tech
Chinese humanoid robots break human records at Beijing robot games
Chinese humanoid robots broke several human sporting records, including Jamaican sprint legend Usain Bolt’s 100-metre world record, at the opening of the World Humanoid Robot Games in Beijing on Saturday.
More than 2,000 humanoid robots are taking part in the five-day event, which features 51 disciplines and more than 1,000 competitions, including athletics, table tennis, soccer, weightlifting and tug-of-war.
The games, now in their second year, are being held at the National Speed Skating Oval, a venue built for the 2022 Winter Olympics. The event is showcasing China’s rapid advances in humanoid robotics as competition in the sector intensifies between China and the United States.
At the opening ceremony, hundreds of humanoid robots marched onto the field in synchronized formations, highlighting their increasingly sophisticated coordination.
A humanoid robot developed by Beijing-based X-Humanoid completed the 100-metre sprint in 9.39 seconds, beating Bolt’s human world record of 9.58 seconds set in 2009.
Another X-Humanoid robot cleared 2.88 metres in the standing high jump, far exceeding the 0.95-metre mark recorded by a humanoid robot at last year’s inaugural games. The performance also surpassed the human world record of 2.45 metres set by Cuban athlete Javier Sotomayor in 1993.
A humanoid robot developed by Chinese smartphone maker Honor had earlier completed a 100-metre trial in 9.32 seconds, reaching a top speed of 14.5 metres per second, according to the company.
The games are being held alongside the 2026 World Robot Conference in Beijing, where companies displayed around 3,000 robotic products.
China currently accounts for a large share of global humanoid robot production. The rapid development has also raised concerns in the United States, which has increased scrutiny of Chinese robotics companies on national security grounds.
Despite the impressive performances, experts say humanoid robots remain largely limited to demonstrations, entertainment and research, with widespread real-world use still some way off.
The event has nevertheless attracted strong public interest. Spectators expressed amazement at the robots’ rapidly improving abilities, while some said they were curious to see the latest technology developed by Chinese companies.
Organisers said robots and teams from 16 countries, including Germany, Japan and the United States, are participating in this year’s games.
2 months ago
TikTok agrees to $400 million settlement with US over children’s privacy
TikTok has agreed to pay $400 million to resolve a lawsuit brought by the U.S. Department of Justice over alleged violations of federal laws protecting children’s online privacy.
Under the agreement announced Friday, TikTok will provide $300 million upfront, while the remaining $100 million will be paid after an earlier consent order involving the company’s predecessor, Musical.ly, is formally withdrawn.
U.S. Associate Attorney General Stanley E. Woodward Jr. described the agreement as an important achievement for children and their parents. He said the settlement reinforces the government’s efforts to ensure that companies handling children’s personal information comply with federal requirements.
The case dates back to a 2024 DOJ lawsuit. Since then, TikTok has experienced significant changes, particularly concerning the ownership of its U.S. operations. In January, the company reached agreements with investors including Oracle, Silver Lake and Abu Dhabi-based MGX to establish a new joint venture for TikTok’s American business.
TikTok did not immediately respond to requests for comment on Friday.
The lawsuit alleged that TikTok and its Chinese parent company, ByteDance, breached the Children’s Online Privacy Protection Act (COPPA). The federal law requires websites and apps aimed at children to obtain parental permission before collecting personal information from users younger than 13.
Federal officials also accused the companies of failing to properly respond when parents asked for their children’s accounts to be removed. In some cases, the government alleged, TikTok continued maintaining accounts even after learning that they belonged to children under 13.
The settlement comes amid increasing scrutiny of social media companies over the safety and privacy of young users. Governments in several countries are introducing restrictions on children and teenagers accessing social media platforms, while technology companies face a growing wave of legal challenges.
Meta Platforms, the parent company of Instagram, is also facing a federal trial in Oakland, California. That case involves allegations that Meta violated COPPA and several state laws related to children’s privacy.
