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California’s New Privacy Law Could Have Big Impact on Tech, Media


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California 's legislature passed sweeping new privacy legislation Thursday that will likely have a major impact on both technology as well as media and entertainment companies, and that could lead to other states following suit. The law was passed in mere days to prevent voters from passing even stricter rules come November.

AB 375, also known as the California Consumer Privacy Act of 2018, passed both the State Assembly and the Senate without any opposition Thursday afternoon, and was signed into law by governor Jerry Brown soon after. When it goes into effect in 2020, the law will give consumers the right to request all the data businesses are collecting on them, as well as the right to request that businesses don't sell any of their data.

The law also comes with strict disclosure rules about data collected by businesses, and it empowers the California Attorney General to fine businesses for non-compliance.

The bill had been introduced just days before, and quickly made its way through the committees. That's because lawmakers were acting under a tight deadline: Californians for Consumer Privacy , a group headed by real estate developer Alistair Mactaggart, had been preparing a ballot initiative to that would have gone even further than AB 375.

The initiative had already collected the necessary signatures to qualify for the November election, but Mactaggart had announced that he would withdraw it if lawmakers were to pass their own bill. Thursday was the last day to finalize ballot propositions that will go before voters in November.

"We are thrilled that AB 375 has become law," Mactaggart said Thursday after the signing of the bill. "This is a monumental achievement for consumers, with California leading the way in creating unprecedented consumer protections for the rest of the nation."

Mactaggart's ballot initiative had been opposed by media, telco and tech companies including Amazon, Google, Microsoft, Comcast, AT&T and Verizon, which all financially contributed to a California Chamber of Commerce-led campaign against its passage. Facebook also spent $200,000 against it, but reversed course after it came under pressure over the Cambridge Analytica data scandal.

Opponents of the ballot measure had argued that it would force companies to "disconnect California" and effectively operate under different rules in the State than elsewhere. With the passage of AB 375, many observers that the opposite will happen: Tech and media companies will adopt stricter privacy rules and make them available to all users, regardless of whether they reside in California or not.

The biggest impact of the law could be on online media business models. Businesses aren't allowed to discriminate against consumers who opt out of the sharing of their data, but they can offer consumers financial incentives if they do agree to share their data. They could also charge consumers reasonable fees for not sharing their data with advertisers or other third parties, which could accelerate the move towards subscription businesses.

However, with AB 375 not going into effect until the beginning of 2020, many expect that both consumer advocates and the business community will lobby to further amend these and other parts of the law.

At the same time, privacy advocates have already vowed to bring similar legislation to other states. One of those groups is Common Sense Media, whose CEO James Steyer promised to do just that in a statement released Thursday: "We look forward to working together with lawmakers across the nation to ensure robust data privacy protections for all Americans."

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Startups, Media Companies Block European Users in Wake of New Privacy Laws

Facebook Admits to Collecting Call and Text Message History From Some Users

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Technology


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