Big Tech's outsized influence draws state-level pushback
Big Tech’s outsized influence over so many aspects of everyday life has become one of the biggest battlefronts in state legislatures
March 27, 2021, 6:30 PM
7 min read
Share to FacebookShare to TwitterEmail this articleFlorida state Rep. Fiona McFarland, who is sponsoring a digital privacy bill in her office on Thursday, March 25, 2021 at the Florida state Capitol in Tallahassee. Big tech’s outsized influence over society has become one of the biggest battlefronts in state legislatures this year. Lawmakers are taking on tech and social media companies over a wide range of issues, including anti-trust, digital privacy, taxing ad sales, net neutrality and censorship. (AP Photo/Bobby Caina Calvan)
New York state Sen. Michael Gianaris was ecstatic when Amazon named Long Island City in 2018 as a front-runner for its new headquarters, a project that would bring 25,000 jobs and $2.5 billion in construction spending to his district in Queens.
But his support faded quickly when he learned that state and city leaders had promised one of the world's richest companies tax breaks worth $3 billion in secretive negotiations. A public backlash led Amazon to cancel the investment altogether, but to Gianaris the episode still illuminated the massive power of tech companies that dominate their industries, overwhelm traditional businesses and use that leverage to expand their reach even further.
Consumer activists, small business owners and state lawmakers across the U.S. are increasingly calling for measures to rein in companies such as Amazon, Apple, Facebook and Google that wield influence over so 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 making new laws related to Big Tech.
So scores of so-called “techlash” bills are being debated in dozens of statehouses, where lawmakers of both major parties are proposing new regulations related to antitrust, consumer privacy, app store fees and taxes on digital ad sales. Republican lawmakers also are pushing back against 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 set a new legal antitrust standard — '"abuse of dominance" — and allow class-action lawsuits under state laws.
“Our antitrust laws have atrophied and they’re not equipped to handle the 21st century and anti-competitive practices,” he said. “Traditional antitrust enforcement doesn’t work because Big Tech has become too big and too powerful."
Tech companies aren't content to play defense. Their lobbyists are pushing state lawmakers to oppose restrictions they deem onerous. In other cases, the companies are working to write their own, more favorable bills. On many issues, they also would prefer federal legislation over a patchwork of state laws.
Of particular concern to two of the biggest companies is legislation being considered in several statehouses that would limit the ability of Apple and Google to collect large shares of the consumer transactions in their app stores.
Critics say the two leading U.S. smartphone companies use their position as app gatekeepers to fatten their profits with fees and undermine rivals that compete against their own music, video and other services.
Leading the pushback are companies such as Epic, which owns the popular Fortnite video game, Spotify and Match.com. They want to force Apple and Google to let them keep the proceeds from subscriptions and in-app sales without taking a cut.
In an attempt to fend off potential government reforms, Apple last year cut in half its standard 30% commission on app purchases for most developers. Google recently followed suit with cuts set to take effect in July.
State Rep. Regina Cobb, a Republican sponsoring app-store legislation in Arizona, said app makers and their customers are being held hostage.
“That’s a Chicago-style mafia kind of thing: 'You pay us 30 percent or you don’t get to play. We’ll take you off of our platform; your company’s done,'” Cobb said.