2 months ago
Alibaba profit plunges 75% as AI investment surges
Chinese technology giant Alibaba reported a 75% fall in quarterly profit on Thursday as the company increased spending on artificial intelligence infrastructure, despite strong growth in its AI-related services.
Alibaba, which is listed in Hong Kong and the United States, said its profit for the April-June quarter fell to 10.5 billion yuan ($1.6 billion), from 43.1 billion yuan ($6.4 billion) in the same period last year.
The company’s quarterly revenue, however, rose 9% to nearly 269 billion yuan ($40 billion). Revenue from its AI cloud and computing services jumped 45% to 48.4 billion yuan ($7.2 billion).
The sharp increase in investment weighed on profits. Alibaba’s capital spending, including investment in AI infrastructure to meet rising customer demand, surged 75% to 67.7 billion yuan ($10 billion) during the quarter.
Alibaba said the higher spending was driven by several factors, including changes in procurement cycles, increased computing capacity ahead of growing demand for AI "agents" and higher prices for chip components.
"As we continue to ramp up our supply, our AI and Cloud revenue growth will accelerate further in the coming quarters, alongside continued improvement in profitability," Alibaba CEO Eddie Wu said in prepared remarks during an earnings conference.
Alibaba's US-listed shares fell more than 3% on Thursday.
The company, one of China's largest technology firms, announced last year that it planned to invest at least 380 billion yuan ($56 billion) over three years in cloud computing and AI infrastructure.
Alibaba has made significant progress with its Qwen AI platform and has introduced AI agent services for business customers.
In July, the company previewed its Qwen3.8-Max AI model, which it said ranked just behind Anthropic's Claude Fable 5.
Alibaba has also set an ambitious target of generating more than $100 billion in annual revenue from AI and cloud services within the next five years.
2 months ago
Meta defends child safety efforts as critics say protections fall short
Meta is defending its efforts to protect children online as it faces a growing number of lawsuits accusing the social media company of harming young users.
In the latest case, Meta is fighting allegations in a California federal court that it helped fuel the youth mental health crisis by deliberately designing Instagram and Facebook features to keep children engaged for long periods.
Four US states are seeking billions of dollars in damages and major changes to the way Meta operates the platforms.
"Meta takes seriously" issues involving children's mental health and what they see and do on social media, the company's lawyer Paul Schmidt said in opening arguments this week.
Critics, however, say Meta's safety measures have not gone far enough and that many of them do not work properly.
Marc Berkman, executive director of the Organization for Social Media Safety, said Meta introduced many of its safeguards mainly in response to public pressure rather than genuine concern for children's safety.
Measures targeting harmful content
Many of Meta's safety changes have focused on bullying, harassment and offensive content.
Instagram has long allowed users to block others. Over the years, both Instagram and Facebook have added tools to report problematic accounts and inappropriate content.
In 2016, Instagram introduced options to delete or filter offensive comments. It later added warnings encouraging users to think twice before posting potentially harmful content, as well as controls for limiting comments and tags.
Meta says adults who are not already connected with teenagers are prevented from starting private conversations with them. The company has also increased efforts to prevent children under 13 — the minimum age for Facebook and Instagram accounts — from using the platforms.
Schmidt acknowledged that some users still provide false birth dates when signing up but said Meta takes its age restrictions seriously.
The company also displays warnings and support information when users search Instagram for topics such as suicide, self-harm and eating disorders.
Meta points to its "Teen Accounts", introduced in 2024, as another major safety measure. The accounts limit the type of photos and videos teenagers can view, broadly following restrictions similar to those of a PG-13 movie unless parents give permission for wider access.
Critics say such measures are more about public relations than effective protection.
A September 2025 report by former Meta employee and whistleblower Arturo Béjar and four online safety groups accused the company of failing to take meaningful action on child safety.
Haley Hinkle, policy counsel at Fairplay, which helped prepare the report, said researchers reviewed 47 of Meta's 53 teen safety features on Instagram and found that 60% were either unavailable or did not work as advertised.
Meta rejected the report's conclusions as "misleading" and "dangerously speculative."
