Overview: California recently enacted the AI Transparency Act, requiring large generative AI providers to implement detection tools and watermarking. This new regulation adds to a growing patchwork of global standards, including mandates from the European Union and New York. As platforms like Google and TikTok also begin automating labels, experts suggest businesses must proactively adopt transparency measures to avoid regulatory penalties and maintain consumer trust.
Nyla Glover
This month, California enacted sweeping new AI transparency regulations, leaving Inland Empire businesses, regional ad agencies, and digital tech providers to navigate a complex web of compliance across local and global markets.
Spearheaded by the California AI Transparency Act (AB 853), the new statewide rules primarily target large generative AI providers boasting over one million monthly users. Rather than placing the burden directly on individual brands, the California mandate requires these tech providers to introduce free public detection tools, optional visible disclosures, and mandatory hidden watermarks in AI-generated media. Tech companies failing to comply will face civil penalties of up to $5,000 for each day of non-compliance.
However, local businesses running broad digital campaigns cannot rely solely on California’s provider-focused rules. For example, internationally, the European Union’s Article 50, taking effect the exact same day, applies directly to any advertiser whose content reaches EU consumers, requiring visible disclosures when AI content mimics real people, places, or events. Domestically, a New York law active since June, holds advertisers accountable for failing to disclose the use of completely synthetic, invented performers in ads reaching New York audiences.
While a recent industry survey reveals that over 90% of consumers want AI-generated video and imagery labeled, disclosing AI use remains a patchwork trust decision for most U.S. ad campaigns. In the absence of a unified national standard, major platforms are stepping in to fill the legislative gaps. Google and TikTok have already implemented automated labeling systems and invisible watermarking, meaning local brands may see their AI-assisted content flagged by the platform regardless of their own disclosure efforts.
This fragmented legal landscape leaves many marketers guessing, a reality Donatas Smailys, co-founder and CEO of Billo, believes will force a shift toward default transparency.
“Nobody is going to wait for three different laws to tell them what to do,” Smailys said, noting that keeping track of separate rules often costs companies more than simply labeling everything. “Brands that check where they stand under all three laws now will know exactly what to do. The ones that skip that step aren’t avoiding the question. They’re just leaving the answer to someone else—a regulator, a customer, or a platform that labels the ad for them.”