Big Tech draws state-level pushback
Influence of social media companies becomes a foil as both Democratic and GOP legislators press for action.
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.
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.
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 appstore 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.