Concerns over endless scrolling
Researchers also question whether Meta has done enough to prevent children from becoming overly dependent on social media.
Ashley Shea, a Cornell University Ph.D. candidate who studies social media and online spaces, said features such as endless scrolling, pull-to-refresh designs, frequent notifications and algorithm-based recommendations can keep users engaged.
She said these features can take advantage of vulnerabilities in young people's developing brains, particularly their desire for rewards.
Shea acknowledged that Meta has taken important steps to deal with harmful content, cyberbullying and sexual predators. But she said she has not seen similar efforts to reduce the addictive effects of features designed to capture users' attention.
Time limits and parental controls
Meta also points to parental controls and other time-management tools as evidence that it is addressing concerns over excessive social media use.
Schmidt said some teenagers struggle to control how much time they spend on social media and highlighted tools such as parental supervision and in-app reminders that encourage teenagers to take a break after repeatedly viewing similar content or using the platforms late at night.
Hinkle said these tools are voluntary and difficult to set up, making them inadequate.
Béjar also criticized Meta's "Take a Break" feature during testimony Wednesday, saying it is "designed to fail" because users must activate it themselves and few choose to do so.
Berkman said technology companies are built to increase revenue, which for social media platforms often means encouraging users, including children, to spend as much time as possible on their services.
Shea said the lawsuits are significant because they focus on whether social media platforms are harmful because of the way they are designed, rather than only because of the content users encounter.
She added that growing pressure from lawmakers and lawsuits could force broader changes across the technology industry.
"The momentum only continues to grow," Shea said, adding that companies driven by profit are likely to respond more quickly as they face greater financial pressure from legal action.
2 months ago
AI-assisted tool helps strengthen satellite communications after 2022 Russian hack
Russia disabled thousands of satellite modems in Ukraine and other European countries on the day it invaded Ukraine in 2022, disrupting communications. Now, an artificial intelligence-assisted tool is being used to help protect satellite networks from similar attacks amid growing concerns over Russian aggression and cyber threats from Iran.
Cybersecurity company Atalanta has launched Argo, a product that includes technology being used to test the resilience of Viasat’s satellite communications network, which was targeted in the 2022 cyberattack.
Cybersecurity experts say the technology offers a new way to protect critical infrastructure from increasingly sophisticated cyberattacks.
Atalanta says Argo uses what it calls “software understanding,” combining advanced mathematics and AI to examine software and internet-connected systems and identify vulnerabilities more thoroughly.
Recent conflicts in Ukraine and Iran have highlighted the growing risks posed by cyberattacks on essential services. Several US government agencies have warned this summer that Iranian hackers have targeted water and wastewater systems and other critical infrastructure.
“The tools and techniques of yesterday do not scale for today,” Atalanta CEO and co-founder Anjana Rajan told The Associated Press, saying software understanding would be increasingly important for systems critical to the United States.
Nick Saunders, Viasat’s chief of cyber strategy, said the technology is helping the company strengthen its network against future attacks while also providing mathematical evidence to support its security claims.
“We have built over the past year, working with Atalanta ... a capability where we can start to develop an understanding of how our systems are more resilient against attacks,” Saunders said.
Atalanta is also working on the Genesis Mission, a Department of Energy initiative aimed at developing autonomous nuclear reactors.
Greg Shannon, chief cybersecurity scientist at the government’s Idaho National Laboratory, said such technology could eventually become a standard part of testing new systems.
“In a decade or two, I would expect it to be just part of the standard development tool kits,” Shannon said.
He noted that the Defense Advanced Research Projects Agency, or DARPA, has invested billions of dollars in related technology over the past two decades. That research helped create demand for systems such as Argo.
DARPA, the US military’s advanced research agency, has played a key role in developing technologies including the internet and stealth aircraft.
“They've probably invested well over $2 billion in various programs to advance formal methods ... and we're finally seeing them start to come to fruition,” Shannon said.
