According to the Legislative Budget Board (LBB), the House Committee Substitute for SB 2420 is not expected to have a significant fiscal impact on the state. The relevant state agencies—including the Office of Court Administration, the Office of the Attorney General, and the Comptroller of Public Accounts—indicated that any administrative or enforcement duties created by the bill could be managed within existing appropriations and staff capacity.

The bill does not create new government programs, grant rulemaking authority, or require the establishment of oversight agencies, which keeps potential state expenditures low. Instead, the bill relies on private sector compliance, placing regulatory duties on app store operators and software developers rather than state agencies. As a result, the state is not expected to incur meaningful costs related to enforcement or administration.

At the local level, the bill is also projected to have no significant fiscal implications. It does not impose new duties on municipal governments, law enforcement, or local courts. Any related activity, such as consumer complaints or legal actions under deceptive trade practice provisions, is anticipated to be minimal and absorbable within current workloads.

In summary, while the bill imposes compliance costs on private businesses, it does not generate measurable financial burdens for state or local government. Thus, the bill maintains a neutral fiscal footprint for public sector budgets.

The House Committee Substitute for SB 2420, known as the App Store Accountability Act, introduces some notable refinements over earlier versions, including improved data privacy provisions and a narrower scope for data sharing. These changes reflect good-faith efforts to respond to stakeholder feedback and reduce overreach. However, despite these improvements, the core structure and approach of the bill remain problematic from a liberty-oriented and limited-government perspective. On balance, SB 2420 still expands government authority, imposes mandates on the private sector, and risks undermining parental autonomy and digital innovation without sufficiently addressing the true sources of harm in online environments.

The most significant concern is the bill’s continued expansion of government regulatory authority into private family decisions and the operations of private digital marketplaces. SB 2420 mandates a statewide age verification and parental consent system for app stores and developers, with enforcement through deceptive trade practices law. This places the state in the position of defining and managing digital parental controls—a function better suited to families and market-based solutions. Rather than offering parents tools or education, the bill imposes a rigid legal framework that all parties must follow, regardless of context or individual preference.

Critically, the bill substitutes state mandates for parental judgment. By requiring explicit consent for every download or in-app purchase, the legislation burdens parents with an inflexible, transactional system that may hinder more than help. It assumes that responsible parenting must be structured and enforced by the state, rather than trusting families to use discretion, existing device-based tools, and common sense. This framework not only undermines the agency of parents but risks disincentivizing the very engagement it purports to support. Protecting children online is a shared priority—but parents, not the government or app stores, are best positioned to make those determinations on a case-by-case basis.

From an economic standpoint, the bill poses particular risks for small developers and startups. While larger platforms may absorb the compliance costs and legal complexity, smaller players may struggle to meet the technical requirements for age gating, parental consent tracking, and regulatory adherence. This could create a chilling effect on innovation and entrepreneurship in Texas’s growing digital economy. Additionally, the bill's structure incentivizes risk aversion, possibly deterring new app deployment or updates, particularly in youth-oriented education, gaming, or social connection spaces.

Equally concerning is the bill’s long-term impact on free enterprise. SB 2420 imposes top-down regulatory burdens on private companies that are already offering optional tools for age controls and parental engagement. It replaces innovation and customer choice with uniform mandates, flattening the competitive landscape. App stores and developers—especially smaller, Texas-based firms—will be forced to devote resources to legal compliance rather than product development, threatening the diversity and vibrancy of the app marketplace. In doing so, the bill undermines the very entrepreneurial dynamism that has made Texas a national leader in tech and small business growth.

Crucially, SB 2420 misdiagnoses the primary threat to children online. It focuses on app stores as intermediaries rather than on the specific content platforms and developers responsible for generating or enabling harmful material. This misalignment may generate compliance without actual protection, as problematic apps may still find paths to users, while responsible developers face heightened regulation. Moreover, the bill does not directly address algorithmic exploitation, predatory monetization schemes, or platforms that evade parental oversight by design.

