State Laws Are Creating a Fragmented Digital Market for Americans

In the absence of congressional action on important digital policy issues, including children’s online safety, states have stepped in, intending to fill these gaps but creating a regulatory patchwork in the process. This patchwork not only creates a costly compliance problem for businesses, but it also negatively impacts consumers, as consumers in one state have different privacy rights and restrictions on their access to certain online services than consumers in other states. A landmark ruling in New Mexico finding that Meta violated state consumer safety law signals how this patchwork could impact consumers further: by removing their access to certain online services entirely.

In the case of New Mexico v. Meta, a jury found on March 24, 2026, that Meta misled consumers about the safety of its platforms and endangered children and ordered the company to pay a total of $375 million in civil penalties. In the second phase of the lawsuit, which is still ongoing, New Mexico’s Department of Justice petitioned the judge on May 4, 2026, to declare Meta a public nuisance and order the company to pay a $3.7 billion penalty and implement certain design changes. These changes would require Meta to verify the ages of all users, not encrypt children’s messages, link a guardian account to every child’s account, and retain a court-appointed child safety monitor to oversee the company’s compliance for at least five years.

Not only do these proposed changes carry serious implications for social media users of all ages, but Meta also claims these reforms are not feasible and could force the company to shut down its platforms in New Mexico. There is precedent for this type of business move. When countries like Belgium, Germany, Spain, France, and Australia attempted to make online news aggregators like Google and Facebook pay news publishers for their content, those aggregators de-indexed articles from publishers in those countries, required publishers to opt in to aggregation, stopped displaying news snippets and preview images, or stopped offering their services entirely, to the detriment of publishers and readers.

Within the United States, Illinois’ Biometric Information Privacy Act (BIPA) offers another cautionary tale. The law regulates the collection of biometric data by companies operating in Illinois or whose products reach consumers in Illinois. Because the law—and its private right of action that allowed consumers to sue companies for violations, even in instances when there was no harm—came with such high costs for companies offering biometric technology, some companies pulled out of the state or limited the technology available to Illinois consumers.

More recently, several states have passed laws requiring adult websites to verify users’ ages to ensure none are under 18. In response, some adult websites have blocked users from those states entirely. Thankfully, social media platforms have so far opted not to restrict services in states that require age verification. But if states enacted policies, such as those proposed in New Mexico, that impose highly restrictive and potentially technologically unfeasible requirements on social media platforms, other companies could reach the same conclusion as Meta: that geographical restrictions are less costly than compliance.

In these ways and more, state laws have already created a digitally fragmented United States. This divide will only deepen as more states pass laws regulating and restricting access to websites, social media, artificial intelligence, and more. Congress needs to act quickly to preempt state laws that draw digital borders and threaten the open Internet. Americans’ access to online services should not vary from state to state, but the longer Congress waits, the more Americans will have to live with—or work around—these arbitrary restrictions.