The enormous influence of big technologies attracts a rejection at the state level

New York State Senator Michael Gianaris was ecstatic when Amazon named Long Island City in 2018 as the leader for its new headquarters, a project that would generate 25,000 jobs and $ 2.5 billion in construction costs for his district. from Queens.

But his support quickly faded when he learned that state and city leaders had promised tax breaks to one of the world’s richest companies worth $ 3 billion in secret negotiations. A public backlash led Amazon to cancel the investment entirely, but for Gianaris the episode still illuminated the enormous power of tech companies dominating their industries, overwhelming traditional companies, and using that leverage to expand their reach even further.

Consumer activists, small business owners, and state legislators in the US are increasingly calling for measures to control companies like Amazon, Apple, Facebook, and Google that influence much of everyday life.

Normally that task would fall to the federal government. But while the Justice Department and the Federal Trade Commission have filed major antitrust actions against Google and Facebook, both with widespread state support, Congress remains stalled when it comes to crafting new laws related to big technology.

So dozens of so-called “techlash” bills are being debated in dozens of state legislatures, where lawmakers from the two major parties propose new regulations related to antitrust laws, consumer privacy, app store fees, and taxes on the sale of digital ads. Republican lawmakers are also rejecting what they claim without evidence is an attempt to stifle conservative voices. on social media.

Gianaris, a Democrat, is pushing a landmark antitrust bill in the New York Legislature. It would establish a new antitrust legal standard – “abuse of domain” – and allow class action lawsuits under state law.

“Our antitrust laws have atrophied and are not equipped to handle 21st century and anti-competitive practices,” he said. “Traditional antitrust enforcement doesn’t work because great technology has gotten too big and too powerful.”

Tech companies are not content to play defensively. His lobbyists are pressuring state legislators to oppose restrictions they consider onerous. In other cases, companies are working to draft their own more favorable invoices. On many issues, they would also prefer federal legislation over a patchwork of state laws.

Of particular concern to two of the largest companies is legislation being considered in several states that would limit Apple and Google’s ability to collect large chunks of consumer transactions in their app stores.

Critics say the top two US smartphone companies use their position as app gatekeepers to increase their profits with fees and undermine competing rivals for their own music, videos and other services.

Leading the pushback are companies like Epic, which owns the popular video game Fortnite, Spotify, and They want to force Apple and Google to allow them to keep the earnings from subscriptions and in-app sales without taking a cut.

In an attempt to avoid potential government reforms, Apple last year cut its standard 30% commission on app purchases last year for most developers. Google recently did the same with the cuts that go into effect in July.

State Rep. Regina Cobb, a Republican legislation sponsor of the app store in Arizona, said app makers and their customers are being held hostage.

“That’s kind of a Chicago-style mob: ‘You pay us 30 percent or you can’t play. We will remove it from our platform; your business is done, ‘”Cobb said.

Similar legislation is being considered in Georgia, Massachusetts, Minnesota, and Wisconsin. The app store legislation in North Dakota died in February after intense lobbying by both parties. Apple’s chief privacy engineer, Erik Neuenschwander, spoke out against the bill, saying it “threatens to destroy the iPhone as you know it” by requiring changes that would undermine privacy and security.

Moves by three states (California, Nevada, and Virginia) to enact their own comprehensive data privacy laws have encouraged others to follow suit.

In Oklahoma, a bipartisan bill would require companies to obtain prior consent before collecting and selling data from state residents. In Florida, the legislation would give consumers ownership of digital information that companies collect through their spending, social interactions, news habits, and travel.

The Florida bill would require companies to disclose the data they are collecting, force them to delete it at the consumer’s request, and prohibit them from sharing or selling it when instructed not to do so. They could be sued if they don’t comply.

One of its backers, Republican State Representative Fiona McFarland, said it’s a response to the ubiquitous collection, sharing and sale of personal information.

“It’s everything from these apps on our phones, to payment exchanges and calendars,” he said.

Facebook says it supports some online privacy laws and provides as much information as possible while invoices are being drawn up. The Internet Association, the top tech industry trade group representing Amazon, Facebook, Google and dozens of other tech companies, declined to comment.

In California, a bill called the anti-eavesdropping law seeks to limit how smart speakers can potentially intrude on privacy. His sponsor, Republican Assemblyman Jordan Cunningham, unplugged a smart device in his bedroom six months ago after it was turned on without warning.

“The only thing preventing all these recordings from being in the hands of the government is a search warrant,” he said. “These things are hacked all the time, so you know, your data can end up in Russia.”

His bill would expand existing limitations on smart TVs and require companies like Amazon, which markets Echo smart speakers, to obtain permission before they can record, transcribe or sell information from any conversation.

The disruption of traditional businesses by companies, and the tax revenue they once provided to governments, has also not gone unnoticed.

This year, Maryland lawmakers overruled a veto by Republican Gov. Larry Hogan to create a nation’s first law taxing digital advertising. The measure, initially passed last year, has prompted other states, including Connecticut, Indiana, Massachusetts, Montana and New York, to consider similar legislation.

Supporters say the law seeks to modernize the state’s tax system and make prosperous tech companies pay their fair share. It would assess the tax on income tech companies generate from digital ads within the state, raising roughly $ 250 million a year for education.

“Companies like Amazon, Facebook and Google have seen their profits increase dramatically during the COVID-19 pandemic as our Main Street businesses struggle to keep up,” said Maryland Senate President Bill Ferguson, a Democrat who sponsored measure.

Opponents have challenged the law in federal court and say it violates the Internet Tax Freedom Act, which prohibits states from imposing “multiple and discriminatory taxes on electronic commerce.”

The wave of state legislation follows growing public awareness of the power of big technology and the growing influence of business, said Samir Jain, policy director at the Washington, DC-based Center for Democracy and Technology. .

“With that has come a growing backlash against tech companies in terms of the power they have and the ways they wield it,” he said.


Calvan reported from Tallahassee, Florida; Gordon reported from Washington, DC


Associated Press writers Jonathan J. Cooper in Phoenix, Arizona; Michael Liedtke in San Ramon, California; Barbara Ortutay in Oakland, California; and Brian Witte in Annapolis, Maryland, contributed to this report.


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