As Congress Dithers, States Step In to Set Rules for the Internet

Critics of the state regulations warned that tech companies weren’t the only ones that would have to maneuver through the patchwork of rules. “For consumers, this means confusion,” said Daniel Castro, a vice president of the Information Technology & Innovation Foundation, a think tank sponsored by tech companies.

Apple and Google declined to comment. Jodi Seth, a spokeswoman for Amazon, pointed to an April blog post from the company’s policy executive Brian Huseman, who said the state laws risked creating a hodgepodge of regulations that wouldn’t serve users well.

Will Castleberry, Facebook’s vice president of state and local public policy, said that instead, the social network largely backed more federal legislation. “While we support state efforts to address specific challenges,” he said in a statement, “there are some issues, like privacy, where it’s time for updated federal rules for the internet — and those need to come from Congress.”

To fight against the splintering rules, the tech companies have gone on the offensive. While data on state lobbying is inconsistent and often underreported, Google, Amazon and Facebook funneled a combined $5 million into those efforts in 2019, according to the National Institute on Money in Politics, a nonprofit. The companies also increased their lobbying ranks to dozens in state legislatures compared with skeletal forces five years ago.

Some of the companies have also recently sent top engineers to kill state proposals. In February, Apple’s chief privacy engineer, Erik Neuenschwander, testified in a North Dakota Senate hearing to oppose a bill that would let app developers use their own payment systems and bypass Apple’s App Store rules. The bill died a week later in a 36-to-11 vote.

Even so, states have barreled forward.

Maryland lawmakers in February overrode their governor’s veto of a new tax on sites like Facebook and Google. The tax, the first aimed at the business of behavioral advertising, takes a cut of the money that the companies make from the sale of ads shown in Maryland. One analysis projected that it would raise up to $250 million in its first year, a fraction of Facebook and Google’s combined $267 billion in annual revenue, but a real threat if replicated across states.

Trade groups for Google, Amazon and Facebook tried to stop the tax. They hired a well-connected political consultant to argue that it would hurt small businesses. When that failed, the trade groups sued to block it. The litigation is pending.