Why are the next big tech battles in state capitals?

According to state representatives, Google, Apple and other local lobbyists are adopting and delving into the details of proposed legislation. Technical companies face potential rules that will restrict the reach of their platforms, shrink revenue with taxes or force them to facilitate additional disclosure of privacy.

While federal lawmakers have held hearings and are discussing policies to regulate technology ventures, debates and votes can only take place in states. If enacted, state laws are important because they could become de facto national standards in the absence of federal action, as with the California Privacy Act of 2018, which gave consumers the right to access personal information that businesses own collected, and the right to request the data. removed and not sold.

Facebook Inc.

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initially opposed the California measures, but supported them after they went into effect. Companies like Microsoft Corp.

chose to adhere to the new rules across the country.

‘So much has happened since California passed on the original [data] privacy law ”in 2018, says Sam McGowan, a senior analyst at policy research firm Beacon Policy Advisors LLC. Legislators’ concerns now extend far beyond privacy over topics such as competitive competition and how social media companies police the content, he said.

In Arizona, a meticulous bill regarding payments in the app store has cleared the State House and is expected to be discussed in the Senate in the next few weeks. The legislation would exempt some software developers from fees paid by Apple and Google on apps, which could fetch up to 30% of sales from paid apps and in-app purchases. App developers will be able to charge people directly through the payment system of their choice. The bill applies to app developers in Arizona and consumers can still set a greater precedent.

Republican State Representative Regina Cobb, the main sponsor of the legislation, said the bill was 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 strongly opposed the bill, said Ms. Cobb said.

Apple declined to comment on lobbying in Arizona. A company spokesperson said that Apple ‘created the App Store to be a safe and reliable place for users to download the apps they love and an excellent business opportunity for developers. This legislation threatens to break the very successful model and undermine the strong protection we have put in place for customers. ”

Google declined to comment on the legislation or any attempts to lobby in the state.

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

of digital advertising. The Virginia government, Ralph Northam, this month signed new privacy rules similar to those in California, with additional restrictions on the consumer data companies can collect online.

The state of Washington has enacted privacy legislation. Some states have targeted online content moderation, with Texas proposing a measure that bans social media companies from banning users based on their views. The state of New York recently investigated the change in antitrust laws to make it easier to sue technology companies.

McGowan said states have an easier way of passing laws than Congress does, because many state law governments have some short legislative sessions that last several weeks or months, which means bills are quickly passed by committees and voices can move.

According to Robert Siegel, a lecturer in management and a business strategy researcher at Stanford University, the increasing growth and influence of technology enterprises increased during the state-level pandemic.

The top five companies – Amazon, Google, Facebook, Apple and Microsoft – all saw tremendous growth in 2020 when Americans and businesses that were at home turned to online shopping, software and cloud computing services, smart devices and video streaming. The combined revenues of these companies grew by a fifth to $ 1.1 billion, and their collective market capitalization rose to $ 8 billion during the pandemic.

Given the interests and what some see as the inevitability of more regulation, technology companies need to play a more active role in influencing legislation, Siegel said. Facebook and Google are among technology companies now calling for federal rules on issues such as data privacy and artificial intelligence.

“Large technology companies have no choice but to switch,” he said. Siegel said. ‘There’s so much money made by these companies, and it’s everyone who’s paid for it. They have the size and scale and reach that no one has. ”

Will Vice President of Facebook’s State and Local Policy Will Castleberry said the company ‘will continue to support accounts that are good for consumers, but a patchwork approach to privacy does not give the consistency or clarity that consumers or businesses have do not need. Therefore, we hope that Congress will pass a national law on privacy. ”

Technology companies have recently stepped up legislative spending at various levels of government. Facebook and Amazon spent all other U.S. companies in federal lobbying last year, The Wall Street Journal reported in January.

Facebook spent nearly $ 20 million, about 18% from the previous year, while Amazon spent about $ 18 million last year, about 11%. Apple announced $ 6.7 million in lobbying spending, up from a record $ 7.4 million in 2019, and Google also reported a decline and spent $ 7.5 million. Google and Facebook are facing several antitrust lawsuits, and Amazon and Apple are subject to inquiries that could progress further under Biden’s government.

States also use courts to seek change. A coalition of Colorado-led attorneys general filed an antitrust case against Google in December over its dominance in online searches. Meanwhile, California is investigating how Amazon treats sellers in its online marketplace, and Connecticut authorities 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]