Red states like Florida are fast becoming magnets for people with entrepreneurial drive and a desire to be free of heavy government regulations. In 2021, Florida added 2,715 new information technology (tech) businesses—more than any other state. Texas added 10,851 tech jobs in 2021, more than double California’s gain. Florida led the nation in net domestic migration in 2022, with 318,855 people leaving their home states to become Floridians, and in the process adding about $13.6 billion to state economic output by my estimate.

How did this happen?

Red states achieve impressive results by shedding costly regulations and allowing people to make their own decisions about managing their lives. For example, millions of Americans have admired how Florida emphasized individual liberty, protecting vulnerable citizens, and keeping businesses open during the COVID-19 pandemic.

But now some legislators in Florida want to lead in the wrong direction by taking a heavy-handed regulatory approach to Big Tech. Governor Ron DeSantis and members of the Florida Legislature are rightly concerned about data security, children’s online safety, and unwarranted political bias on social media. Unfortunately, some prescriptions rely too much on regulatory fiat and not enough on empowering consumers.

Consider Florida’s 2021’s Stop Social Media Censorship Act, the Florida social media law seeking to control how social media companies like Meta manage content on their platforms. These regulations substitute the judgements of elected officials and bureaucrats for those of consumers regarding what people want to see. If American companies decline because regulations are out of step with what customers want, customers will move on, most likely to companies from China, such as TikTok. A better approach would have been to incentivize the companies to offer users options for creating their own viewing alternatives.

Legislation now under consideration in Florida would change how selected tech companies manage data and engage in advertising. There are several problems, but most troubling are rules that would limit digital advertising. This would particularly harm small and medium-sized businesses (SMBs).

Digital advertising helps SMBs compete with larger companies by allowing them to target advertising to their most likely customers. A recent survey of US SMBs found that about 80 percent believe that digital ads generate more revenue than offline ads and help SMBs compete with large rivals. Black-led and Hispanic-led SMB advertisers believe digital advertising enabled their businesses to grow 48 percent and 40 percent respectively during COVID-19. The survey also found that 79 percent of SMB online publishers believe that revenue from digital ads helps them compete with the large tech companies.

How much the new advertising controls would impact small businesses is anyone’s guess. But even a 10 percent impact would likely make businesses consider locating somewhere else.

Another troubling aspect of the legislation is its targeting of US companies over their international rivals. The proposed controls are oddly specific: Covered companies must derive at least 50 percent of their global annual revenue from targeted online advertising or provide “a consumer smart speaker and voice command component service with an integrated virtual assistant connected to a cloud computing service that uses hands-free verbal activation.”

It is anyone’s guess why data in the hands of a company that uses smart speakers is more dangerous than in the hands of a company that relies on cameras, typing, and normal microphones. But the authors of the legislation clearly have particular companies in mind and with these provisions target US companies, such as Meta and Amazon, while apparently avoiding Chinese companies like Alibaba with which the US companies compete.

The legislation also mirrors some features of recent European regulations, such as granting people rights to demand changes to companies’ databases. The European regulations are much more draconian, but it is worthwhile to note that the European laws have killed entrepreneurship there. States mirroring the proposed Florida approach are moving in the wrong direction.

State lawmakers should keep red states on their paths of prosperity by looking for market-friendly solutions. Rules should encourage information systems that save consumers time and save businesses money. Consumers should be trusted to make informed choices and market processes should be trusted to offer commercially viable options. At a minimum, new state laws should be consistent with and no more onerous than laws already in the books in other states.

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