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Solutions
The correct answer is option 2 i.e. or laughing at.
The error lies in option 2 because of the wrong use of "Verb form".
We need to replace "Laughing" with "Laugh" to make the statement grammatically correct.
Grammatical concept:-
All the verbs are in the "First form" hence, we need to keep the coming verb joined with "or/and" in the same form.
The chosen option contains the Grammatical Error hence, it will be the correct choice.
Correct Sentence:-
The state is tightening its control over what we read, watch, hear or laugh at.