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From Washington to Florida, here are Big Tech’s biggest threats from states

The states are moving much quicker than Congress on privacy, taxes and content moderation.

From Washington to Florida, here are Big Tech’s biggest threats from states

Virginia is expected to be the second state to pass a comprehensive privacy law.

Photo: Ron Cogswell/Flickr

When critics say that Virginia's new privacy bill is "industry-approved," they're not totally wrong, said David Marsden, the state senator who has been working for months to shepherd the law through the state legislature.

It was an Amazon lobbyist who originally presented Marsden with the text of the bill, which hews closely to the failed Washington Privacy Act, versions of which have been pushed by Microsoft across the country.

"Amazon gave us the first cut of a draft to look at that was based on other work," Marsden said.

An Amazon spokesperson called the text a "starting point." "It was an example of strong legislation and, like many other stakeholders, we consulted with the Senator as he refined his bill," the spokesperson said.

Marsden and Virginia delegate Cliff Hayes held meetings with other large tech companies, including Microsoft; financial institutions, including Capital One; and non-profit groups and small businesses, who all wanted desperately to have a hand in shaping the legislation.

But Marsden said he didn't hear much from consumer advocacy groups. That is, until this week, when it became clear that Virginia Gov. Ralph Northam intends to sign the legislation after it passes the Virginia General Assembly, and a barrage of organizations including the U.S. Public Interest Research Group and Electronic Frontier Foundation came out aggressively against the bill, calling it "weak" in a flurry of letters and public statements.

Marsden concedes there's some truth to their concerns. "If it has a business focus to it, it's because the folks who put it together, they're the ones who showed up," he said.

Ed Mierzwinski, a senior director at the U.S. Public Interest Research Group, said he and other national consumer and privacy groups didn't find out about this bill until a few weeks ago. Mierzwinski said the groups sent a letter to Marsden and other lawmakers on Feb. 4 raising concerns with the bill. "We're disappointed that he didn't reach back to us," Mierzwinski said.

The showdown in Virginia is only the latest battle in the influence war between Big Tech and their critics playing out in states across the country. Players on all sides are seeking to push their agenda on privacy, taxes, content moderation and AI through unpredictable and malleable state legislatures, with less-resourced advocacy groups fighting to keep up with tech giants' expansive lobbying efforts. All of it is happening in the void of any federal action from Congress.

"Now, when I talk to state lawmakers or state staff members and say, 'Hey, it's a really bad idea to have a state patchwork of laws,' I just hear silence from them because they're like, 'Well, Congress still hasn't done anything,'" said Billy Easley, a senior tech policy analyst with Koch-backed Americans for Prosperity, which advocates against state-level legislation on privacy and speech.

As the Virginia case highlights, it's hard to predict where the next serious legislation will emerge. But Protocol compiled a list of the tech-related state efforts to watch most closely this year.

The Washington Privacy Act

Washington's tech-friendly privacy legislation has failed to pass for the past two years amid disagreements over whether individuals should be allowed to sue tech companies for privacy violations and whether the bill should address concerns around facial recognition technology. But its supporters are more gung-ho than ever that this could be the year that Washington finally pushes through the privacy bill, which has spawned copycats across the country.

Washington State Sen. Reuven Carlyle told Geekwire last month that he believes the bill has a substantially higher chance of passing following years of negotiations with tech companies, consumer groups and discussions with the Washington attorney general's office.

"Washington is absolutely there," said Tom Foulkes, who leads state policy for BSA, also known as The Software Alliance, which has been working on the Washington legislation.

The Washington Privacy Act would give consumers the right to access, correct and delete data that companies hold on them, while opting out of particular forms of data collection and sale. It does not include the right for individuals to sue companies. Instead, it grants that authority to the attorney general.

Tech companies including Microsoft and Amazon have made it clear that they would prefer Washington's model over California's complex approach, which includes the right for individuals to sue over data breaches, if they have to choose. But the companies are still pushing for federal privacy legislation.

New York privacy legislation

The New York legislature can be hard to predict as it's very dependent on which bills congressional leadership and the governor will get behind their proposals. But this year's legislative session started off with a flurry of privacy and biometrics-related legislation from the House and Senate, and Gov. Andrew Cuomo is proposing a comprehensive law to provide New Yorkers with "transparency and control" over their personal data.

