ALBANY, New York — Big Tech has hit a wall in the Empire State.
The Democratic-dominated Legislature this month greenlit bills meant to check the power of major technology companies, underscoring a fresh hostility to an industry that’s become a populist punching bag across the country.
The measures include a one-year moratorium on data center construction — the first statewide ban in the country — a prohibition on using personal data to set retail prices, limits on how health information is shared and a ban on toys that use artificial intelligence-powered chatbots. Tech companies fought many of the proposals and are now pressing New York's governor to reject some of the bills.
While disparate, the policy prescriptions share a common thread: a deepening skepticism among state-level elected officials over tech’s increasingly dominant and disruptive role in peoples’ lives. The bills reflect a bet that technology-leery voters will reward elected officials who back policies restraining powerful tech companies and the new class of extraordinarily wealthy people who lead the industry.
How voters truly feel about clamping down on tech will play out this election year with candidates like Democratic Assemblymember Alex Bores, who’s competing in a hotly contested Manhattan House primary and positioning himself as a Big Tech critic. The industry’s push on behalf of friendly candidates in California — the cradle of many tech firms — fell flat with voters in the state’s June primary. Voters in four states this fall will also determine how to proceed on data center development.
These elements have emboldened policymakers to take an aggressive posture.
“It’s a recognition that we need to rein in Big Tech,” said Queens state Sen. Kristen Gonzalez, who chairs the Internet and Technology Committee. “For a long time these tech goliaths have been able to get away with under-regulation or writing rules for themselves.”
Approving the legislation is, in part, a rebuke of President Donald Trump’s effort to limit the regulatory reach of state governments when it comes to rapidly evolving technologies — a posture that many tech firms have aggressively lobbied the White House to embrace. But with a narrowly divided Congress hopelessly deadlocked, red and blue states are filling the power vacuum by passing their own laws meant to bottle up the industry.
Governors across the country, of all political stripes, are grappling with voter concerns about data centers to support the AI boom. Several of them have fine-tuned their initial open-armed approach, including Texas Gov. Greg Abbott, a Republican, who released new guardrails for the industry this week and Pennsylvania Gov. Josh Shapiro, a Democrat, who has also pushed new limits and requirements.
The upside for elected officials to expand tech industry regulations is clear.
Limiting how prices can be set using personal financial information has been framed as a method of addressing voters’ affordability concerns. Keeping AI-powered devices away from kids mirrors nationwide efforts to ban cellphones in classrooms. Data privacy concerns have pushed lawmakers to limit how health apps share information, given that tracking could be used to determine if a woman recently had an abortion.
The passage of these measures will kick off a fresh round of lobbying to persuade Gov. Kathy Hochul, who has not yet taken an official position on any of the bills. The governor has vowed to protect children from harmful technologies and put guardrails on data centers but has also sought to capture the economic development benefits of the AI boom.
New York, home to the nation’s financial capital, stands to significantly benefit from the emergence of technologies like AI. Rival firms OpenAI and Anthropic have both signaled their intentions to go public — a move that’s expected to sharply boost Wall Street’s tech sector.
Business boosters in New York have warned that aggressive AI regulation will only make states like Texas more attractive to rapidly expanding companies. Yet they also acknowledge the industry needs to do a better job educating policymakers.
“The tech industry is willing to come to New York,” Paul Zuber, a vice president at The Business Council of New York State. “We should be rolling out the red carpet for them. Of course we realize there should be guardrails in place, but let’s also protect that growth.”
One of the highest-profile technology measures approved in the last week of Albany’s legislative session was the one-year moratorium on new data centers. Scaled back from a proposed three-year pause, the omnibus bill was introduced near the very end of the session.
It includes requirements for data centers to purchase renewable energy and potentially pay a higher rate for electricity than other large industrial or commercial businesses.
Policymakers across the country are grappling with growing public awareness of — and opposition to — large-scale data centers to support AI. A February POLITICO Poll found a bipartisan majority of Americans believe data centers will be a future campaign issue. The booming industry hasn’t taken off yet in New York, but there are active proposals backed by companies including Google.
Those plans — if they haven’t received state permits — could be halted if Hochul signs the moratorium.
The state’s grid operator has warned that a surge in applications for large outlays of power for data centers poses risks to the system’s reliability. That’s compounding the challenges facing Hochul’s “all of the above” energy strategy as she runs for reelection on a platform focused on affordability.
Tech companies are allied with labor in opposing the moratorium. Unions representing workers who would build data centers slammed lawmakers over the proposed pause and are poised to pressure Hochul on the issue.
“Having labor protections does us no good if data centers move to other states and there’s no work to be had,” said Addie Jenne, legislative counsel for the NYS Association of Electrical Workers.
Hochul has advanced her own regulatory approach playing out at the state’s utility regulator. She promised in January that data centers would have to bring their own energy and ensure residential users don’t pay more.
The governor has been circumspect but largely unsupportive of a statewide moratorium when asked about it in recent weeks, suggesting the decisions should be up to local communities.
State lawmakers, meanwhile, also took a granular approach to addressing emerging technologies that have overlapping concerns for consumers as affordability issues continue to gnaw at voters.
A bill backed by state Attorney General Letitia James would ban the use of algorithms to set prices using information gleaned from people’s data.
“This legislative session I focused on cutting costs and protecting New York’s kids, and we brought together the coalition of seniors, parents, working people, unions, and small businesses to pass laws that will do just that,” James said in a statement. “We welcome innovation, but not at the price of exploitation.”
Tech firms pushed back hard against the legislation and raised concerns the provision would limit New Yorkers’ ability to get discounts. Chamber of Progress, an advocacy consortium that includes consumer-facing companies like DoorDash, InstaCart and Amazon, argued New York’s legislation goes too far in trying to regulate the practice of data-driven pricing.
“This definitely moved very quickly, and you see a lot of inherent contradictions within the bill text itself,” said K.J. Bagchi, the group’s vice president for U.S. policy and government relations. “That’s where we see an opportunity to work with the governor’s office as she’s considering chapter amendments.”
The industry has argued the measure will limit the ability of companies to send targeted coupons and discounts to consumers. Chamber of Progress has shared polling data with state lawmakers showing voters prefer to retain those deals.
“This is definitely going further than what we’ve seen in other states,” Bagchi said of the final bill.
Tech firms are only beginning to push back. Super PACs fueled by AI and cryptocurrency interests have hammered Bores in his competitive Manhattan House primary. That spending, though, has also served to raise Bores’ profile as crusader against the industry’s excesses.
In Albany, state lawmakers believe they’re lagging when it comes to addressing a rapidly shifting tech landscape.
“We’re behind,” said Assemblymember Linda Rosenthal. “Every state is behind because technology gallops so quickly before the laws catch up.”
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