ITIF Speaks Out Against California Privacy Law, Calls for Federal Privacy Legislation

June 29, 2018

WASHINGTON—In response to Gov. Jerry Brown signing AB 375, the California Consumer Privacy Act of 2018, the Information Technology and Innovation Foundation released the following statement from ITIF Vice President Daniel Castro:

California’s new privacy legislation will do less damage to the Internet economy than the proposed ballot initiative would have done. But even so, the bill is flawed. Billions of users around the world share personal data—often anonymously—in exchange for access to free content and services. The system is not perfect, but it works.

While policymakers should address legitimate privacy concerns, this bill is not the answer. This legislation will undercut access to free content and services by prohibiting companies from penalizing consumers who opt out of sharing their personal data. This is like passing a law saying that consumers can opt out of paying for their meals, but restaurants can’t refuse them service. If there is no cost to consumers who choose not to contribute their data, then they will have little incentive to do so. California has just created a classic free-rider problem, and anyone who has studied economics knows it will not end well.

This legislation will give Californians a free lunch—paid for by Internet users outside the state. The Internet cannot work effectively for businesses or consumers if there is a patchwork of state Internet privacy laws. This should be wakeup call to Congress that it needs to pass federal legislation that preempts all state privacy laws and regulations, guarantees consumers notice and choice, and allows Internet companies to structure their business models as they choose.