Tech firms pry at US pri­vacy law

Google, al­lies lobby against Calif. reins on use of user data

The Morning Call - - BUSINESS CYCLE - By Kar­tikay Mehro­tra, Laura Mahoney and Daniel Stoller

Google and its in­dus­try al­lies are mak­ing a late bid to wa­ter down the first ma­jor data-pri­vacy law in the U.S., seek­ing to carve out ex­emp­tions for dig­i­tal ad­ver­tis­ing, ac­cord­ing to doc­u­ments ob­tained by Bloomberg and peo­ple fa­mil­iar with the ne­go­ti­a­tions.

A lob­by­ist for Google re­cently dis­trib­uted new lan­guage to mem­bers of Cal­i­for­nia’s state leg­is­la­ture that would amend the Cal­i­for­nia Con­sumer Pri­vacy Act. As cur­rently drafted, the law lim­its how Google and other com­pa­nies col­lect and make money from user data on­line, threat­en­ing a busi­ness model that gen­er­ates bil­lions of dol­lars in ad rev­enue. It’s due to kick in next year and there are only a few more days to amend the law.

The lob­by­ing push seeks leg­isla­tive ap­proval to con­tinue col­lect­ing user data for targeted ad­ver­tis­ing, and in some cases, the right to do so even if users opt out, ac­cord­ing to the doc­u­ments and the peo­ple fa­mil­iar with the ne­go­ti­a­tions. They asked not to be iden­ti­fied dis­cussing pri­vate ac­tiv­i­ties and to keep the lob­by­ist’s name con­fi­den­tial.

It is un­clear if the lan­guage cir­cu­lat­ing in the state capi­tol’s cor­ri­dors was drafted by Google, and other lob­by­ists are likely ask­ing for sim­i­lar changes. In­dus­try groups, such as the Cal­i­for­nia Cham­ber of Com­merce and the In­ter­net As­so­ci­a­tion, of­ten help write leg­is­la­tion and have been the face of in­dus­try dur­ing two years of de­bate over the CCPA. It’s also com­mon for in­ter­ested par­ties to sug­gest late changes to bills.

“This is a jail­break,” said Cal­i­for­nia State Sen. Han­nahBeth Jack­son. “This blows up the en­tire pur­pose of the CCPA, which is for peo­ple to know when their in­for­ma­tion is be­ing used and to give them the right to opt out.”

A spokesman for Google said the com­pany has “long supported pri­vacy leg­is­la­tion that pro­tects consumers’ data and en­cour­ages in­no­va­tion.”

“The CCPA will im­pose new obli­ga­tions on thou­sands of small and large busi­nesses, and it is crit­i­cal that its re­quire­ments are clearly de­fined,” he added in a state­ment.

One pro­posal shared by the lob­by­ist would let Google and oth­ers use data col­lected from web­sites for their own anal­y­sis, and then share it with other com­pa­nies that may find it use­ful. This in­cludes firms not in­volved with the web­site in ques­tion. Cur­rently, the CCPA pro­hibits the sale or distri­bu­tion of user data if the user has opted out, with lim­ited ex­cep­tions.

An­other change would loosen the def­i­ni­tion of “busi­ness pur­pose” when it comes to sell­ing or dis­tribut­ing user data. The law cur­rently de­fines this nar­rowly and has a list of spe­cific ac­tiv­i­ties, such au­dit­ing and se­cu­rity, that will be al­lowed. Google’s lob­by­ist shared new lan­guage that sig­nif­i­cantly broad­ens the rule by re­plac­ing the phrase “Busi­ness pur­poses are” with “Busi­ness pur­poses in­clude,” be­fore the list of ap­proved ac­tiv­i­ties.

The pro­posal may also cre­ate a loop­hole for com­pa­nies when users re­quest ac­cess to their data or ask for their in­for­ma­tion to be deleted.

The Google rep­re­sen­ta­tive, who dis­trib­uted the re­vised lan­guage in re­cent weeks, has yet to find a law­maker to spon­sor the amend­ments, ac­cord­ing to peo­ple fa­mil­iar with ne­go­ti­a­tions. The pro­posal must be in a bill by Tues­day to be eligible for law­mak­ers to vote on it be­fore they ad­journ for the year on Fri­day.

The CCPA is set to be­come the first data-pri­vacy law in the U.S. once en­acted in 2020. It’s part of a broader crack­down on in­ter­net com­pa­nies, which have be­come hugely prof­itable by of­fer­ing use­ful ser­vices backed by targeted ads and moun­tains of data. The in­dus­try is try­ing to re­write the law, while run­ning crit­i­cal ads in Sacra­mento, the Wash­ing­ton Post re­cently re­ported.

Google says it works hard to pro­tect user data and the com­pany has ap­plauded some pri­vacy leg­is­la­tion in re­cent years. Still, the com­pany gets about 85% of rev­enue from ads, so any lim­its on its abil­ity to use data for mar­ket­ing are a threat to its busi­ness. In Wash­ing­ton state this year, the com­pany at­tempted to amend a bill dubbed GDPR-lite, ac­cord­ing to sources fa­mil­iar with the mat­ter. The bill failed to pass. Last year in Illi­nois, Google tried and failed to roll back def­i­ni­tions in the state’s com­pre­hen­sive bio­met­ric pri­vacy law. The law re­mains as it was en­acted in 2008.

Cal­i­for­nia’s new law is widely viewed as the bench­mark other states will use for their own data-pri­vacy reg­u­la­tions. The CCPA may also be a tem­plate for a fu­ture fed­eral law. In Congress, law­mak­ers are al­ready dis­cussing lan­guage for pos­si­ble na­tion­wide leg­is­la­tion that would supersede Cal­i­for­nia’s law.

If Google and other in­ter­net com­pa­nies fail to change the CCPA, the pro­posed amend­ments sug­gest the in­dus­try will con­tinue to push for ex­emp­tions to other data-pri­vacy leg­is­la­tion, or fight for a more-fa­vor­able fed­eral law.

Ear­lier this year, the in­dus­try pro­posed a CCPA ex­emp­tion for all targeted ad­ver­tis­ing, which failed. In July, the Cal­i­for­nia Cham­ber of Com­merce backed a bill to re­de­fine the term “dei­den­ti­fied,” the prac­tice of sep­a­rat­ing user data from peo­ple’s real iden­ti­ties. Sen­a­tor Jack­son’s com­mit­tee quashed that ef­fort.

Jack­son says the CCPA de­bate could shift the balance of power in Sacra­mento, which she thinks has been con­trolled by Sil­i­con Val­ley firms to pro­tect their un­reg­u­lated ways of do­ing busi­ness.

“Up till now, there re­ally hasn’t been any pol­icy, it’s been the Wild West,” she said. “They’ve just gone and done their thing, but now we’ve forced in­dus­try to come to the ta­ble.”

KRISZTIAN BOCSI/BLOOMBERG NEWS

In its cur­rent form, the Cal­i­for­nia Con­sumer Pri­vacy Act lim­its how Google and other com­pa­nies col­lect and make money from user data on­line.

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