Last year, Pentagon Chief Technology Officer Emil Michael said in a prerecorded address to a DARPA software conference that he viewed the mathematics behind Atalanta’s technology as an important part of the military’s cybersecurity future. He said he wanted it to become the Department of Defense’s “gold standard” for cybersecurity.
2 months ago
China recovers rocket stage on land for first time after earlier sea recovery
China has successfully recovered a rocket’s first stage on land for the first time, state media reported Wednesday, marking another step forward in the country’s efforts to develop reusable space technology.
The achievement marks China’s second successful recovery of a rocket stage. In July, the country recovered a rocket stage on a sea platform.
China’s state-run Xinhua News Agency reported that the reusable Zhuque-3 rocket was launched Wednesday morning and its first stage was successfully recovered afterward.
SpaceX, founded by Elon Musk, and Jeff Bezos’ Blue Origin have been recovering rockets since 2015. Reusing rocket hardware that would otherwise be discarded has helped lower launch costs for satellites and other payloads.
Xinhua said Wednesday’s mission was also the first time China had used deployable landing legs during a rocket recovery. It described the successful landing as “a major breakthrough” in the country’s reusable rocket technology.
On July 10, the first stage of a Long March-10B rocket separated from its second stage after liftoff and returned to a platform at sea. The stage was recovered using a net-capture system.
The following day, July 11, Japan conducted the first test flight of an experimental reusable rocket, which successfully launched and landed.
Japan is also working to develop reusable rocket technology as it seeks to reduce launch costs and strengthen its competitiveness in the global space market.
2 months ago
China builds diversified AI landscape by leveraging regional strengths
China is drawing on its nationwide capabilities to develop a locally tailored yet nationally coordinated artificial intelligence industry, aiming to accelerate the commercial application of AI and create new economic momentum.
The latest economic data from 31 provincial-level regions shows rapidly growing demand for AI terminal applications, alongside a tiered development pattern based on the strengths and resources of individual regions.
“The driving role of the AI wave is becoming increasingly pronounced in emerging industries such as integrated circuits and industrial robots across regions,” said Xiao Hongwei, a researcher at the State Information Center under the National Development and Reform Commission, China’s top economic planning agency.
“AI is accelerating its transformation from a technical concept into tangible productivity gains in China,” Xiao said.
First-tier ai hubs
China’s intelligent computing capacity reached 2,185 EFLOPS by the end of June, up 177 percent year on year, reflecting the rapid expansion of the country’s AI infrastructure. The nationwide utilization rate of computing facilities stood at 71.4 percent, according to the Ministry of Industry and Information Technology.
EFLOPS, or exaFLOPS, is a measure of computing performance, with one unit representing 1 quintillion floating-point operations per second.
Xiao said regions across China are developing their AI sectors according to local conditions and leveraging their respective strengths, resulting in a pattern of complementary advantages and coordinated development.
“Benefiting from their strengths in technology, talent and industrial chains, Beijing, Shanghai and Guangdong Province are taking the lead in developing indigenous AI industrial ecosystems while continuing to advance the full industrial chain in areas such as integrated circuit manufacturing and industrial robots,” he said.
All three regions have identified “global AI competitiveness” as a goal in their five-year plans for 2026-2030, seeking leadership in AI technology, industrial ecosystems and application scenarios.
Beijing is working to establish itself as a global AI innovation hub. As of July 23, the capital had completed filings for 259 large models and registrations for 195 AI products, including general-purpose large models, industry-specific models and on-device mobile models, according to the municipal cyberspace administration.
By the end of June, 169 large AI models in Shanghai had received filing approval. The city’s 394 above-scale AI enterprises generated more than 637 billion yuan ($93.85 billion) in industrial output in 2025. In Guangdong, the core AI industry exceeded 300 billion yuan in scale last year.
Diversified tracks with unique advantages
Other regions are also using their distinctive resources to develop specialized AI sectors and pursue differentiated growth paths.
