requests for comment.

Robinson saw the upside of Prop. 22 after it passed. She liked being able to continue setting her own hours and saw a bump in her earnings delivering for Grubhub due to the law. But she is now frustrated about how tough it was to figure out who’s supposed to be upholding it. 

“It’s not helpful if it’s not enforced or applied,” she said.

Robinson said the deputy labor commissioner she was in touch with throughout the process of pursuing her claim against Curri told her last week that because Prop. 22 was upheld by the state Supreme Court — effectively ensuring gig workers cannot be considered employees — the department would no longer be handling similar cases because it does not have jurisdiction over independent contractors.

What gig workers are complaining about 

The Prop. 22-related wage claims reviewed by CalMatters were part of a larger set of nearly 200 claims that gig workers filed with the Industrial Relations Department since the law took effect in December 2020. Citing the California Public Records Act, CalMatters sought all wage claims in that timeframe involving gig companies, but the state did not provide any claims against DoorDash, which is one of the biggest of the app-based gig companies. A department spokesperson could not explain why.

Most of the claimants sought delayed or unpaid wages, including adjustments owed under Prop. 22. Others sought health care stipends required under the gig-work law, and one driver said he sought occupational accident insurance but did not receive it.  

The claims also shed light on the mechanics of how app companies are allegedly withholding wages. In them, some gig workers claimed that they were deactivated — kicked off or fired by the app — before receiving all their wages. 

The records also indicate the state had trouble holding app companies to account in a timely fashion. In emails about the claims, some workers frequently asked for updates about their cases and complained about limited communications from the state. This prompted one supervisor in the Industrial Relations Department’s San Francisco office to respond by email on May 30, 2024, seemingly noting that gig workers’ complaints were just a fraction of the array of worker complaints the state fields: “I am working with 40% staff shortage. There are over 3,000 cases, most of which are older than yours, and only seven people (total) to handle them.” The department did not respond to requests for comment on whether this shortfall persists.

Monetary wage claims ranged from about $2 to nearly $420,000. Most — 54% —  were against ride-hailing and delivery giant Uber and 25% were against its rides competitor Lyft. There were 17 claims against grocery-delivery app maker Instacart, seven against food-delivery platform Grubhub, four against Target-owned delivery service Shipt and three against UPS-owned delivery service Roadie. 

The Industrial Relations Department has long tried to resolve gig workers’ wage disputes. The labor commissioner, who heads the department’s Labor Standards Enforcement Division, still has pending wage-theft lawsuits against Uber and Lyft that it filed in 2020 on behalf of about 5,000 workers with wage claims going back to 2017.

Those cases predate Prop. 22, originating during a period when gig workers were misclassified and should have been considered employees under California law, the labor commissioner argues in the wage-theft suits. After Prop. 22 passed, opponents challenged it and the case ended up before the California Supreme Court, which upheld the law in July, effectively affirming that drivers are independent contractors, not employees. A department spokesperson, Peter Melton, said the ruling means the department can no longer handle claims about missing wage adjustments under the earnings guarantee, unpaid health care stipends or other aspects of the law. 

Department representatives made similar statements to workers even before Prop. 22 was upheld, the claims records show. An email response, dated March 26, 2024, from the department to an Uber driver stated: “The Division of Labor Standards Enforcement enforces employment law. We cannot enforce Prop 22 earnings because they aren’t ‘wages’ earned by ‘employees’.”

This echoes the position lawyers for Uber and Lyft took in some of the records when responding to wage claims. They asked the state to dismiss such claims, writing in one email: “As of December 16, 2020, drivers using Lyft’s platform are considered independent contractors by statute and, thus, cannot seek relief under the Labor Code.”

Now that the department has disavowed responsibility for Prop. 22 claims, the question remains: Who will enforce the law?

Scott Kronland, the attorney for Service Employees International Union California who unsuccessfully argued before the state Supreme Court that it should throw out Prop. 22, told CalMatters: “I’ve also heard from drivers that they’re not getting the things they’re promised by Prop. 22.”

Kronland said their recourse, after the ruling, is to press local prosecutors or the attorney general, who have the ability to hold companies liable for unlawful business practices under the state’s Unfair Competition Law. Still, he said “enforcement is something the Legislature could clarify.”

In an unsigned email response to CalMatters’ questions after the state Supreme Court decision, including whether it planned to pursue Prop.-22-related cases against gig-work companies, the attorney general’s office said gig workers can submit complaints at oag.ca.gov/report. The email added: “Although the Attorney General does not represent individual workers or adjudicate individual complaints by holding administrative hearings like (the Department of Industrial Relations), DOJ brings lawsuits to hold accountable companies that systematically break the law, for example through widespread violations of wage and hour standards. Reports or complaints of employer misconduct are an important part of our work.”

When CalMatters previously asked the attorney general’s office for copies of any wage complaints it had received from gig workers thus far, a spokesperson responded that the office was representing the state in its effort to defend Prop. 22 before the California Supreme Court — and referred CalMatters back to the Industrial Relations Department.

What gig companies share about Prop. 22’s impact

Gig companies have said that, due in part to the initiative’s earnings guarantee, workers now make more than $30 an hour. But a May study by the UC Berkeley Labor Center found that, for California ride-hailing drivers, average earnings after expenses, not including tips, is about $7.12 an hour, and for delivery workers, $5.93. With tips, drivers’ average hourly earnings are $9.09 an hour, and $13.62 for delivery workers, the study found. 

