States work to rein in tech companies’ influence
New York state Sen. Michael Gianaris was ecstatic in 2018 when Amazon named Long Island City 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 enormous 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 parties are proposing 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 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 anticompetitive 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 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 inapp sales without taking a cut.
In an attempt to fend off government regulations, 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.
Similar legislation is being considered in Georgia, Massachusetts, Minnesota and Wisconsin. App store legislation in North Dakota died in February following intense lobbying by both sides. Apple Chief Privacy Engineer Erik Neuenschwander spoke out against the bill, saying it “threatens to destroy iPhone as you know it” by requiring changes that would undermine privacy and security.
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.