The Costs of Data Restriction are Too High – CA Privacy Ballot Initiative Abandoned

On Monday, former California senator Steve Peace and retired trial lawyer Michael Thorsnes abandoned their ballot initiative intended to add cumbersome privacy protections to California’s state constitution.  Their reasoning? The Legislative Analyst’s office warned them that such an initiative could have broad and damaging consequences, as well as serious difficulties in implementation.  The Sacramento Bee reports that the legislative analyst said that it would spur “unknown but potentially significant costs to state and local governments from additional or more costly lawsuits, increased court workload, data security improvements, and changes to information-sharing practices.” “We would never win the argument with the legislative analyst,” Peace said in the article. “It was too big a hurdle.”

Too big a hurdle, but not as big of a hurdle as the ballot initiative would have been to taxpayers and businesses if it had passed—in fact, the initiative created a huge potential liability from class-action lawsuits for every government entity in California. A coalition in which DMA was a member and financial contributor met with staff assessing the financial impact of the ballot initiative. Staff agreed that there was a significant risk to California taxpayers. California sales tax revenues would have been harmed as well.  Sadly, the analysis did not examine the tremendous financial risk to American, not just Californian, businesses.

Data are the lifeblood of commerce in the US, not just e-commerce. Severe restrictions on data will cost all Americans. Right now, the United States is the world leader in e-commerce—regulation like the ballot initiative would squander that lead.

American consumers have voted for data-driven e-commerce with their feet and pocketbooks. Fortunately, the events in CA have ratified that election. We’re happy that California understood some of the costs involved in restricting the legitimate use of data. DMA is proud to work with other businesses and associations to be united defending businesses that meet the needs of consumers.

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