Impact of new California privacy law will be felt by consumers here, too

Last week, California passed an internet privacy law that could have ripple effects in Indiana and nationwide.

While the new law, perhaps the strictest in the United States, doesn’t take effect until January 2020, many people in business and technology circles think the impact could be felt sooner as companies—ranging from Facebook and Amazon to AT&T and Comcast—settle on strategies to deal with the regulations, which grant consumers more information about and control over the spread of their personal data online.

The law gives residents the right to know what data is collected by companies like Google and Facebook and to request their information not be sold to third parties.

Under the new law, consumers will find it easier to sue companies after a data breach. And it gives the state’s attorney general more authority to fine companies that don’t adhere to the new regulations. Sharing or selling information on people younger than 16 is also more difficult under the new law.

So what does all this mean for Hoosiers—and the rest of the country? A Purdue University professor says it could result in a business strategy that offers discounts in exchange for user data.

“The natural response to this law from companies will be to have users consent for their data to be shared in return for discounts,” said Karthik Kannan, the Thomas Howatt chaired professor in management at Purdue University and an expert in data analytics.

But, he said, “because we are dealing with information, there are still some open-ended issues. If a user changes their mind and does not want discounts anymore, what happens to his or her past information that was sold?”

The legislation likely will set a precedent for data collection and information security across the U.S., and possibly around the world, said Kannan, who studies how companies can leverage big data while balancing privacy concerns.

“Companies such as Google and Facebook are unlikely to retain a separate set of policies for customers in California versus the rest of the country,” he said. “The U.S. as a whole might start seeing improvements in data protection reminiscent of the fuel emission standards California imposed in the past. Because they were the tightest in the nation, it led to auto companies producing fuel-efficient cars for everyone. In similar regards, this law could be hugely influential.” 

The new law was opposed by Google, Facebook, Verizon, Comcast and AT&T, which each payed $200,000 to a committee fighting a proposed ballot measure in California that closely mirrors the new law.

Robert Callahan, a vice president of state government affairs for the Internet Association, a Silicon Valley lobbying group whose members include Google, Facebook and Amazon, said in a statement that the new law contains many “problematic provisions.” 

Among them are ambiguities in the new law, opponents said. But the Internet Association did not try to obstruct the law, Callahan said, because “it prevents the even worse ballot initiative from becoming law in California.”

If the bill had failed, proponents of it—led by California real estate developer Alastair Mactaggart, who spent $3 million and gathered 600,000 signatures to get the ballot initiative certified—promised to take the issue straight to the voters in November.

Since the law was passed, the ballot initiative will be dropped.