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1 big thing: In 2020, tech policy fights move to the states

Illustration: Sarah Grillo/Axios

The tech industry's most consequential policy fights in 2020 will play out in the states, not Washington, as Axios' Kim Hart and Margaret Harding McGill report.

The big picture: Momentum on a range of tech issues, from governing online privacy to regulating the gig economy, has stalled in D.C. as impeachment and election campaigns consume attention. State leaders and legislators are stepping in to fill the void. 

"It's really interesting to see the metamorphosis of states going from being the bench players to being lead hitters. It's because Congress and the federal government can't be relied upon to protect consumers."
— Gigi Sohn, distinguished fellow at the Georgetown Law Institute for Technology Law & Policy and former FCC adviser

These policy fights have shifted to the states:

  1. Privacy: California's landmark consumer privacy law takes effect this month (see below for more on that), while other state legislatures are considering their own privacy efforts amid a stalled attempt in Congress on a bipartisan national law. Industry watchers expect to see privacy legislation emerge in New York, Washington and Illinois in 2020, though some on Capitol Hill are still hoping for a breakthrough.
  2. Net neutrality: California and Vermont are facing litigation over their attempts to impose their own net neutrality regulations after the FCC repealed the Obama-era open-internet rules. New York Gov. Andrew Cuomo said he intends to advance statewide net neutrality legislation.
  3. Gig-economy labor: California is starting to implement a new law that codifies a state supreme court ruling making it hard for companies to treat gig economy workers as independent contractors rather than employees. New Jersey recently fined Uber for allegedly misclassifying drivers as independent contractors and not employees.
  4. Facial recognition: California has a three-year ban on police departments using facial recognition on body cam footage, and the cities of San Francisco and Berkeley have banned the use of the technology by local government. Boston suburbs Brookline and Somerville have also implemented bans.
  5. Home-sharing: Legislatures in some states such as Tennessee and Arizona have passed laws placing restrictions on popular short-term-rental sites like Airbnb and HomeAway.

Yes, but: Antitrust is different. Competition probes of major tech companies are moving forward in parallel at both federal and state levels.

  • Attorneys general from 50 states and territories, led by Texas, launched a joint antitrust investigation into Google.
  • New York is leading a coalition of 47 states investigating Facebook.
  • New York and California are leading the multi-state effort to block the T-Mobile-Sprint merger, which was blessed by federal regulators.

Between the lines: State-by-state policy battles will be headaches for all the companies involved. It's expensive to distribute lobbyists in state capitol buildings, deal with local politics and track varying legislative processes.

  • The major players would much prefer to have Congress or federal agencies adopt national rules to forestall a patchwork of different state laws.
  • Sohn views the "patchwork" argument skeptically. "You will comply with the strongest state law, so really in essence, you’re only complying with one."

What to watch: Cities are also asserting their power on these issues and, in the process, either fighting or trying to shape state-level laws that often preempt city-level ordinances.

  • For example, cities are taking the lead on regulating e-bikes and e-scooters as well as ride-hailing firms like Uber and Lyft.
  • But 15 states (including Pennsylvania, Texas and Colorado) prevent cities from building their own municipal broadband networks.
2. California's privacy law is here

Illustration: Sarah Grillo/Axios

Speaking of state laws, as of Wednesday, Californians can find out what data certain companies have collected about them, and even ask for it to be deleted, Axios' Kia Kokalitcheva reports.

Why it matters: The California Consumer Privacy Act covers residents of the most populous state, but it also has national repercussions. Some companies, like Microsoft, have already said they'll extend the practices required under the law to all their customers and users. And other states have tended to follow California when it introduces new rules that don't exist on the federal level.

The law applies to any company that has California-based customers and meets any one of these criteria:

  • Has at least $25 million in annual gross revenue
  • Has personal information on at least 50,000 devices
  • Earns at least half its money selling California consumers' personal information

How it works: The California attorney general is in charge of enforcing the law, though AG Xavier Becerra's office is expected to only have the resources to handle a limited number of cases per year.

