The California Privacy Protection Agency, the nation's first governing body to enforce consumer privacy protections, is retreating from an attempt to regulate artificial intelligence and other forms of computer automation.

The agency was under pressure from business groups, legislators, and Governor Newsom, to back away from rules it drafted.

In a prior draft of the rules, businesses would have had to conduct risk assessments before using or implementing behavioral advertising.

Behavioral advertising is used by companies like Google, Meta, and TikTok, and their business clients.

It can perpetuate inequality, pose a threat to national security, and put children at risk.

In a unanimous vote, the Agency's board watered down the rules, which impose safeguards on AI-like systems.

The changes approved in May mean the agency's draft rules no longer regulate behavioral advertising, which targets people based on profiles built up from their online activity and personal information.

The revised draft rules also eliminate use of the phrase artificial intelligence, and narrows the range of business activity regulated as automated decision-making, which also requires assessments of the risks in processing personal information and the safeguards put in place to mitigate them.

Consumer advocacy groups worry that the recent shifts mean the agency is deferring excessively to businesses, particularly tech giants.

Opponents of those rules say they would be costly to businesses and potentially stifle innovation.

Supporters of stronger rules say the narrower definition of automated decision-making allows employers and corporations to opt out of the rules by claiming that an algorithmic tool is only an advisor to human decision-making.

The draft rules retain some protections for workers and students in instances when a fully automated system determines outcomes in finance and lending services, housing, and health care, without a human in the decision-making loop.

Companies must comply with automated decision-making rules by 2027.

For CalMatters, I'm Khari Johnson.