"New Yorkers appreciate the value and convenience that technology has afforded their lives, but progress does not need to come at the expense of basic privacy," Cuomo said in a statement. "New York will act to pass a strong privacy law that safeguards New [Yorkers'] personal information and continues to encourage innovation."

The New York Privacy Act, which was set aside last year as the legislature focused on COVID-19, appears poised to make a comeback. It would create extensive new requirements for businesses to obtain consumers' consent before processing their data. It also includes a private right of action, which tech companies lobby aggressively against.

New York antitrust legislation

New York State Sen. Mike Gianaris believes that New York could become the first state to update its antitrust laws to rein in Big Tech this year. Gianaris made a name for himself through strident opposition of Amazon's plans to build a second headquarters in New York — plans the ecommerce juggernaut eventually scrapped.

After his battle with Amazon, he said he began researching ways to keep the tech giant's "incredibly powerful and unaccountable position from hurting people and other businesses."

"I had very up-close and personal experience with them," Gianaris said.

Gianaris' 21st Century Antitrust Act, which was introduced last summer on the heels of the House Judiciary Committee's congressional hearing with the tech CEOs, would allow the state to sue companies for "abusing" their dominance.

Right now, New York state law requires two parties to conspire to manipulate the market. But many of the monopoly concerns around Big Tech revolve around the companies' efforts to buy up rivals and muscle into new markets.

Adopting an abuse of dominance standard, he said, "opens the door to a lot more enforcement ability, particularly against Big Tech, which transcends so many different markets."

Gianaris said his office consulted with Attorney General Letitia James, who has publicly supported the bill, as well as anti-monopoly groups like the American Economic Liberties Project and Zephyr Teachout, a key antitrust advocate.

He said the tech companies initially ignored his legislation when it came out last year, but as it's become clear that the legislature might have interest in moving it forward, he's heard more pushback from the major tech trade groups.

Online ad taxes

Maryland last week sent shockwaves through the industry when it approved the country's first tax on Big Tech's ad revenue. The law's supporters have claimed that it's an effort to get the tech companies to pay their fair share in taxes, while the companies have threatened that they will ultimately pass the new costs onto Maryland's businesses and individuals buying digital ads.

"The intentionally equivocal claim that internet companies need to 'pay their fair share' is useful only to politicians pushing a political agenda, not to the development of sound public policy," said Robert Callahan, who heads state government affairs for Internet Association. "It is also detached from reality. The internet industry is providing enormous economic benefits to states like Maryland, whether or not companies are actually headquartered there."

A group of tech industry trade associations and the U.S. Chamber of Commerce sued Maryland on Thursday, claiming that the new tax is unconstitutional and violates federal law.

Other states will watch the litigation in Maryland closely as they weigh whether to move forward with their own digital ad taxes. Lawmakers in Indiana and Connecticut have proposed similar taxes.

Gianaris, who is also supportive of a New York bill that would impose similar taxes on digital ads, said New York could renew its push if Maryland succeeds. "If their effort gets upheld, we'll move quickly to do the same here in New York," he said.

Florida's privacy and speech bills

Florida Gov. Ron DeSantis at a press conference this month said that taking on Silicon Valley will be "the most important legislative issue that we're going to have to get right this year and next year." He's since laid out a series of proposals, including privacy legislation and a proposal to ban companies from "deplatforming" political candidates.

While other lawmakers have promoted privacy bills as an effort to protect consumer privacy, DeSantis has explicitly tied his state's privacy legislation to the populist battle against companies including Facebook and Google. "Big Tech platforms have created a surveillance economy, which enriches those platforms by free-riding on consumer data," DeSantis said at another press conference this week. "Worse, Big Tech platforms have made privacy an illusion. The truth is Floridians' most intimate information is collected, analyzed and sold to the highest bidder."

He has also proposed legislation to fine social media companies for deplatforming politicians, a clear rebuke over Twitter, Facebook and YouTube's decisions to bar President Trump from their platforms.

Lawmakers in red states have increasingly proposed legislation aimed at social media's "censorship" of right-wing voices, and that effort has only intensified in the wake of the companies' decision to kick off Trump, Easley said.

"I think it's least 50 to 50 or 60 to 40 that some of these bills pass," Easley said, pointing to Florida's effort as a prime example. But he predicted that those efforts will get tied up in court as companies argue over the First Amendment and the role of Section 230.

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