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Hi and welcome to TechScape. Nick Robins-Early and Dara Kerr here, filling in for your usual host Blake Montgomery who is out on vacation. We’ll be talking about the fight over a proposed billionaire tax in California, the UK’s social media ban and SpaceX making a big buy in the AI arms race.

Big week for the California ‘billionaire tax’

The California wealth tax showdown comes to a head this week. After gathering more than double the necessary number of signatures to qualify for the November ballot, there’s still uncertainty that the proposal for a one-time tax on billionaires will make it to voters this fall.

This comes even after back-room dealing last week that led the proposal’s proponents to drop the tax from 5% of the wealth of any California resident worth more than $1bn down to a levy of 2%.

Tech billionaires have been spending big and lobbying state lawmakers to block the measure. Silicon Valley moguls, including former Google executives Sergey Brin and Eric Schmidt, have donated tens of millions of dollars to Super Pacs aimed at defeating the proposal. Crypto titan Chris Larsen launched an attack ad in May called “Reckless”, which warns the tax “will backfire and hurt you”.

Other tech billionaires, like Google co-founder Larry Page, Meta co-founder Mark Zuckerberg and Donald Trump’s AI and crypto czar, David Sacks, have already fled California or are making moves to leave. And more have funded efforts to kill the tax, including Palantir co-founder Peter Thiel, Ring founder James Siminoff, DoorDash CEO Tony Xu and Stripe CEO Patrick Collison.

Gavin Newsom, the state’s tech-friendly governor, has vowed to quash the proposal. He has said such state-level wealth taxes “drive a race to the bottom” and will chase billionaires out of California and strip the state of revenue. The measure is backed by the Service Employees International Union-United Healthcare Workers West (SEIU-UHW) as a means of funding California’s strained healthcare, food assistance and education programs.

Newsom has reportedly been whipping together a coalition to help him negotiate a deal with the union to withdraw the proposal before California’s secretary of state certifies it by a 25 June deadline. He’s yet to respond to SEIU-UHW’s proposal to back a one-off 2% tax.

David McCuan, a political science professor at Sonoma State University who studies the California ballot measure process, told the Guardian it was likely the union would continue talks.

“From the get-go, SEIU-UHW has designed this measure as a ‘gun-behind-the-door’ to negotiate a better deal,” McCuan said. Rather than “go nuclear in a ballot measure battle that can cost hundreds of millions of dollars, the goal has been to threaten to go to war”.

More on the billionaire’s tax

• California ‘billionaire tax’ makes ballot despite opposition from tech moguls

• Tech billionaires are spending unprecedented sums in California races. Experts say it’s the tip of the iceberg

The UK’s contentious social media ban

The UK presented its plans last week to ban children under 16-years-old from using what the government deems as “high-risk” social media apps – a list that includes TikTok, Instagram, X, YouTube, Snapchat and others – while placing additional restrictions on the use of other tech platforms such as romantic chatbots.

While the policy is set to face judicial review, it is one of the most intensive bans of its kind by any democratic government and part of a growing movement to restrict children’s access to social media. Australia enacted a similar ban last year, with Canada introducing a social media bill to parliament earlier this month and European countries considering their own legislation.

The UK’s ban has set off an intense debate between child safety activists, privacy groups and the tech industry over whether the policy will benefit or harm children. It has created strange bedfellows within those groups, with privacy activists aligning themselves with the big tech companies they have historically criticized. Critics allege that the ban could lead to collecting data on children that could be used for government surveillance and the restriction of their privacy rights.

UK government ministers have also engaged in a lobbying effort to ward off backlash from the pro-tech Trump administration, with British officials saying they spent weeks reassuring the White House that the policy was not an attack on the US tech industry.

Young Britons that would actually be impacted by the ban expressed skepticism to the Guardian that it would be effective, even as they agreed that the addictive nature of social media posed a problem for their generation:

“Many teenagers use social media for creative outlets, education, and support networks, not just entertainment. The ban raises questions about where the line is drawn between protecting young people and restricting their freedoms,” said 16-year-old Leo, from Cumbria.

More on the UK social media ban:

• ‘It makes no sense’: 16- and 17-year-olds on UK social media ban

• UK ministers lobby Trump to avert backlash against social media ban

SpaceX’s big AI purchase

Days after SpaceX went public in the biggest IPO of all time, the rocket, artificial intelligence and satellite internet company announced that it had agreed to buy the AI startup Cursor for $60bn. The acquisition could help SpaceX and its subsidiary xAI become a more serious contender in the AI race, where it has lagged behind rivals such as Anthropic and OpenAI.

Cursor focuses on AI that helps write code, which has proven to be an incredibly lucrative application for the technology. Anthropic, which makes Claude, rapidly rose to the front of the pack in the AI race after releasing its widely-used coding tools late last year.

Prior to acquiring Cursor, xAI’s attempts at coding products struggled compared with competitors. The company’s AI model, Grok, also failed to gain the same level of mainstream adoption and use within enterprise businesses as Claude or OpenAI’s ChatGPT. xAI has meanwhile faced numerous scandals and lawsuits related to Grok, including the chatbot generating sexualized nonconsensual images of women and children.

Although Elon Musk has struggled to keep pace with other frontier AI labs, SpaceX’s acquisition of Cursor opens up the possibility that he could essentially buy his way into the competition. SpaceX’s enormous market valuation – it eclipsed Amazon at one point last week to become the world’s fifth most valuable company – has given Musk even more power to build out the company’s AI capabilities.

Whether SpaceX can successfully incorporate AI products and services into its business remains a key question for the company, especially as it makes a big bet on building data centers in space.

Read more: SpaceX overtakes Amazon to become world’s fifth most valuable company

The wider TechScape

• New York City House primary emerges as key battleground in ‘AI civil war’

• Over-reliance on chatbots can diminish critical-thinking skills, study finds