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A California Legislator Battles Big Tech Over New Privacy Laws

A California Legislator Battles Big Tech Over New Privacy Laws

(Bloomberg Businessweek) -- The push to confront the power of big technology companies recently reached an inflection point. Federal regulators have divided up antitrust responsibilities over Amazon, Apple, Facebook, and Google, and both Democrats and Republicans are opening congressional inquiries into allegedly anticompetitive behavior in the industry.

A preview of a challenge to the tech industry, at least through legislative action, has been playing out in California. The state has often served as a testing ground for policy ideas stuck in Washingtonian gridlock. Last summer it passed the California Consumer Privacy Act (CCPA), which gives residents the right to know how their data is being collected and shared and allows them to deny companies the right to sell it. The law is seen as a potential model for other states or for national rules. Since its passage, lobbying groups for the tech giants have backed several bills to shape the law in their favor.

One person attempting to stand in the way of the companies is Buffy Wicks, a freshman member of the California Assembly who sits on the Privacy and Consumer Protection Committee. Wicks has opposed industry-backed legislation and introduced her own bill to make the CCPA more restrictive. Separately, she promoted new rules to govern Amazon.com Inc.’s relationship with companies that sell their products on its platform. “I think we can push the envelope here in California, regardless of what happens in D.C.,” she says. But Wicks’s experience has also served as a reminder of how formidable the industry can be as a political opponent.

Elected in November, Wicks arrived in Sacramento just as business interests were pushing to liberalize the CCPA in various ways, from carving out special protections for companies that use targeted advertising to changing the definition of personal information. Consumer groups have been overwhelmed by what they see as an attempt to reverse the gains made with the original law, says Elizabeth Gettelman Galicia, vice president of Common Sense Kids Action, one of the groups pushing for stronger privacy laws. She says the groups had been “looking around for who we can turn to.”

Wicks didn’t paint herself as a tech skeptic during her campaign. After protesting the invasion of Iraq and Walmart Inc.’s low wages during the George W. Bush years, she joined Barack Obama’s 2008 presidential bid and worked in the White House, organizing grassroots efforts. She went on to manage Rahm Emanuel’s Chicago mayoral campaign. Working in Obama’s orbit placed Wicks firmly in the pro-business wing of the Bay Area’s Democratic circles. Her intraparty opponent for the 15th Assembly District—including Berkeley and parts of Oakland in the East Bay—made sure to raise the point during the campaign.

In Amazon, Wicks saw echoes of Walmart, another company with a reputation for being a brutal partner to its suppliers. Amazon’s critics now argue that its real abuse of market power can be seen not in its relationship with customers, who are only too happy with their discount toilet paper subscriptions and Amazon Prime web series, but in how it squeezes merchants. Third-party sellers complain about seemingly arbitrary suspensions and mysterious delays in payment. Even those in good standing fear that Amazon is gradually shifting costs and risks onto them. They’re doubly suspicious, given how the company often sells its own competing products.

Wicks’s bill sought to prohibit Amazon from requiring merchants to turn over customer information and forbid it from using that data for its own advertising purposes. She also wanted to place limits on how long Amazon could delay paying vendors. The bill didn’t name Amazon explicitly but applied only to e-commerce sites with more than 200 million active customer accounts, a very short list.

Amazon and tech trade groups such as the Internet Association and TechNet argued that the bill was, effectively, targeted harassment. “It is not good public policy to single out one company and impact the competitiveness of the e-marketplace industry, without any clear benefit or policy rationale,” wrote a coalition of industry groups opposing the bill. Wicks didn’t understand Amazon, they argued, saying that sellers had no customers of their own and were in fact customers of Amazon.

The Amazon bill passed the Assembly in May, but by then it had been stripped down to a set of rules requiring all marketplaces to write merchant agreements in plain language and to give specific reasons when they withhold funds from sellers. “I do love the spirit of it,” says Paul Rafelson, who leads an advocacy group for businesses that sell through Amazon called the Online Merchants Guild. “It just seems it’s missing the teeth it was intended to have.”

Wicks’s privacy bill, meanwhile, was basically dead on arrival. While she presented it as a way to strengthen the CCPA, it was mostly an overhaul. It would’ve required companies to get customers to opt into data collection, instead of allowing them to opt out, and also would’ve allowed counties and cities to sue violators, a right restricted to the state attorney general in most cases under the CCPA. The Assembly’s privacy committee never brought it up for a hearing.

Privacy advocates say the law will probably be significantly weakened by the time it takes effect next year. Their most pressing concern is legislation that would narrow the definition of personal information, creating larger categories of data that wouldn’t be held to stringent standards. “The technology industry has privatized the privacy committee,” says Chris Conley, a lawyer with the ACLU of Northern California.

Despite Silicon Valley worries about other states following California’s lead, no others have passed laws adopting a similar privacy framework. While momentum for antitrust investigations is on the rise, privacy legislation hasn’t moved beyond the conceptual stages. The time to advance a federal bill before the 2020 presidential election is running short, according to experts who follow the issue. Privacy advocates lament that the momentum they expected from the California law has already receded.

For her part, Wicks says she’s considering reintroducing her original proposal, or some new form of it, in January. “We’re going to figure out what my privacy bill is for next year,” she says. “Obviously what I had wasn’t catching fire.”

To contact the editor responsible for this story: Dimitra Kessenides at dkessenides1@bloomberg.net

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