This is one of the rare times Newsom actually did the right thing with his veto power.
That bill was written by/for big AI companies to secure their hold on consumer AI and squeeze out open source R&D. If it had passed, the only people who could afford AI R&D would be already-established, rich, greedy corporations with no regard for humanity past the wealth they can extract therefrom.
Sure, the bill would still be bad for big AI companies in the sense that it would increase their liability and operational costs, but that'd be a small price to pay to eliminate their only competition: free, community-driven, open source development.