WASHINGTON, DC – In a joint letter led by the Association for Competitive Technology (ACT), a coalition of organizations is urging the California Senate Judiciary Committee to reject AB 1776, the COMPETE Act, warning that the bill would create a vague California-specific antitrust framework that threatens startups, small businesses, developers, and the broader innovation ecosystem.

AB 1776 would move California away from established antitrust guideposts by limiting the role of federal antitrust precedent and creating new uncertainty over how ordinary commercial conduct will be judged. The coalition warns that the bill would make common business practices involving product integration, platform management, marketplace curation, pricing, distribution, security, and fraud prevention easier to challenge, even when those practices benefit consumers and small businesses.

The letter, sent to Senate Judiciary Committee Chair Thomas Umberg and Vice Chair Roger Niello, highlights three core concerns with AB 1776:

    • Moving California antitrust law away from established federal guideposts, creating uncertainty for businesses and courts;
    • Making ordinary and often procompetitive business practices legally suspect, including integration, platform management, marketplace curation, and trust and safety measures; and
    • Adopting a “regulate first” approach that could slow innovation, increase costs, and undermine California’s leadership in artificial intelligence and emerging technology markets.

“AB 1776 would replace predictable competition rules with an uncertain, litigation-driven framework that businesses will struggle to navigate,” said Graham Dufault, general counsel of the Association for Competitive Technology. “Startups and small developers rely on integrated digital ecosystems for distribution, payments, security, fraud prevention, customer trust, and market access. Making those ordinary platform practices newly suspect would raise costs and make it harder for smaller firms to compete.”

The coalition also warns that AB 1776 is poorly suited for modern technology markets, where costs and benefits often appear across different products, services, and user groups. By requiring courts to evaluate anticompetitive effects and procompetitive justifications within the same relevant market, the bill could prevent courts from considering the full competitive context of platform, software, and AI markets.

This risk is especially acute for emerging technology companies in California. Smaller firms building AI-enabled tools in healthcare, education, agriculture, productivity, and other sectors depend on access to infrastructure, distribution channels, and commercial relationships that support rapid growth and deployment. A broad new liability framework could discourage the partnerships, integrations, and product design choices that help these companies scale.

“California should lead the world in innovation, not import a regulatory philosophy that has stalled product launches, delayed access to new tools, and increased costs and uncertainty for small tech businesses,” Dufault continued. “California already has substantial antitrust enforcement tools. Lawmakers should reject AB 1776 and avoid creating a state-specific liability regime that weakens the ecosystem small businesses depend on.”

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About the Association for Competitive Technology (ACT)
ACT is a global technology trade association representing startups, scaleups, and small technology companies. ACT works directly with members worldwide to advocate for a policy environment that addresses their real-world challenges and supports innovation, access to capital, job creation, and the ability of small technology companies to grow and compete globally.