Federal inaction is fueling efforts by state legislatures to regulate the tech industry and address consumer digital privacy concerns.
Some of the tech-related issues cleave along party lines, but in other cases there is broad bipartisan support for action. That includes the unanimous passage in 2022 of a California law to regulate how companies design online products that are likely to be used by kids.
The push for more tech and privacy regulation in the states is poised to continue when legislatures reconvene in the new year.
“There’s more attention being paid by state policy makers on these issues than ever before,” says David Edmonson, vice president of state policy and government relations at the trade group TechNet.
Here is a look at several of the biggest issues to watch in 2023:
To date, five states have passed comprehensive data privacy laws. They are: California, Colorado, Connecticut, Utah and Virginia. Generally, the idea behind these laws is to give consumers more control over how their data is collected and used.
California passed the nation’s first such law in 2018, the California Consumer Privacy Act, and then built upon it in 2020 with the California Consumer Privacy Rights Act. That law grants consumers even more power over their data and also creates a state privacy protection agency.
With federal legislation stalled in Congress, the trend of states considering data privacy laws is almost certain to continue in 2023. Chamber of Progress, a tech industry coalition, says states to watch include Wisconsin, Florida, Iowa and Indiana, where bills have previously advanced in at least one legislative chamber.
While data privacy is an issue of bipartisan concern, legislative debates can easily get high-centered over the question of whether to include a private right of action, which allows individuals, not just state attorneys general, to sue under the law. The tech industry has made it clear it opposes the state-by-state approach to digital privacy regulation and would prefer a federal solution.
California once again jumped ahead of other states in 2022 by passing a law (modeled on a law in the United Kingdom) that requires online products that youth are likely to access be designed with their best interests in mind. That means higher privacy settings, restrictions on geo-tracking and limits on certain features such as auto-play.
Before rolling out new online products, companies must complete a Data Protection Impact Assessment. The California law has already inspired a child privacy proposal in New York, and advocates hope the idea gains traction in other states as well in 2023.
Wary of this potential trend, the tech industry is going on the offensive. In December, the trade group NetChoice — whose members include Google, Meta, TikTok and Twitter — announced a lawsuit challenging the constitutionality of California’s Age-Appropriate Design Code Act. “California is expanding government control over online speech by using children’s privacy as a front,” said a NetChoice press release announcing the lawsuit.
Tech groups are also watching to see if California lawmakers revive a bill in 2023 that would allow fines against social media companies that deploy features known to cause kids to become addicted to their platforms.
States could also seek stricter social media restrictions for kids. Texas state Rep. Jared Patterson (R) proposed an outright ban. Utah state Rep. Jordan Teuscher (R) says he is considering legislation to place youth limits on social media.
“It’s a very tricky area because minors have First Amendment rights, as well as adults,” Teuscher told local media.
Republicans and Democrats have varying causes of heartburn over social media companies and what they do and do not allow on their platforms. Republicans get most fired up when content is taken down or users are “de-platformed.” Democrats tend to reserve their outrage for online hate that is not swiftly removed.
That has led to something of a red state-blue state approach to trying to regulate social media companies. Republicans in Texas and Florida recently passed “anti-censorship” laws that are now embroiled in legal challenges. In 2022, Democrats in New York and California enacted laws aimed at addressing hateful content on social media sites. For 2023, New York Democrats are proposing additional social media regulations in response to the Buffalo supermarket mass shooting.
Tech companies don’t like either approach and often assert the First Amendment and Section 230 of the federal Communications Decency Act, which generally protects online companies from legal liability for the content their users post. While the legal and lobbying power of the tech industry is immense, that seems unlikely to dissuade state lawmakers who are getting an earful from their constituents or who don’t want to wait for Congress or the courts.
So expect the split-screen approach to social media content moderation to continue at the state level in 2023.
Right to Repair
As cars and electronics get more sophisticated, fixing them when they break is a more complicated endeavor that often involves software as much as hardware. Enter the “right to repair” movement.
It is a multi-pronged push to require that manufacturers share the same information — diagnostic tools, parts, software updates — with independent repair shops as they do with authorized dealers. Manufacturers and automakers vociferously oppose these measures, citing cybersecurity and intellectual property concerns. Proponents counter that consumers should have the right to fix their products themselves or go to the repair shop of their choice.
In 2022, New York lawmakers passed what has been described as a first-in-the-nation comprehensive right-to-repair law, which Gov. Kathy Hochul (D) signed this week. Colorado also enacted a right-to-repair law, but it only applies to wheelchairs. Massachusetts voters have twice approved right-to-repair ballot measures dealing with automotive repairs, but the most recent change in the law in 2020 was quickly stalled by legal challenges.
Despite the challenges, the recent wins in New York and Colorado are likely to give the right-to-repair movement momentum in 2023. The advocacy group repair.org, whose members include Consumers Union and the National Wireless Independent Dealer Association, has developed model legislation and is promoting the cause at both the state and federal level.
The group’s executive director, Gay Gordon-Byrne, told Pluribus News in an email that lawmakers in 21 states have pre-filed or plan to file right-to-repair legislation in 2023. Some may be comprehensive while others will focus on a single area such as agriculture, consumer electronics, home appliances or medical equipment.
Over the past couple of years, state lawmakers have been drawn into an ongoing antitrust battle between app makers and app store goliaths Apple and Google. The stores take a hefty cut — up to 30% — of the cost of an app and any in-app purchases. App makers don’t like that.
Epic Games, the company behind the multi-billion-dollar videogame Fortnite, has waged a high-profile legal fight against Apple and Google. But there has also been an effort to pass state legislation to end what many app makers view as Apple and Google’s monopoly.
The Coalition for App Fairness, whose members include Epic Games and Spotify, has pushed bills in several states to allow app makers to use alternative stores and payment systems. So far Apple and Google have successfully fought this legislation with key battles playing out in 2021 in Arizona and North Dakota. The Arizona bill was revived in 2022 only to be killed again.
The fight isn’t over, especially with federal legislation languishing. Chamber of Progress anticipates app store bills will be reintroduced in a dozen states in 2023.
The autonomous vehicle industry has evolved to the point that it is now deploying driverless cars that do not have a backup driver on board. At least 20 states explicitly allow testing without a safety driver.
Surveys show the public remains wary of autonomous vehicles, but the push to get more states to loosen their rules is expected to continue in 2023.
“We’re at a moment in time where more state-level officials are beginning to think about what the future looks like in their state with AVs,” Jeff Farrah, executive director of the Autonomous Vehicle Industry Association, told Pluribus News in November.
It only takes one colossal business failure to snap regulators and policymakers to attention. That is what the multi-billion-dollar collapse of cryptocurrency exchange FTX has done.
With FTX founder and former CEO Sam Bankman-Fried now under indictment, questions abound about the future of digital currency and what additional laws and regulations are needed to protect consumers going forward.
Beyond the legislative debate at the federal level, lawmakers in states including New York and California are also looking for ways to further regulate the industry.
In crypto-friendly Wyoming, legislators plan to make another run at a bipartisan bill to allow the state to issue its own virtual currency backed by the dollar and held in trust by the state. Gov. Mark Gordon (R) vetoed a 2022 version of the idea, but backers are hopeful they can assuage the governor’s concerns in a new version of the bill in 2023.