Why are the next big tech fights taking place in state capitals?

Google, Apple and others hire local lobbyists and immerse themselves in the meticulousness of the proposed legislation, according to state officials. Technology companies face potential rules that would slow the reach of their platforms, restrict revenue with taxes, or force them to provide additional privacy disclosures.

Although federal lawmakers have held hearings and discussed policies to regulate technology companies, debates and voting could take place first in states. If passed, state laws are important because they can become de facto national standards in the absence of federal action, as is the case with the 2018 California Privacy Act, which gave consumers both the right to access information. personnel that companies collect as the right to request this data. be deleted 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.

they have chosen to abide by the new rules across the country.

“So much has happened since California approved the original [data] privacy act ”in 2018, said Sam McGowan, senior analyst at policy research firm Beacon Policy Advisors LLC. Lawmakers ’concerns now extend far beyond privacy to issues such as anti-competitive behavior and how social media companies protect content, he said.

In Arizona, a monitored bill regarding payments to app stores has been scrapped by the State House and is expected to be debated in the Senate in the coming weeks. The legislation would free some software developers from the fees that Apple and Google assign to apps, which can generate up to 30% of paid app sales and in-app purchases. Application developers could charge people directly through the payment system they choose. The bill would apply to Arizona-based consumers and app developers, although it could set a broader precedent.

Republican State Representative Regina Cobb, the main sponsor of the legislation, said the bill is about “consumer protection and transparency” and said a final vote could be held next month. Ms. Cobb said she believes there are enough votes to pass the narrowly divided Senate bill. Apple and Google have put a lot of pressure on the bill, Ms. Cobb said.

Apple declined to comment on the town hall in Arizona. A company spokeswoman said Apple “created the App Store to be a safe and trusted place for users to download the apps they love and a great business opportunity for developers. This legislation threatens to break this model. with great success and undermining the strong protections we have established for customers ”.

Google declined to comment on the legislation or any pressure efforts on the state.

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

from digital ads. This month, Virginia Gov. Ralph Northam signed new privacy rules similar to those in California, with limits added to consumer data that companies can collect online.

Washington State has introduced privacy legislation. Some states have aimed at moderating online content, with Texas proposing a measure that would prohibit social media companies from banning users based on their views. Recently, New York State considered changing its antitrust laws to facilitate the demand of technology companies.

States may have an easier way to pass laws than Congress, McGowan said, because many state governments have fairly short legislative sessions that last a few weeks or months, which means bills can open quickly. through committees and voting.

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

The five largest companies — Amazon, Google, Facebook, Apple, and Microsoft — experienced surprising growth in 2020, as Americans and trapped businesses engaged in online shopping, software, and computer services. in the cloud, smart devices and video streaming. The combined revenues of these companies grew one-fifth, to $ 1.1 trillion, and their collective market capitalization rose to $ 8 trillion during the pandemic.

Siegel, according to the bets and what some consider that greater regulation is inevitable, technology companies must play a more active role in the influence of legislation. Facebook and Google are among the technology companies now calling for federal rules on issues such as data privacy and artificial intelligence.

“Big tech companies have no choice but to commit,” Siegel said. “These companies have made so much money, and that makes everyone shoot them. They have a size, a scale and a scope that no one else has.”

Facebook’s vice president of local states and policies, Will Castleberry, said the company “will continue to support bills that are good for consumers, but a privacy approach does not provide the consistency or clarity that consumers need or that is why we expect Congress to pass a national privacy law. “

Technology companies have recently increased legislative spending at different levels of government. Facebook and Amazon outperformed all other U.S. companies in federal pressure last year, The Wall Street Journal reported in January.

Facebook spent about $ 20 million, 18% more than the previous year, while Amazon spent about $ 18 million last year, 11% more. Apple revealed $ 6.7 million in pressure spending, below records of $ 7.4 million in 2019, and Google also reported a drop, investing $ 7.5 million. Google and Facebook face multiple antitrust lawsuits, and Amazon and Apple have been the subject of preliminary investigations that could further advance under Biden’s administration.

States also use the courts to seek change. A Colorado-led coalition of attorneys general filed an antitrust lawsuit against Google in December for its dominance in online search. Meanwhile, California is studying 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 to [email protected] and Dan Frosch to [email protected]