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Florida Privacy Bill Is Bad for Business and Consumers

Florida Privacy Bill Is Bad for Business and Consumers

May 3, 2023

The Florida State Legislature introduced, in March, data privacy legislation, S.B. 262, attempting to follow in the footsteps of six states that have passed their own privacy laws. Data privacy should be addressed at a federal level, not the state level, to avoid subjecting businesses and consumers to a confusing and expensive patchwork of conflicting laws. However, some state privacy proposals are particularly worrisome, and Florida’s proposal is among the worst given its likely damage to the Sunshine State’s digital economy while failing to protect consumer privacy.

The most problematic provision in S.B. 262 is one that would allow Florida consumers to opt out of all personalized advertisements and certain types of contextual advertisements. Personalized online advertising uses information about a user, such as demographic information or search history, to allow the website or app to display ads the user is more likely to show an interest in. This is almost always done without sharing personal information with the advertiser. Contextual advertising, on the other hand, displays ads related to the content of a web page and requires no personal information. Both are important tools that help businesses reach consumers and nonprofits reach potential donors.

Advertising, including personalized and contextual advertising, serves as an important source of revenue for online services, including social media, online news, and other websites and apps. Many of these online services are able to operate at no cost to users because of advertising revenue, or at least offset some of the costs users would otherwise have to pay. Users also benefit by seeing ads that are tailored to their interests instead of randomly placed, likely irrelevant ads.

If a significant portion of an online service’s users opt out of personalized and contextual advertising, it would decrease the amount of revenue online services derive from advertising, and are likely to pass costs onto consumers, which would disproportionately impact low-income consumers’ access to these services. The vast universe of free online services is a boon to Florida’s lower-income households. Additionally, S.B. 262 restricts online services from charging a different price or denying services to users who exercise their privacy rights, creating a free-rider problem where users benefit from the low cost of online services that rely on personalized and contextual advertising even though they have opted out of those forms of advertising.

Furthermore, limitations to personalized and contextual advertisements are likely to impact political campaigns, which rely on online advertising more than ever to raise awareness and support for an issue, candidate, or political party. Limiting the ability of political parties and candidates to advertise online runs contrary to the governor and state legislature’s desire to promote free speech for political candidates, exemplified by Florida’s social media law, S.B. 7072, which prohibits social media companies from de-platforming any political candidate.

Beyond the likely impacts the bill would have on Florida’s digital economy, S.B. 262 would also not comprehensively protect Floridians’ privacy. The bill only applies to online services that make over $1 billion in annual gross revenues and derive at least 50 percent of their revenue from targeted or online advertising or operate a smart speaker or voice command service. These restrictions mean the bill covers a small handful of companies such as Google, Meta, Amazon, Twitter, and TikTok. In other words, Floridians would have no legal protections when dealing with the other 99 percent of companies that collect their personal information.

A more effective privacy law would apply to all companies that collect Floridians’ personal information and allow targeted and contextual advertising while enabling consumers to opt out of data sharing with third parties. As it is, S.B. 262 is a misguided attack on “Big Tech” that will do little to protect Floridians but add to the growing patchwork of state legislation. At the same time, it will reduce the effectiveness of online advertising, with serious repercussions for the digital economy in the state, and for consumers who benefit from free or low-cost online services. And finally, as Florida is making important strides to grow its innovation and digital economies, it will send a clear message that Florida is not open for digital business.

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