States Are Ground Zero for Tech Regulation. Voters Back the Measures, but Also Seek Federal Action

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Over the course of the past two years, members of the House and Senate have drafted bipartisan legislation to establish federal data privacy laws, restrict anticompetitive actions in online marketplaces, regulate content on social media and prevent young children from accessing social platforms. None of the efforts thus far have managed to be passed into law, despite President Joe Biden’s call for regulating the tech industry.

Lawmakers at the state level, meanwhile, have had more success in pursuing tech regulations, passing at least 28 laws regulating online platforms since 2021. While most voters would prefer the federal government take the lead in establishing tech regulations, a Morning Consult survey found state-level laws have found bipartisan support in the absence of nationwide legislation.

Most voters, including nearly 2 in 3 Democrats and more than half of independents, believe the federal government is more responsible for passing legislation related to the tech industry. A slim majority of Republicans, meanwhile, believe that states hold more responsibility for regulating the sector.

Rep. Suzan DelBene (D-Wash.), the former chief executive of Nimble Technology Inc. and a vice president of Microsoft Corp., said she recognizes the need for federal legislation “to make sure we have consistent policy across the country so people know what their rights are.” She also noted the unique challenge that implementing legislation at the federal level presents when it comes to the tech industry and the massive amount of data on which many companies rely. 

“It’s different from other regulations where you have a federal standard that is a baseline and states can build on top of it. This isn’t quite so linear,” she said, raising questions about what data is collected, stored, protected and when consent is required. “All of these things make it much more complicated, and in the absence of a federal standard, we end up with these different state laws that create a patchwork that becomes untenable for consumers to know what their rights are and for businesses to abide by them.”

Tech legislation moves quickly through statehouses — but legal challenges can follow

One of the appeals of legislating from the state level is the speed at which the legislatures can move compared to Congress. Voters in both parties have a desire to see additional regulations in place for the tech industry, and state houses allow for those laws to go into effect sooner than waiting for a federal standard to be established. 

That speed is not necessarily a good thing, warns Carl Szabo, vice president and general counsel at tech trade organization NetChoice. 

“In a state, a bad idea can become law in as little as a week,” he said. “While that does give a lot of opportunity for good ideas to be experimented with, simultaneously it can often have well-intentioned legislation result in a myriad of unintended consequences.”

He also noted that regulating internet companies is “inherently an interstate issue. A law passed in one state will impact its neighboring states and even the states all across the country.” 

At the state level, tech regulations tend to find bipartisan support among lawmakers. But they are still far more likely to pass when one party controls a supermajority within the statehouse, holding both houses of the legislature and the governorship. 

States with a trifecta of Republican control have produced some of the more controversial tech legislation. In 2021, Florida passed a law that prohibited social media platforms from suspending the accounts of state political candidates. Later that year, Texas passed its own social media restrictions preventing platforms from removing content based on the political viewpoint of the user. 

Both may ultimately end up in front of the Supreme Court due to legal challenges. Earlier this year, Republican-controlled Utah passed a law that requires social media platforms to verify the age of users living in the state and restrict access to the platforms for anyone under the age of 18 during mandatory curfew hours. The restrictive law is expected to face pushback. 

Voters show bipartisan support for selection of state-level tech regulations

Despite the controversy surrounding some of these laws, sentiment among the electorate for such efforts tends to be positive. Four in 5 voters said they back state-level laws to protect the privacy of children online, while a slim majority said they would back a state’s attempt to limit the ability of social media platforms to remove certain content. 

There tends to be bipartisan support for these efforts, as well, with majorities of Republican and Democratic voters backing most efforts. The largest divide among the parties came on requiring the reporting of hate speech — a move that 3 in 4 Democrats support, though about 3 in 5 Republicans also backed the measure.

Among the more popular measures for both parties are efforts to protect the data privacy of  residents, which garnered support from 3 in 4 Democrats and Republicans. Virginia state Sen. David Marsden (D), the co-author of a data privacy law that has become the framework for similar legislation in several states, said he viewed the law as an opportunity for states to act first and experiment with different approaches to protecting consumer rights.

“This is a way of allowing the states to do what they've always done, which is to be laboratories of invention, and seeing what they come up with to help the federal government decide what will work for everybody,” said Marsden, though he admitted that “doing this state by state really is not a sensible way of doing this.”

While state action may benefit those residents, it also further exacerbates the issue as the federal government seeks to set its own standard. DelBene noted that one of the challenges of crafting a federal law is addressing pre-emption of state laws.

“You can't just incorporate all the different state laws together and have a federal law. You have to come up with a federal standard, and that may be different than some of the individual state laws and how they implement these things,” said DelBene, adding that she understood why states would want to move forward with their own efforts. “We have places where folks don't have any protections. I think states feel like if there isn’t going to be federal legislation, that they're going to move forward.”

Public’s awareness of state-level tech regulations is lacking

While tech-related state laws tend to be popular among voters, they often have less awareness than federal legislation. About 2 in 3 voters had heard little or nothing about state-level laws aimed at limiting the ability of social media platforms to remove content, like those passed in Florida and Texas. Only about 1 in 4 had heard a lot or some about a Maryland law that would tax the digital advertising revenue of Big Tech firms.

The lack of awareness stems from the local nature of the bills, but also the sheer volume of them. Carl Holshouser, senior vice president at technology industry group TechNet, said there have been 175 different data privacy bills introduced across the country since 2018. 

“How are consumers across the country and mom-and-pop shops concerned about keeping their lights on and staying in business supposed to navigate this growing patchwork that changes from one minute to the next — and one state to the next?” Holshouser said.

As awareness of these efforts increase, so do the number of parties interested in influencing them. Marsden, who said he was approached by a consortium of high-tech companies who were interested in helping craft the law, noted that attention and scrutiny on his bill increased once it was passed. 

“It's a good start,” he said of the law, which he noted had already been amended since its passing. “We'll have to see how it works. And I'm sure we'll be amending this legislation until the day I die.”

DelBene noted that the longer the federal government goes without establishing its own standard for these types of regulatory efforts, the more difficult it is for the country to have a seat at the table when discussing international laws. 

“It's hard for us to talk about what international standards should be when we don't have a domestic standard,” she said.

While federal laws help to simplify the complicated patchwork of navigating different rules that start and stop at different borders, NetChoice’s Szabo warned that excessive regulation isn’t a fix, either. 

“The notion that the U.S. isn't leading the world just because we haven't had a law to enforce something assumes that the creation of laws shows leadership, and that's very misguided,” he said. “Creating laws is easy; enforcing laws and protecting people's privacy is the hard part. And that's where America and American businesses are the world leader.”