East China’s Anhui Province is stepping up efforts in the AI chip industry and has achieved a series of breakthroughs. Nexchip, the province’s first 12-inch wafer foundry, debuted on the Hong Kong Stock Exchange in July, giving it dual listings in Hong Kong and on the A-share market. Its fourth-phase project, involving an investment of 35.5 billion yuan, is scheduled to begin production in the fourth quarter of this year.
ChangXin Memory Technologies, a memory chipmaker based in Hefei, the capital of Anhui, also went public in late July and became the most valuable company on China’s A-share market.
Central China’s Hubei Province is leveraging its strong optoelectronics sector. Its capital, Wuhan, is home to the Optics Valley of China, and the province has built a globally competitive full industrial chain covering optical communications, chips, displays, terminals and networks to meet growing demand for AI computing power.
Henan Province, traditionally a major transportation hub, is using AI to transform itself from a “railway heart” into a “computing power hub.”
In April, the country’s largest scientific intelligent computing cluster began operations at the national supercomputing network’s core node in Zhengzhou, the capital of Henan. The project marked a major advance in China’s computing infrastructure for AI-driven scientific research and industrial applications.
Meanwhile, regions including Xinjiang, Inner Mongolia and Guizhou are leveraging their abundant clean energy resources to develop intelligent computing centers.
Computing center in the mountains
Located in the Wuling Mountains in Lichuan City, Hubei Province, the Lichuan AI Computing Center demonstrates how geographical and natural advantages, including a cool climate and clean air, can support AI development.
Although Lichuan lacks abundant scientific and educational resources, its relatively cool weather and rich hydropower resources make it a suitable location for a computing center with comparatively low electricity costs.
The facility houses rows of black server cabinets, each about two meters high, with rapidly flashing indicator lights. It provides around 150 PFLOPS of computing power, with utilization exceeding 80 percent.
PFLOPS, or petaflops, measures computing speed for AI and data-intensive applications, with one PFLOP equivalent to 1 quadrillion calculations per second.
The center’s services now support sectors including culture and tourism, government affairs and aerospace information.
In Liangwu Township of Lichuan, GEOVIS Raywin Technology Co. Ltd. has established a satellite ground receiving station that can directly access computing resources from the nearby AI center to process satellite data in real time.
“The site is surrounded by mountains yet offers expansive views, with a pristine electromagnetic environment and a mild, stable climate. These natural endowments make it an ideal location,” said Gao Kui, the company’s general manager of operations.
He said the station’s proximity to the computing center also improves operational efficiency and convenience while reducing costs.
Beyond meeting external demand for computing power, the center’s surplus capacity is supporting local industries. More than 20 million tourists visit Lichuan each year for summer retreats and wellness, generating huge amounts of data related to accommodation, food, transportation, sightseeing, shopping and entertainment.
These data have supported the development of a domestic large language model for culture and tourism services, improving visitors’ experiences through AI-powered smart guides and other services.
The Ministry of Industry and Information Technology, working with other government departments, has been promoting the development of high-quality computing infrastructure. It is accelerating the coordinated deployment of hub, regional and edge computing facilities while building a national integrated automated monitoring system to track computing power and its use.
2 months ago
States take Meta to trial in California over alleged harm to children on social media
Among the thousands of legal cases Meta is facing over the safety of children on its platforms, a trial beginning this week in California could have particularly significant consequences.
The states involved are seeking substantial financial penalties that could theoretically reach $1.4 trillion, along with changes to the way Meta operates Facebook and Instagram.
The lawsuit alleges that Meta knowingly designed features intended to keep children and teenagers engaged and dependent on its platforms, contributing to the growing youth mental health crisis. It also accuses the company of collecting personal information from children under 13 without obtaining parental permission, which would violate federal law.
The case was filed by dozens of states three years ago. The trial beginning Tuesday in federal court in Oakland involves California, Colorado, Kentucky and New Jersey as the plaintiffs. The remaining 25 states are expected to pursue separate trials later.
Meta has rejected the allegations, saying evidence presented during the trial will demonstrate the company’s efforts to protect and support young users. The company said it has worked with parents, experts and law enforcement and conducted extensive research into issues affecting young people.
