Future-Proofing Your Terms of Service

As artificial intelligence and online platforms transform the digital economy, a new wave of state-level legislation is reshaping how tech companies must approach their Terms of Service (ToS), as well as their Privacy Policies. From California to New York, and from proposed laws to enforceable statutes, a clear theme is emerging: transparency, accountability, and user protection. While many laws focus on personal data collection and privacy, an increasing number are now zeroing in on the public-facing documents that govern user interaction—Terms of Service. For tech companies large and small, staying ahead of these legal developments is crucial to avoid enforcement actions, reputational damage, or costly litigation.

California: The Frontline of Terms of Service Regulation

California has taken a leading role in mandating transparency in platform governance. One of the key statutes is Assembly Bill 587 (AB 587), which took effect on January 1, 2024. AB 587 requires social media companies with over $100 million in annual revenue to publicly post their Terms of Service and to disclose their content moderation policies. Platforms must submit semiannual reports to the California Attorney General detailing how they enforce these policies, including any changes made to their ToS and moderation procedures.

Originally, AB 587 mandated that companies define and disclose their approach to controversial content categories such as hate speech and misinformation. However, following a First Amendment challenge from X Corp. (fka Twitter), a February 2025 settlement eliminated those specific provisions. Despite the rollback, the law remains in effect, and platforms are still required to publicly post their ToS, make them downloadable, and report biannually on enforcement practices. The California Department of Justice continues to monitor compliance, with submitted reports made publicly available.

Another major California law, Assembly Bill 2481 (AB 2481), known as the Youth Social Media Protection Act, is scheduled to take effect on January 1, 2026. AB 2481 mandates that large social media platforms (defined as those with over 100 million users or $1 billion in revenue) include specific procedures in their ToS for reporting content that poses a risk to minors’ safety. Verified reporters, such as school officials and mental health professionals, must be able to submit threat reports and receive responses within 24 to 72 hours. Platforms are also required to publish annual statistics on the volume and outcome of such reports. Though not yet in effect, AB 2481 is prompting proactive compliance planning across the industry.

New York: Mandatory Transparency in Terms of Service

New York has also joined the regulatory vanguard with the "Stop Hiding Hate" Act, formally Senate Bill S895B. Signed into law in December 2024, the statute imposes detailed requirements on social media companies operating in the state. Platforms must publicly post their ToS in a user-accessible format and make them available in the twelve most commonly spoken non-English languages in New York. The ToS must describe how users can flag content, what actions the platform may take against violating content or users, and provide a contact mechanism for inquiries.

Additionally, S895B requires social media companies to submit semiannual reports to the New York Attorney General. These must include updates to their ToS, statistics on flagged content, definitions of moderation categories (such as extremism or harassment), and explanations of their content moderation procedures. The Attorney General must make these reports publicly accessible via a searchable repository. Violations can result in fines of up to $15,000 per day, though a 30-day cure period is granted for initial noncompliance. As of this writing, S895B is in force and unchallenged.

Litigation Watch: Florida and Texas Laws in Legal Limbo

In contrast to the enforceable measures in California and New York, similar efforts in Florida and Texas are currently stalled due to constitutional challenges. Florida Senate Bill 7072 (SB 7072) and Texas House Bill 20 (HB 20), both enacted in 2021, sought to prevent social media platforms from censoring users based on viewpoint or from deplatforming political candidates.

SB 7072 required platforms to publish detailed moderation policies, provide mechanisms for users to access their data, and allow users to opt out of algorithmic rankings. HB 20 went further, mandating that large platforms implement transparent appeals processes and prohibiting moderation based on viewpoint or geography. Both laws imposed significant obligations on platform Terms of Service.

However, both were quickly challenged in court. Federal judges initially blocked enforcement in both states, citing First Amendment concerns. The Fifth Circuit later upheld HB 20, while the Eleventh Circuit struck down SB 7072, creating a circuit split. In July 2024, the U.S. Supreme Court vacated both appellate decisions and remanded the cases for further analysis, stating that the lower courts had not sufficiently addressed the First Amendment issues at stake. As of April 2025, neither law is in effect, and platforms are not required to comply with them—yet.

What This Means for Tech Companies

These state laws are converging around a shared objective: compelling digital platforms to be more open and accountable. While not all of these statutes directly require updates to Privacy Policies, they increasingly require Terms of Service to function as living, transparent, and accessible documents. This includes disclosing moderation policies, outlining user rights, describing complaint processes, and sometimes even making content policies multilingual.

For tech companies, this marks a significant shift. Large firms must now treat their ToS as compliance artifacts, not just legal shields. Smaller companies may not yet be directly affected by these laws, but the trend line is clear. With federal proposals like the American Data Privacy and Protection Act (ADPPA) and growing public scrutiny of AI and content moderation, it’s only a matter of time before similar requirements become more widespread.

Next Steps

If you operate a platform, now is the time to:

• Audit your Terms of Service for transparency and completeness

• Prepare internal processes to support user flagging and appeals mechanisms

• Localize content policies for jurisdictions with language access laws

• Build compliance roadmaps for upcoming statutes like AB 2481

Even if litigation delays enforcement in some states, these laws set a precedent. Future-proofing your ToS and related moderation systems is not just a legal safeguard—it’s becoming a competitive advantage in a market increasingly shaped by trust and accountability.

Stay tuned for updates as these laws evolve, and reach out if you need help adapting your ToS and compliance strategy.