[nwmt]

I think it's a bit premature to suggest that either a) Facebook would move out of California or b) a new social network would start up outside of California and eat Facebook's lunch because it didn't have draconian laws. Surely there are easier ways to solve the problem at hand.

[marcusbooster]

I'm only going from the article, which is evidently flawed (TechCrunched!), but it could effectively add a tax on social networking sites operating in the state. States compete for companies all the time and this could provide an opening for somewhere else to put together a more compelling package. Obviously the big drawback to leaving is the lack of tech people, so I guess you weigh your options. Personally, I feel like Facebook and Google would set up shop on the moon if it were in their financial interest and they could find someone to run it.

[anigbrowl]

What you're missing is that the state the company is located in doesn't matter. In general, if it's doing business in California, it can be sued in California court. This has been the case for a long long time. Otherwise everyone would just set up in Delaware or whichever state was most inaccessible and/or sympathetic to corporate defendants.