New legislation hinders data collection for targeted ads. That hurts small businesses | Opinion
If you’ve been searching online for shoes, an ad for a local shoe store might pop up on your phone or computer. That’s not because the shoe store owner is spying on you. It’s because your browser data indicates you’re a good match for shoe ads. That kind of data-powered advertising helps small businesses drive sales without wasting money advertising to people unlikely to be interested in their products.
Small businesses — which are 99.8 percent of California businesses — use aggregated or anonymized data to advertise to audiences likely interested in their products.
I run a Sacramento-based marketing and advertising agency that helps small businesses like salons and plumbers grow and compete with bigger brands. In today’s digital economy, that means creating great websites and content, and — critically — using digital ads to reach the right customers.
But the work we do for our clients could soon become much harder and more expensive — and many small businesses might not survive. That’s because California legislators are considering Assembly Bill 566, authored by Assemblymember Josh Lowenthal, D-Long Beach, which would make it tough for small businesses to reach people who are actually interested in their product or service.
The bill would force web browsers like Chrome and Safari to permit one-click data-blocking, which would cut off the flow of privacy-preserving digital insights that small businesses need to ensure their ads reach the right customers. Unfortunately, lawmakers don’t seem to understand the nature of this data, how small businesses actually use it or why its loss would be so damaging.
In announcing the introduction of AB 566, its sponsor, the California Privacy Protection Agency, said “many businesses collect and repurpose personal information,” and suggested that they “use and share it in dangerous ways.” That’s wildly inaccurate.
If people opt out of all data collection by default, small businesses will struggle to reach the right customers and make sales — and people will miss out on ads for things they may actually want, offered by local businesses they want to support. Large businesses, however, will gain another advantage, as they have larger customer bases and advertising budgets to reach people.
Indeed, the law would do little to help consumers because Californians already have control over their data. The most popular browsers, like Chrome and Safari, include various privacy controls and allow use of extensions that offer additional controls. Gov. Gavin Newsom cited this very point when he vetoed nearly identical legislation last year, and Attorney General Rob Bonta encouraged Californians to take advantage of these “easy-to-use” tools
Similarly, the California Privacy Protection Agency’s key rationale for the bill — that it will prevent misuse of individuals’ sensitive data — is a red herring. Sharing sensitive data for malicious purposes is already prohibited by a raft of state and federal privacy laws and standards. Agency officials know this, as all the instances of malicious data-sharing they highlighted were investigated by state and federal law enforcement officials.
California small businesses are already struggling with enormous economic uncertainty. Many are also dealing with the costs and complexities of complying with other California Privacy Protection Agency regulations, including the possible installation of costly pop-up data-use consent windows in front of their websites, which would cost an estimated $20,000 a year. Worse, consumers often find pop-ups aggravating, causing them to leave websites before purchasing anything.
I support smart, balanced privacy regulations, but AB 566 misses the mark. It would harm small businesses and do nothing to help consumers.
California already has some of the strictest data privacy laws in the U.S. The last thing we need right now is more regulations — especially when their costs are so great and their benefits non-existent.