While child protection is a shared and important goal, this legislation’s approach reflects an expansive regulatory posture that oversteps the appropriate role of government. Empowering parents through transparency, education, and voluntary tools offers a more balanced path forward. SB 2420, even in its revised House form, leans too heavily toward state mandates and regulatory enforcement, with questionable benefits and likely unintended consequences.

For these reasons, Texas Policy Research recommends that lawmakers vote NO on SB 2420. The bill remains inconsistent with principles of limited government, personal responsibility, free enterprise, and individual liberty, and risks setting a precedent for future digital regulation that bypasses family authority and innovation-friendly policy.

• Individual Liberty: The bill introduces a state-mandated framework for age verification and parental consent, requiring that all users be categorized into age brackets and that minors obtain permission from a parent or guardian for every app download or in-app purchase. While the intent is to protect minors, this imposes blanket restrictions that potentially reduce the freedom of older teenagers and their families to make decisions on their own terms. The bill substitutes uniform digital controls for the nuanced decisions that parents and youth already make using existing tools. Furthermore, the mandated data collection, even when minimized, still raises privacy concerns for families and adult users alike. This level of state involvement in digital access curtails individual choice and autonomy.
• Personal Responsibility: At its core, the bill represents a transfer of responsibility from parents to the state and private app stores. Rather than equipping families with information and tools to manage their own children’s digital lives, the bill mandates a prescriptive system of verification, consent, and oversight. This undermines the very notion that families are the best arbiters of their children’s needs, capabilities, and boundaries. It reflects a top-down philosophy that assumes parents are not capable of managing their children’s digital habits without legal mandates, which is contrary to the principle that responsibility for children belongs first and foremost to parents, not the government or corporate platforms.
• Free Enterprise: The bill represents a clear intrusion into the domain of private enterprise by shifting enforcement responsibilities from parents to businesses and prescribing how platforms must design, operate, and interact with their users. This bill would effectively require all app stores and developers, regardless of size, market focus, or risk profile, to bear the cost of building and maintaining a state-mandated age classification and consent infrastructure. While large tech firms may absorb these costs, smaller businesses and independent developers are far more likely to be squeezed out or deterred from entering the marketplace entirely. Moreover, the legislation disrupts the principle of competitive innovation by substituting centralized compliance mandates for decentralized, voluntary solutions. Instead of allowing platforms to develop and offer differentiated parental tools or content moderation systems tailored to their user base, SB 2420 imposes a one-size-fits-all regulatory model. This chills experimentation, rewards compliance over creativity, and locks in procedural costs that act as barriers to entry. Innovation in Texas’s tech sector—particularly from startups and small firms—is likely to slow, not because of market failure, but because of regulatory overreach. Free enterprise thrives in an environment where businesses are accountable to consumers, not to a checklist of state-imposed requirements disconnected from product context or user intent. The bill risks turning app distribution into a heavily policed channel defined more by liability avoidance than by responsiveness to users or parents. For a state that prides itself on economic freedom, entrepreneurship, and limited government, this bill sets a concerning precedent for digital overregulation.
• Private Property Rights: The bill indirectly affects the ability of private platforms to control how they manage access to their products and services. By dictating how app stores must classify users, verify identities, and facilitate transactions, the bill limits the discretion of these businesses in designing and administering their own systems. While it doesn’t result in expropriation or overt seizure of property, it effectively requires businesses to structure their operations around state-prescribed procedures, narrowing their freedom to innovate and serve customers as they see fit.
• Limited Government: Perhaps the most concerning aspect of the bill is its contradiction of the limited government principle. The bill centralizes decision-making around age-appropriate access in the hands of the state, mandates compliance with detailed regulatory schemes, and establishes enforcement under deceptive trade practices law. This represents a considerable expansion of the state’s role into digital commerce and family life, where market-driven solutions and parental discretion should prevail. Even with its improved privacy protections and narrowed data scope, the bill still exemplifies a top-down mandate where freedom-oriented governance would favor flexibility, education, and voluntary adoption of parental controls.

• HB 4901 (Same As)