Updated Jun 25, 2018

Supreme Court poised to revamp tech laws

Illustration: Lazaro Gamio/Axios

Two U.S. Supreme Court decisions last week, about online sales taxes and law enforcement access to cellphone location data, landed like thunderbolts in two key tech-industry domains — e-commerce and privacy law.

Why it matters: While Silicon Valley has been preoccupied with Congressional hearings and regulators both at home and abroad, these decisions were a reminder that the Supreme Court's refittings of constitutional principles to new technological realities will have a strong hand in shaping the digital future.

The bottom line: These rulings suggest the court will not hesitate to adapt or discard precedents when it believes technological change has eroded their relevance.

The Wayfair decision: Thursday's decision, in South Dakota v. Wayfair Inc., opened the door for state governments to levy sales taxes on online purchases, even when merchants do not have brick-and-mortar stores in the state.

  • Some of the largest online retailers, including Amazon, have been charging sales tax for years, but a 1992 ruling had kept states from being able to require them to do so if remote sellers did not have a substantial presence in the state.
  • The decision was a victory for the Trump administration, which has criticized online merchants for not collecting the taxes. Ironically, though, it could extend the dominance of big players in e-commerce who already have the resources and systems to manage a patch-quilt of 50 different tax jurisdictions.

The Carpenter decision: In Friday's decision, Carpenter v. United States, the court ruled that police must obtain a search warrant before obtaining cellphone location data.

  • It held that this information was such an "exhaustive chronicle" of individuals' location that it was not covered by a 1970s precedent known as the "Third Party Doctrine," under which police obtain routine access to personal data stored by third parties like phone companies.
  • In his majority opinion, Chief Justice John Roberts wrote, "The Government's position fails to contend with the seismic shifts in digital technology that made possible the tracking of not only Carpenter's location but also everyone else's, not for a short period but for years and years."
  • The court insisted its decision was narrow, but digital privacy groups hailed the decision as groundbreaking. The Electronic Frontier Foundation called it "a major victory" and applauded it as a blow against the kind of long-term, pervasive surveillance cellphone location technology can perform.
  • Orin Kerr, law professor at USC, tweeted: "In short, majority on cell-site technology: This stuff is freaky and where it's going is scary, so we're going to regulate it."

How they voted: Both cases moved the law beyond principles established in the pre-internet era, and both were 5-4 decisions that fractured the court's partisan lineup in unconventional and unpredictable ways. In Wayfair, liberal justice Ruth Bader Ginsburg joined four conservative judges in the majority; in Carpenter, the conservative chief justice joined the court's four liberals.

What to watch: A decision is expected soon on another case, Ohio v. American Express, that focuses on credit card merchant fees. But the ruling will also impact other two-sided markets, such as advertising and e-commerce.

The bottom line: Technology moves faster than the law and presents judges with questions that don't break easily along traditional left-right lines.

Go deeper: Axios' Kim Hart has an in-depth look at the stakes in the Wayfair case, and Axios' Sam Baker explained the Carpenter case.

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