Prop 24: A Choice Between Expensive Ineffectiveness or a Prosperous Future

Prop 24: A Choice Between Expensive Ineffectiveness or a Prosperous Future

On November 3, Californians will be asked to make a what appears to be a simple decision, that is, would they like to increase their privacy? However, where Proposition 24, to enable the California Privacy Rights and Enforcement Act is concerned, appearances are deceiving.

In 2018, seeking to address the same issue, a massive consumer privacy regulation, the California Consumer Privacy Act, was forced through the state legislature.  The state legislature passed the Act after just a week of work in a rush to avoid a threatened ballot initiative.  They did so because ballot measures can rarely be amended or changed. Appropriate review was denied, something that this proposal very much needed.

The proposal needed review more than most as it was written by a San Francisco real estate developer with no expertise in privacy law or legislation. He demanded that the law be passed or he would move forward with the ballot proposal on which he spent millions of dollars to gather the necessary number of signatures. He effectively bought the law.

Unsurprisingly, the language of the resulting law was lacking. In fact, it was so problematic, so ill-written, that the enforcement date had to be set two years in the future, to July 1 of this year, so that whole paragraphs of ambiguous language could be addressed. The mechanisms for expanded policing and enforcement on the internet had to be determined. Unaffordable compliance costs for every website viewed in California had to be considered as well.

But even with that delay regulatory “clarifications” have continued. The supposed final draft of the rules for enforcement were not released from the attorney general’s office until June 2, less than 30 days before enforcement would begin. The latest round of modifications took place on October 12, months after enforcement began. Yet still sprawling and unclear definitions have gone unclarified, likely to rope in data and actions that were never contemplated.

Now, adding to the costs and confusion, another proposal, the California Privacy Rights and Enforcement Act, is on the ballot as Proposition 24. This proposal suffers from the same lack of thoughtful analysis and drafting. Few think it is a good idea. People on both sides of the political aisle have real problems with the proposal.

Problematically, the new proposal would allow law enforcement to direct companies to retain the personal data of its customers for twice as long as is allowed now. The risks to privacy from longer term storage of sensitive information are well known. Even worse, the government would not even need a warrant or subpoena. That is, government could force private businesses to collect and keep data without any oversight.

The proposition would also create a new bureaucracy, the California Privacy Protection Agency, with its sole function and focus to scrutinize and penalize companies. Prop. 24, if enacted, would create a perverse incentive as the new agency would be solely funded from the fines it collects for presumed violations of the law. The clear incentive is to broadly define violations and extract large fines.

Further, the provisions included to exempt small business fail for a lack of understanding of the real world. For example, excluding companies who interact with less than 50,000 customers might have been an adequate exemption decades ago. However, today 50,000 interactions via a digital platform seems laughable. That number of views might earn a person about $1800 a year on YouTube according to Influencer Marketing Hub. Hardly enough for a side hustle much less a business.

The cost to business is already soaring. Businesses that have already tried to comply with the ever-changing rules have already wasted time and money. While big businesses can likely weather the ambiguity and unpredictability, small businesses already struggling would suffer more. The sole proprietors, creators and inventors would be out of luck. Innovation would suffer.

So, what should be done? Empower the consumer not government. The rights and freedoms of California citizens should come first. If the legislature was able to act quickly when its power was threatened by a ballot measure, perhaps it could act as quickly when the state’s residents are getting a bad deal.

Bartlett Cleland is senior fellow in tech and innovation at the Pacific Research Institute.

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Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.