States seek significant penalties against MetaThe case presents major risks for Meta, particularly after the company lost two important cases involving alleged harm to children and teenagers earlier this year. Meta also reported an unusual decline in profits last month, partly because of $2.4 billion in legal costs.
The potential $1.4 trillion penalty disclosed by Meta in a court filing is nearly equivalent to the company’s entire market value. Legal experts say such a penalty would almost certainly push the company into bankruptcy if it were actually imposed.
Eric Goldman, a law professor at Santa Clara University, said state attorneys general are seeking an unusually strong outcome, including potentially significant financial penalties and changes to Meta's business structure.
Meta has described the proposed penalty as completely disconnected from the violations alleged by the states. The company argued in a July court filing that a penalty of that magnitude would be unprecedented in consumer-protection enforcement.
Even if the states win, however, experts believe the court is highly unlikely to impose the full $1.4 trillion amount. Cornell law professor James Grimmelmann said such a judgment would bankrupt Meta, eliminate the value held by its shareholders and potentially leave the states in control of the company.
He noted that courts have previously reduced enormous potential penalties when calculating damages for numerous individual violations. In one example involving Anthropic's AI training practices, plaintiffs initially sought $150,000 for each copyrighted book allegedly copied, but the final amount was reduced to $3,000 per book, resulting in roughly $1.5 billion in damages.
Trial focuses on alleged violations of state and federal lawsThe California federal case is more complicated than a separate trial held earlier this year in Los Angeles. In that case, a state court awarded $6 million to a young woman who said she became addicted to social media as a child. The damages were assessed against Meta and Google's YouTube.
That earlier case was considered a bellwether trial, meaning it was selected from thousands of similar lawsuits to provide an indication of how arguments from both sides might perform in court. Jurors concluded that Meta and YouTube were negligent in designing or operating their platforms and that their conduct contributed significantly to the plaintiff's injuries. They also found that the companies knew their services could pose risks to minors but did not provide sufficient warnings.
The Oakland trial differs because state attorneys general are bringing the case and alleging violations of multiple state and federal laws. These include regulations covering children's privacy, false advertising and unfair competition, with penalties potentially applying to each violation.
Meta has introduced safety measures, but states want stronger protectionsThe trial could result in changes to the way Facebook and Instagram function, which may ultimately prove more significant than any financial penalty.
Meta has introduced several measures aimed at protecting minors. In 2024, Instagram introduced Teen Accounts, which make young users' profiles private by default and impose restrictions on messaging and content while providing parents with additional controls. Meta also uses artificial intelligence to identify possible users under 13 and detect teenagers who may be misrepresenting their ages.
However, child-safety advocates argue that these measures are not enough. Earlier this month, a judge in New Mexico ordered Meta to introduce additional protections, including limits on how long minors can use the platforms, restrictions on AI chatbot interactions and mandatory warnings. The order applies only to users in New Mexico.
Advocates say the California case could give state governments an opportunity to force broader changes to Meta's products and policies.
During jury selection last week, potential jurors were asked about the extent to which they believe Meta has contributed to declining mental health among young people. Many acknowledged that social media could play a role, while also pointing to parents, climate change and broader social conditions as other factors affecting children's and teenagers' mental health.
2 months ago
Berkshire Hathaway boosts Alphabet, homebuilder investments in second quarter
Berkshire Hathaway significantly increased its investment in Google parent Alphabet and expanded its holdings in US homebuilders during the second quarter, according to the conglomerate’s latest regulatory filing.
The Omaha-based company also reduced its positions in several financial firms and other companies during the April-June period, the filing showed.
Berkshire bought about 48.1 million additional Alphabet shares in the second quarter, bringing its total holding in the technology giant to roughly 106 million shares.
The stake was valued at about $37.76 billion as of June 30. At the end of last year, Berkshire held only around 17.8 million Alphabet shares worth about $5.6 billion.
Berkshire CEO Greg Abel, who succeeded Warren Buffett at the start of the year, agreed in June to make a $10 billion investment in Alphabet, adding to the position Berkshire began building last year.
