San Francisco Business Times, March 21, 2008

California's lawmakers seek to derail one of the state's thriving industries: the technology sector. This bipartisan agenda targets e-commerce, arming bureaucrats with vast new authority to monitor, regulate and tax the Internet.

A recent survey of the Silicon Valley's economy reveals that policy makers should study and replicate this unique environment, not smother it. The absence of burdensome regulations on the Internet allows creative products to ascend rapidly, making web-based ventures attractive to investors. Unfortunately, lucrative technologies also attract zealous politicians.

Sen. Jenny Oropeza (D-Long Beach) introduced SB 1743, a one-sentence declaration of her "intent" to "enact legislation specific to the regulation of technology." Sen. Oropeza's office would not elaborate on the scope of this legislation, but the preamble invokes state power to regulate "advertising."

The worldwide market in online advertising is projected to triple to $147 billion over the next five years. Silicon Valley pioneers such as Google and Yahoo rely on these profits to design and provide innovative free online services. Likewise, countless startups now build their business models around Internet advertising strategies. Each time a user "clicks" an online advertisement, the advertiser pays the web site. Therefore, the state cannot collect taxes on this revenue without broad authority to track every "click."