Internet Dodges a Bullet in California

California’s Legislative Affairs Office (LAO) did innovators and their customers a huge service earlier this month, when it released a report that warned of the unforeseen costs of imposing a sweeping new privacy standard.

But while the LAO may have warded off one serious threat, in one state, it’s good work won’t be enough to hold back a rising tide of economically disastrous “privacy” measures nationwide.

The time is ripe to build on what the California LAO accomplished, by conducting a nationwide study that examines the economic impacts of all proposed privacy measures – not just to governments – but to the innovative industries that they target.

The focus of the LAO study was a draft ballot initiative – backed by former State Senator Steve Peace – that would have required all Internet companies to obtain affirmative, opt-in consent before sharing virtually any customer data — even for necessary functioning of services.

The LAO may have warded off one serious threat, in one state, but it’s good work won’t be enough to hold back a rising tide of economically disastrous “privacy” measures nationwide.

Such a requirement – which would instantly become the strictest in the nation – would turn the underlying assumptions of Internet communication on their head, and endanger all the ad-supported Internet products and services we rely on today.

The LAO – which looked only at what the measure would cost to implement on the government side – warned that, “Changing the presumption of harm in privacy cases would make it easier for individuals to win privacy lawsuits against state and local governments.”

The LAO’s bottom line on fiscal impact was, “Unknown but potentially significant costs to state and local governments…”

As we gather more and better data, we as an industry will be better equipped to tell the story of what’s at stake when lawmakers start muddling around with the core functions of Internet communication.

This report seems to have succeeded – at least temporarily – in pulling California back from the brink, as plans to place the measure on the ballot have been dropped.

The entire incident, including the LAO report, reveals the incalculable value of real, tangible economic data in driving intelligent policymaking.

Imagine for a moment if the LAO had looked not just at the cost to government, but to industry, non-profits, and the general public.  And imagine if the scope of the study went beyond one single legislative proposal to cover a wide range of efforts to regulate how Internet companies do business.

Such an analysis could be a powerful tool for Internet advocates and lawmakers as they work to rebuff well-intentioned but poorly conceived efforts to restrict the flow of information and commerce online.

The LAO examined only a fraction of the impact of one measure, on one state’s government, and that was enough to at least delay a serious threat to the Internet.  As we noted in our iAWFUL, California’s been rife with bad laws for citizens who use the internet.

As we gather more and better data, we as an industry will be better equipped to tell the story of what’s at stake when lawmakers start muddling around with the core functions of Internet communication.

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