Apr 19, 2021 - Technology

States court tech money even as they bash companies

Illustration of a one hundred dollar bill as a computer dialogue box, asking the user whether they want to delete
Illustration: Annelise Capossela/Axios

Some of the country's fastest-growing states are publicly attacking the tech industry's business practices on one hand while courting its investment on the other.

Why it matters: Attracting technology companies is a holy grail for economic development because they bring high-paying jobs and prestige to aspiring tech hubs. But that project is now colliding with some state leaders' efforts to rein in tech companies' growing power.

What they're saying: "It shows how conflicted state lawmakers are on these issues," said Alec Stapp, director of technology policy at the Progressive Policy Institute. "It's easier to attack Big Tech in the abstract and incentivize small tech to come to the state."

  • Yes, but: "It's a tough message to sell that you'll be tough on Google and Facebook but open to other startups," he said. "Every venture-backed company wants to be the next Facebook. So it's a flawed message from these states to say, move here, invest here and in 10 years we'll come after you."

What's happening: Red states including Texas, Florida and Arizona are touting low tax rates and business-friendly regulatory environments for companies such as Facebook, Google, Apple and Intel.

  • Meanwhile, blue states such as Colorado and Virginia highlight their high-skilled workforce and advantageous locations to attract Amazon and Palantir.

Where it stands: Here's how the states' tech-growth ambitions are colliding with growing anti-tech sentiment.

Texas

The Texas Legislature is considering a proposal that would bar major social media companies from blocking users based on their views.

  • Also, Texas Attorney General Ken Paxton launched a lawsuit alleging that Google and Facebook conspired to manipulate online ad sales. Paxton also joined 47 other AGs and the FTC in suing Facebook over its monopoly power.

The other side: Behind the scenes, Gov. Greg Abbott has been courting Facebook to build a second data center in the state, the Texas Tribune reported. Facebook's first Texas data center resulted in Fort Worth providing a $147-million tax-exemption deal, in exchange for 40 good-paying jobs.

  • Austin — a liberal city in a conservative state — is a well-established tech hub. Tesla and Oracle are moving their corporate headquarters to the city. Abbott has welcomed them with open arms.
Arizona

State lawmakers pushed a bill that would let app Arizona-based developers use their own payment systems to bypass the fee charged by Apple and Google app stores — which the bill's author, Rep. Regina Cobb (R), said would draw businesses to the state. The bill died when the state senate declined to take a vote.

  • Attorney General Mark Brnovich joined a multi-state antitrust lawsuit against Google.

The other side: The flat, sunny state has been a testing ground for autonomous vehicles. Gov. Greg Ducey last month signed into law new rules of the road, giving self-driving companies the certainty they want as they continue testing.

  • Intel is spending $20 billion to build two new chip factories, or fabs, in the state — creating 3,000 high-paying tech jobs and 3,000 construction jobs.
  • Phoenix and surrounding suburbs have tried to attract more companies and startups through university partnerships and incentives. Many Silicon Valley firms have sales and operations staff based in the Phoenix area to take advantage of the lower cost of living.
Florida

Florida lawmakers are considering a bill that would make it illegal for a social media network to knowingly "de-platform" a political candidate. Gov. Ron DeSantis called Google and YouTube "a Big Tech council of censors in service of the ruling elite."

The other side: Florida's population is ballooning, in part thanks to pandemic relocations, and the state has a vision of assembling a "high-tech corridor" between Tampa and Cape Canaveral.

  • Miami is the latest city to make noise about becoming a "tech hub," with Mayor Francis Suarez recruiting techies and startups.
Virginia & Colorado

Virginia last month became the second state (after California) to pass its own privacy law.

The other side: Virginia gave Amazon $750 million in tax breaks over the next 15 years to build its second headquarters in Crystal City. Its proximity to government and military operations have made Virginia a mecca for cybersecurity firms.

  • Denver has lured Silicon Valley refugees (Palantir moved its headquarters there last year) and Google, Facebook and Amazon have satellite operations there. Venture capital funds have set up shop there, helping the startup scene.

The bottom line: The culture wars are changing the economic development equation. States "want to project externally that they're business-friendly, but on political and cultural issues like free speech, they want to send the right signals in their direction," said Stapp.

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