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California Set to Lead US in Regulating AI Companion Chatbots

Cansin Cengiz

11 Sep 2025 — 2 min read

California Set to Lead US in Regulating AI Companion Chatbots

The California State Assembly has moved decisively towards regulating AI-powered companion chatbots, passing Senate Bill 243 (SB 243) with bipartisan support. This landmark bill, designed to protect minors and vulnerable users from potential harm, now heads to the state Senate for a final vote. If approved and signed by Governor Gavin Newsom, the law will take effect on January 1, 2026, making California the first US state to require comprehensive safety protocols for AI chatbot operators.

Key Provisions of SB 243

Clear Restrictions: The bill targets AI chatbots that provide adaptive, human-like responses to users’ social needs. It prohibits these bots from engaging in conversations about suicidal ideation, self-harm, or sexually explicit content.
Transparency Measures: Platforms must issue frequent alerts—every three hours for minors—reminding users that they are interacting with an AI, not a real person, and encouraging them to take breaks.
Annual Reporting: Companies offering companion chatbots, including major players like OpenAI, Character.AI, and Replika, must submit annual transparency reports detailing their compliance with the law.
Legal Accountability: Individuals injured by violations may file lawsuits for damages (up to $1,000 per violation), injunctive relief, and attorney’s fees.

What Prompted the Legislation?

SB 243 gained urgency after the tragic death of teenager Adam Raine, who took his own life following extended discussions with an AI chatbot. The bill also responds to reports that some AI systems allowed inappropriate "romantic" or "sensual" conversations with minors. These incidents have intensified calls for stricter oversight of AI platforms nationwide.

Growing Regulatory Focus on AI and Child Safety

Across the US, regulators are increasingly scrutinizing AI’s impact on children:

The Federal Trade Commission is preparing to investigate how chatbots affect children’s mental health.
Texas has launched probes into Meta and Character.AI for allegedly misleading mental health claims.
US senators are investigating big tech companies over their AI chatbot practices with minors.

Industry Pushback and Compromises

While SB 243 initially included stricter measures—such as bans on addictive "variable reward" engagement tactics—some provisions were softened in response to industry concerns about feasibility and excessive administrative burden. Still, the bill balances immediate risk mitigation with the ongoing need for innovation, according to its sponsors.

California is also considering SB 53, a separate AI safety bill with broader transparency requirements. Major tech firms have largely opposed stricter state-level rules, favoring lighter federal frameworks. However, only Anthropic has openly supported SB 53 among leading AI companies.

What Happens Next?

Should the California Senate approve SB 243, and Governor Newsom sign it, new safety standards for AI companion chatbots will begin in January 2026. Annual reporting requirements will follow from July 2027.

Implications for Businesses and Developers

AI companies operating in California will need to:

Implement robust safety features to prevent harmful or inappropriate chatbot interactions
Provide clear, recurring disclosures to users—especially minors
Prepare for annual compliance reporting and potential legal challenges

For businesses leveraging AI chatbots, especially those targeting younger audiences or vulnerable groups, now is the time to assess risk, update safety protocols, and ensure transparency in platform design.