To better understand the impact of Prop. 22, CalMatters asked each of the four largest gig companies — Uber, Lyft, DoorDash and Instacart — the following: 

• How much they have spent on delivering on each of Prop. 22’s four main promises:
  • 120% of minimum wage earnings guarantee
  • Health care stipends
  • Occupational accident insurance 
  • Accidental death insurance
• How many gig workers have received each of the promised benefits. 
• Whether they have passed on costs to consumers, and if so, where they account for those customer fees in their public financial filings. 
• How they handle complaints or issues related to their promises.

Lyft said 85% of California Lyft drivers who have driven for the company since Prop. 22 went into effect have received at least one wage “top up” — the additional money drivers receive under the earnings guarantee — through the end of the fourth quarter of 2023, though spokesperson Shadawn Reddick-Smith would not provide specific numbers of Lyft drivers in the state. None of the other companies would give any information on their delivery of the wage guarantee.

Instacart spokesperson Healow said the company has paid out about $40 million in health care subsidies to its delivery workers, which she said number in the tens of thousands in the state. She also said about 11% of California shoppers have become eligible for a health care stipend since Prop. 22 took effect, and that 28% of those eligible shoppers have redeemed their subsidy. 

To qualify for the health care stipends, workers must work at least 15 hours a week each quarter, and be enrolled in health insurance that is not provided by an employer or the government. Because the gig companies won’t share how many workers have received the stipends, CalMatters asked the state health insurance exchange, Covered California, if it had data that might help shed some light. Seven percent of the 1.6 million people who used Covered California reported doing gig work in a 2023 survey, said a spokesperson for the exchange, Jagdip Dhillon.

DoorDash spokesperson Parker Dorrough said that just 11% of eligible couriers used the health care stipend in the fourth quarter of 2023 but that 80% of DoorDash’s delivery workers had health care coverage through another source, such as their full-time job or spouse.

None of the other companies would give any information on their delivery of the stipend. Lyft’s Reddick-Smith said 80% of California Lyft drivers already have health care coverage, including 13% who bought their own coverage (this second group is the set of drivers who qualified for the stipend).

None of the four companies provided the numbers of workers who have used occupational accident or accidental death insurance.

None of the companies would disclose how they account for the fees they charge customers for Prop. 22 expenses, nor are the fees included in their publicly available financial filings. Instacart said it does not charge customers for expenses associated with Prop. 22. Lyft said its per-ride service fee includes a 75-cent “California Driver Benefits Fee.” Uber charges customers a “CA Driver Benefits” fee for each ride and delivery in the state and spokesperson Zahid Arab said the company has “invested more than we collected in fees.”

Uber published a blog post after CalMatters’ questions, saying it has “invested” more than $1 billion in Prop. 22 benefits. Arab would not break down these benefits further. 

As for complaints related to the promises, each of the companies said workers should contact support agents, whom they can usually get in touch with in the app; an Instacart spokesperson said workers can make some claims directly in the company’s app.

Seeing little from Prop. 22

Ride-hailing driver Sergio Avedian last year helped raise public awareness of the lack of Prop. 22 enforcement. Specifically, he homed in on one narrow issue: Under the law, gig-work companies were supposed to adjust for inflation each year the reimbursement they pay to drivers for mileage. Avedian said no such adjustment had taken place for two consecutive years. And as a podcaster and contributor to  the Rideshare Guy, a popular gig-work blog, he had a high profile. Avedian and a fellow eagle-eyed driver started pestering the state’s treasurer’s office, which had not published the adjusted rates as stipulated under Prop 22. The office eventually did so and, the Los Angeles Times reported, put the state’s gig workers on track to get back pay for the mileage expenses — pay potentially worth hundreds of millions of dollars. 

Now, a year later, Avedian is curious about gig-company math again. He has asked Uber some of the same questions CalMatters did — including how the company accounts for the driver-benefits fee it adds on to each ride or delivery. The company’s response to him was similar — it provided few specifics.

Besides his concern about the issue as a driver, Avedian said “as a consumer who is paying into the Prop. 22 fund on every trip or delivery, I would like to know the accounting of where my money is going.”

When the gig companies were campaigning for Prop. 22, they implored voters to “help create a better path forward for drivers.” 

But Avedian and other gig workers in California say their paths have not changed much. Many still complain about low wages, little transparency from the companies and lack of worker protections.

Yasha Timenovich said he has worked as a ride-hailing driver for a decade, first with Uber, now with Lyft.

“I work 12, 13, 14 hours a day,” said Timenovich, who drives in the Los Angeles area. “But the time I sit and wait at LAX is not accounted for.” He said he has to work long hours to try to make sure he has enough earnings. “We’re not completely independent contractors. We’re not employees. We’re sort of a hybrid model of theirs. We’re pretty much nobody.”

He also said he must obtain health insurance through Medi-Cal, California’s health care coverage for low-income residents — which in turn means he doesn’t qualify for the health care stipend. He said every driver he knows “is on Medi-Cal because they can’t afford health insurance. I don’t know anyone who has (the stipend).”

Many drivers voted for Prop. 22, he said. But “what we were told was a lie.”