  • Companies that offer free services can't discriminate against consumers who opt out of data collection (though they may modify the service provided).

What's next: July 1 is the deadline for the AG's office to finalize regulations laying out exactly what companies need to do to stay in compliance with the law.

  • Some businesses hope those regulations will settle questions around parts of the law they say are ambiguous, such as a provision that lets consumers block their data from being sold, the New York Times notes.
  • Also starting in July, Californians will be allowed to sue businesses for certain data breaches, and the California AG will be able to start bringing enforcement actions.
  • Californians may also get to vote in November on a ballot initiative that would expand these privacy rights.

Go deeper:

3. T-Mobile trial heads toward closing arguments

T-Mobile's legal battle to consummate its merger with Sprint heads to closing arguments this month, as Margaret reports. The companies are trying to convince a federal judge the tie-up won't hurt competition, thanks in part to a side deal with satellite TV company Dish.

Why it matters: The state case, led by the New York and California state attorneys general, is the last remaining obstacle for the deal after the Federal Communications Commission, the Justice Department and shareholders gave it the green light.

What happened: T-Mobile CEO John Legere, Dish co-founder Charlie Ergen and dueling economists testified during the December trial as lawyers for the 14 attorneys general argued the deal will reduce competition in the wireless market and lead to higher prices.

  • The Justice Department cleared the merger after the wireless companies agreed to sell assets to Dish to enable it to enter the market as a new fourth nationwide mobile carrier.
  • T-Mobile pledged not to raise prices immediately following the merger as part of its commitments to the FCC, but critics have argued that promise contains loopholes. Legere acknowledged during cross-examination that the company doesn’t include the cost of devices in its rate plans.
  • Ergen also faced questions from an attorney for the states about text messages from Justice Department antitrust chief Makan Delrahim urging Ergen to reach out to his "Senator friends" to contact FCC Chairman Ajit Pai in June.
  • The FCC and Justice Department teamed up on a Dec. 20 filing arguing that blocking the merger will deprive consumers, especially those in rural parts of the country, of the benefits of the merger.

What's next: Each side will make closing arguments Jan. 15, with the judge ruling sometime after that.

4. FAA proposes new drone-tracking regulations

Photo: Matthew Horwood/Getty Images

The Federal Aviation Administration wants to require the vast majority of drones to broadcast identifying and location information so authorities can spot rogue drones and generally keep tabs on the rest, Kim reports.

Why it matters: Drone makers have been waiting on the FAA to propose the Remote ID regulation to ease security concerns about potentially hostile drone operators that could, for example, wreak havoc at an airport — similar to the incident that shut down the U.K.'s Gatwick Airport last year.

Between the lines: The drone industry hopes a workable Remote ID standard will make the FAA comfortable with allowing operators to fly drones beyond their line of sight and over people — allowances necessary to enable package delivery and other commercial uses.

Details: The draft rule, which is expected to be published in the Federal Register Tuesday, will apply to all recreational and commercial drones weighing more than 0.55 pounds. The public can comment on the proposed rule for 60 days.

Go deeper: The drone nightmare is here

5. Take Note

On Tap

  • Happy 82nd birthday to Lynn Conway, a pioneer in chip design and so much more.

ICYMI

  • Despite challenges, Huawei ends 2019 with record $122 billion in revenue (Axios)
  • The U.S. Army is banning TikTok from government-owned phones. (Axios)
  • The IRS announced changes on Monday that should make it easier for people to find free online options for filing their taxes. (ProPublica)
  • President Trump signed into law a bipartisan bill aimed at cracking down on robocalls. (ZDNet)
  • A number of apps designed to help those dealing with depression or suicidal feelings have incorrect information or non-working numbers for crisis hotlines. (The Verge)
  • TikTok said in its first transparency report that China hasn't asked for any video takedowns. (The Verge)
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