Why the next big tech battles are happening in capitals

Google, Apple and others are hiring local lobbyists and digging into the details of proposed legislation, state representatives said. Technology companies are faced with possible regulations that would limit the reach of their platforms, reduce revenues with taxes, or force them to allow additional privacy disclosures.

While federal lawmakers have held hearings and debates on policies to regulate technology companies, debates and votes may take place in states first. If passed, state laws matter because they can become de facto national standards without federal action, such as with the 2018 California Privacy Act, which gave consumers both the right to access personal information that companies collect from them and the right to to request that information. are removed and not sold.

Facebook Inc.

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was initially against the California measures, but supported them after they took effect. Companies such as Microsoft Corp.

have chosen to comply with the new rules across the country.

“So much has happened since California passed the original [data] privacy act, ”said Sam McGowan, a senior analyst with policy research firm Beacon Policy Advisors LLC. Lawmakers’ concerns now extend far beyond privacy to topics like anti-competitive behavior and how social media companies control content, he said.

In Arizona, a closely monitored bill regarding app store payments has passed the state house and is expected to be discussed in the Senate in the coming weeks. The legislation would exempt some software developers from fees Apple and Google charge on apps, which could be up to 30% of the revenue of paid apps and in-app purchases. App developers could let people pay directly through the payment system of their choice. The bill would apply to app developers and consumers in Arizona, but could set greater precedent.

Republican State Rep. Regina Cobb, the legislation’s lead sponsor, said the bill is about “consumer protection and transparency,” and said a final vote could take place within the next month. Ms. Cobb said she believes there are enough votes to pass the bill in the narrowly divided Senate. Apple and Google have lobbied hard against the bill, Ms. Cobb said.

Apple declined to comment on lobbying in Arizona. A company spokeswoman said Apple “has created the App Store as a safe and trusted place for users to download their favorite apps and a great business opportunity for developers. This legislation threatens to break that highly successful model and undermine the strong protections we have put in place for customers. “

Google declined to comment on the legislation or lobbying efforts in the state.

In February, lawmakers in Maryland passed legislation that would tax the revenues of companies like Google, Facebook and Amazon.com Inc.

of digital advertisements. This month, Virginia Gov. Ralph Northam signed new privacy rules similar to California’s, with additional limits on the consumer data companies can collect online.

Washington State has enacted privacy laws. Some states have focused on moderating online content, with Texas proposing a measure that would ban social media companies from banning users based on their views. New York State has recently looked into changing its antitrust laws to make it easier to sue technology companies.

States may have an easier way to pass laws than Congress, Mr McGowan said, because many state governments have fairly short legislative sessions lasting a few weeks or months, meaning bills can quickly pass through committees and to votes.

The tremendous growth and influence of technology companies during the pandemic has increased urgency at the state level, said Robert Siegel, a management professor and business strategy researcher at Stanford University.

The five largest companies – Amazon, Google, Facebook, Apple and Microsoft – all saw staggering growth in 2020, as Americans and home-based businesses switched to online shopping, software and cloud computing services, smart devices and video streaming. The combined sales of those companies grew by a fifth to $ 1.1 trillion, and their collective market capitalization rose to $ 8 trillion during the pandemic.

Given the stakes and what some see as the inevitability of more regulation, technology companies need to take a more active role in influencing legislation, Mr Siegel said. Facebook and Google are among the tech companies that are now advocating federal rules on issues like data privacy and artificial intelligence.

“Major technology companies have no choice but to join,” said Mr Siegel. “So much money has been made by these companies, and everyone has focused on them. They have a size and scale and reach that no one has. “

Will Castleberry, Facebook’s vice president of state and local policy, said the company will “continue to support accounts that are good for consumers, but a patchwork of privacy does not provide the consistency or clarity that consumers or businesses need. Therefore, we hope that Congress will pass a national privacy law. “

Technology companies have recently increased legislative spending at various levels of government. Facebook and Amazon outperformed any other US companies in the federal lobby last year, The Wall Street Journal reported in January.

Facebook spent nearly $ 20 million, about 18% more than the previous year, while Amazon spent about $ 18 million last year, an increase of about 11%. Apple announced $ 6.7 million in lobbying spending, down from a record $ 7.4 million in 2019, and Google also reported a drop by spending $ 7.5 million. Google and Facebook are facing multiple antitrust lawsuits, and Amazon and Apple have been the subject of preliminary investigations that could continue under Biden’s government.

States also use courts to seek change. A Colorado-led coalition of attorneys general filed an antitrust suit against Google in December over its dominance in online search. Meanwhile, California is investigating how Amazon is treating sellers in its online market, and authorities in Connecticut are investigating how Amazon sells and distributes digital books.

Amazon declined to comment.

Write to Sebastian Herrera at [email protected] and Dan Frosch at [email protected]