Eric Little: California’s privacy gamble
August 9, 2018
As you may have heard, about six weeks ago the California Legislature suddenly drafted and passed a new privacy law.
A ballot initiative on privacy funded by a wealthy San Francisco real estate investor and scheduled for the November ballot supplied urgency to this effort. The folks down the hill preferred to write the new law by themselves, so they enacted the California Consumer Privacy Act of 2018.
In their rush, the legislators passed a law full of inconsistencies and unintended consequences. Whether they will be able to revise it into something acceptable before it goes into effect on Jan. 1, 2020 is unknown. Unless that happens, the law will hurt small and medium-sized businesses and limit effective civil and political discourse to a small number of on-line platforms.
Like the recently implemented European General Data Protection Regulation, the California law covers the collection, sale or transfer of all personal information, regardless of whether it occurs manually, over the internet, by video, or otherwise. Although the law applies to only certain for-profit entrepreneurs and companies, it will, nonetheless, sharply curtail the collection, sale or transfer of personal information about California residents. Indeed, this is its intended purpose.
Will the next great social movement be forced to advertise on Facebook or Google to share its message?
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Many Californians will say this is a good thing. They're damn tired of having ads for lawn chairs after they've checked prices on Amazon, follow them around like a lost puppy on the next 15 internet sites they visit. Nothing wrong about prohibiting that, they might say.
Well, let's walk through what is likely to happen. Consumers, if only as a result of click fatigue, will almost certainly allow companies to continue collecting information about them, even as they prohibit companies from selling this information to others.
This is a silver lining for the largest technology and social networking companies. Their market power will increase while smaller startup and emerging competitors are driven out of business. How could this perverse result happen? Easily.
The largest companies —Twitter, Google, Facebook and, of course, Amazon — will continue to have enough data to support a sophisticated analysis of their customers. If these companies can't sell this information to data brokers or vendors, vendors will have to come to these companies to purchase targeted ads and rates for targeted ads will rise.
But wait, there's more.
Because targeted advertising will be limited to a smaller number of platforms, many vendors will seek to display their advertisements on search engines when relevant queries suggest that a visitor is a likely prospect for their products. This less efficient approach will require more advertising dollars to achieve the same results as targeted ads.
Consequently, the importance and market power of the biggest online companies with the most data will increase, rather than decline. Smaller companies that don't collect sufficient information on consumers will be out of luck. Advertising costs will rise to the detriment of everyone, but particularly small and medium companies trying to market their products or services to California consumers.
These effects, by themselves, argue for a rethink of the privacy law. Yet vastly more important than its economic effects may be the new law's long-term civic and political impact.
The great social movements in the United States — universal suffrage, civil rights, protections for labor and many others — grew out of the exercise of the rights set forth in the First Amendment, which provides that the government shall make "no law … prohibiting … the right of the people peaceably to assemble, and to petition the government for a redress of grievances."
With so much of our lives lived online these days, these rights to gather together and seek redress must also live online. However, if names and addresses of California residents, both physical or online, are unavailable, how can we exercise this right effectively?
Thus, one has to ask. Will the next great social movement be forced to advertise on Facebook or Google to share its message? Is that what we truly want?
The Wall Street Journal recently reported that the large technology companies are now pushing for a federal privacy law to preempt state legislation and provide a single nationwide standard. However, the prospect that this effort might fail and the California law might go into effect without revision, or worse, that the California law becomes a model for nationwide legislation is frightening.
Really, seeing too many lawn chair advertisements is a cheap price for preserving the power of future generations to be agents of social change.
Eric Little lives in Nevada County.
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