Are You a 'Covered Provider'? Decoding California's 1 Million User Threshold
Not every AI startup is subject to SB 942. Are you over the 1M user mark? Let’s check the math. 📊
The Magic Number: 1 Million
SB 942 and several other California AI laws apply specifically to "Covered Providers." One of the primary metrics for this definition is the number of users. Specifically, if your GenAI system has 1 million monthly active users (MAU) in California, you are covered.
How to Calculate MAU
It sounds simple, but the devil is in the details.
- Geographic Filtering: You must count only users physically located in California. Do you have the telemetry to track this?
- "Active" Definition: Is it a visit? A query? A generated image? The law leans towards "interaction," meaning a user who actually uses the AI features, not just a site visitor.
- B2B vs. B2C: If you sell an API, your "users" might be the businesses, but the law may look through to the end-users.
The "Small Business" Exemption
If you are under this threshold, you may be exempt from the most onerous watermarking and disclosure requirements. However, this is a moving target. If you go viral next month, you become compliant the moment you cross the line.
What If You Are Close?
If you are hovering around 800k or 900k users, it is time to prepare. The cost of retrofitting compliance features (like watermarking) is high. It is cheaper to build them in now than to scramble when you hit 1,000,001.
Conclusion
Know your numbers. The 1 million user threshold is the difference between a startup that can move fast and one that must navigate complex regulatory waters.