Alphabet has announced plans to spend $80 billion on computing infrastructure to support its artificial intelligence services.
Beyond the technology sector, Berkshire continued to increase its exposure to the US housing market.
Its investment in homebuilder Lennar rose by nearly 30% during the quarter. Berkshire also took a new, small position in D.R. Horton, which was worth about $580,504 at the end of June.
In July, Berkshire completed its $6.8 billion acquisition of homebuilder Taylor Morrison.
The conglomerate also substantially increased its holdings in Delta Air Lines and Macy’s during the quarter. Its Delta stake was valued at about $5.37 billion at the end of June, while its Macy’s investment was worth around $173 million.
At the same time, Berkshire reduced its positions in several companies, including supermarket operator Kroger, steelmaker Nucor and dialysis services provider DaVita.
It completely exited beverage company Constellation Brands, selling all 632,890 shares it held.
Berkshire also cut several financial-sector holdings. Its stakes in Bank of America and Ally Financial fell by about 6% and 6.9%, respectively, while its holding in Capital One Financial was reduced by 58%.
Investors closely monitor Berkshire’s portfolio because many have historically tried to replicate Buffett’s investment decisions.
Buffett remains Berkshire’s chairman and largest shareholder despite handing over the chief executive role to Abel at the beginning of the year.
Berkshire, which owns a wide range of businesses including insurer Geico and railroad operator BNSF, does not typically comment on its quarterly stock transactions, allowing the regulatory filings to provide the main public insight into its investment decisions.
2 months ago
Maryland tax court strikes down digital ad tax, orders refunds to Apple, Google and Peacock TV
A Maryland state tax court has struck down the state’s tax on digital advertising and ordered officials to refund money collected from major technology companies, including Apple, Google and Peacock TV.
In a ruling issued Friday, the Maryland Tax Court found that the tax violated the federal Internet Tax Freedom Act as well as constitutional protections involving free speech, interstate commerce and due process.
Maryland became the first US state to impose a tax specifically on digital advertising when lawmakers approved the measure in 2021. The state had estimated that the tax could generate around $250 million annually to help fund a major K-12 education initiative.
Under the law, companies with more than $100 million in annual global gross revenue were subject to a 2.5% tax on revenue generated from digital advertisements displayed in Maryland. The rate increased for companies with higher global revenues, reaching 10% for companies earning at least $15 billion annually.
Supporters argued that the tax system needed to be updated to reflect major changes in the way businesses advertise and generate revenue.
However, major technology companies, including Meta and Amazon, challenged the law in several courts, arguing that it unfairly targeted them.
In its latest ruling, the Maryland Tax Court said Congress, rather than individual states, has authority to regulate interstate commerce. It also questioned the law’s use of companies’ global revenue to determine the tax, rather than revenue specifically generated from advertising in Maryland.
The court also cited the federal Internet Tax Freedom Act, which restricts states from imposing taxes on electronic commerce when comparable services are not subject to similar taxes.
The court found that, at least under the current circumstances, there was no significant distinction between digital advertising and traditional advertising such as print and billboard ads, meaning the federal restriction applied.
The ruling follows a decision last year by the 4th U.S. Circuit Court of Appeals, which found that part of Maryland’s digital advertising law was unconstitutional because it prevented companies from informing customers that they were passing the tax costs on to them.
Judge Julius Richardson said that provision violated the companies’ First Amendment right to free speech.
Maryland Senate President Bill Ferguson and House Speaker Joseline Pena-Melnyk, both Democrats, said they respectfully disagreed with the tax court’s decision and expected the legal battle to continue.
They said the law was intended to modernize Maryland’s tax system in response to changes in the economy.
“We remain committed to ensuring that Maryland’s tax system is fair, sustainable, and reflects today’s economy,” they said in a statement, adding that they would continue working with the state attorney general and comptroller as the case moves through the courts.
The ruling is being closely watched by other US states considering similar taxes on digital advertising.
2 months ago