Tech industry group beefs up efforts to battle states in court

A key industry group is gearing up to aggressively fight back in court as states increasingly pass laws to regulate the tech industry amid congressional paralysis.

NetChoice, a libertarian-oriented trade association whose members include Airbnb and Yahoo, announced Tuesday that it is launching a litigation center to “protect online freedoms” at both the state and federal level.

The tech industry faces heightened scrutiny, including litigation and regulation, from state attorneys general, state lawmakers and the U.S. Department of Justice. NetChoice already had active lawsuits in federal court against four states. This move signals a likely escalation in a burgeoning battle between states and the tech industry on a range of issues from content moderation to how social media sites engage with teens.

“We’re fighting to protect free speech and free enterprise online in both the courtroom and the court of public opinion,” Chris Marchese, the center’s director, said in a statement announcing the new initiative.

In 2021, NetChoice joined the U.S. Chamber of Commerce and other business groups in suing Maryland over its adoption of a tax on digital advertising.

The same year, NetChoice and the Computer and Communications Industry Association sued Texas and Florida over so-called anti censorship laws aimed at preventing social media sites from de-platforming conservative politicians or removing political content. Those cases have reached the U.S. Supreme Court.

Late last year, NetChoice sued California to overturn a first-in-the-nation youth digital privacy law, also known as an age-appropriate design code. The law, which is modeled on regulations in the UK, requires internet companies to design products that are likely to be accessed by teenagers with the best interests of those users in mind.

Lawmakers in other states are trying to pass similar legislation this year. In Maryland, the House this week overwhelmingly approved its version of the bill. NetChoice has cautioned Maryland lawmakers about proceeding with the legislation to “avoid unnecessary litigation.”

NetChoice’s announcement Tuesday about its litigation center drew a sharp rebuke from Shelby Knox with ParentsTogether Action, which is part of a coalition of groups advocating for the Maryland law.

“Big Tech is sending a very clear signal — they’re willing to do and spend whatever it takes to stop necessary reforms that protect our kids online,” Knox said in a statement.

NetChoice’s lawsuits against the states are likely the tip of the spear, as both blue states and red states increasingly seek to regulate the role of tech companies in individual lives and address the impact of social media on young people.

“The NetChoice Litigation Center will be the go-to source for the future of American tech litigation, to ensure the internet remains safe and free as it ages,” Marchese said in his statement.

Besides data privacy and social media regulations, state lawmakers this year are considering legislation on topics including collection of biometric data, regulation of data brokers and algorithmic discrimination.

As states step into the breach left by Congress’s inaction, tech companies must contend with a regulatory patchwork that the industry says often runs afoul of the First Amendment, the Commerce Clause and federal law.

Utah could be the next target for tech industry litigation.

On Thursday, Utah Gov. Spencer Cox (R) is expected to sign a pair of bills that would require parental permission for teens to have a social media account and make it easier for parents to sue the companies. NetChoice and other groups have called the bills unconstitutional.

But the potential for litigation goes both ways. In January, Cox and Utah Attorney General Sean Reyes (R) held a press conference to announce the state was preparing to sue social media companies because of alleged harms to young people.

“Without strong action on our part, social media companies will simply not make the changes that are necessary to protect our children,” Cox said at the news conference.