Tech Giants Lobby Congress to Avoid New CA Privacy Law...
BIG TECH IS APPEALING TO CONGRESS TO HELP GET AROUND
CALIFORNIA’S NEW ONLINE PRIVACY LAW
By David Dayen September 28 2018, 10:11 a.m.
AFTER CALIFORNIA PASSED the most sweeping online privacy
law in the nation this summer, big tech went back to the state legislature to
weaken it. While that effort fizzled before the end of the state’s legislative
session, a more insidious strategy emerged this week: going around California
and appealing to Congress.
Alastair Mactaggart, who led the California effort, told
The Intercept that a Wednesday hearing in Congress left him concerned that Congress
might pre-empt the state legislation at the behest of giant tech firms.
“Tech has had zero regulation,” Mactaggart said in an
interview. “For them it’s been this Wild West of being able to monetize
information any which way. They will pull out all the stops to try to get back
to where they were.”
Mactaggart, a Bay Area real estate developer, became an
unlikely activist when he bankrolled a ballot measure that, among other things,
would require tech companies to reveal what personal information they collected
on users, allow users to opt out of the sale of their data to third parties,
and impose fines for data breaches. Tech firms fought it vigorously, but were
hampered by a series of scandals like Facebook’s release of data to Cambridge
Analytica, and widespread popular support for some limits on persistent
surveillance.
Tech firms, fearing being locked into a policy they could
only change at the ballot, encouraged the state legislature to get involved.
The California House and Senate passed a law substantially similar to the
initiative, with unanimous support in both chambers. Gov. Jerry Brown signed it
in June.
The law doesn’t take effect until January 2020, and big
tech’s hope was to water it down before that date. Industry representatives
went to Congress this week after failing to get California lawmakers to narrow
the definition of “selling” data, which would have rendered some of the
protections of the law moot.
The Senate Commerce Committee held a hearing on Wednesday
where leaders of six tech and telecom companies — Amazon, Google, Apple,
Twitter, AT&T, and Charter Communications — endorsed a federal consumer
privacy standard. In their conception, this would pre-empt any state data
protection laws.
It’s an eerie echo of the federal pre-emption that Wall
Street banks received and used to great effect during the run-up to the housing
bubble. In 2002, Georgia passed an anti-predatory lending law, and both the
Office of Thrift Supervision and the Office of the Comptroller of the Currency
ruled that banks they regulated simply did not have to comply with it. This
created a chilling effect, as states declined to crack down on the rampant
fraud in the mortgage industry. And the financial crisis was the result.
At the hearing, the companies criticized the California
statute, in particular its definition of “personal information,” which they
consider overbroad. Amazon vice president Andrew DeVore called the statute
“confusing and difficult to comply with,” adding that it “may actually
undermine important privacy-protective practices.” Alone among the witnesses,
Apple’s Bud Tribble did say that while federal legislation should pre-empt
state law, it must also “meet the bar of protecting consumers meaningfully.”
However, he did not elaborate on what that protection should entail.
Most who testified opposed mandatory opt-ins to collect
data, and all warned that their services could be compromised. “If Facebook was
restricted and slowed down, maybe what we’d all have is [China’s] WeChat,” said
former LinkedIn founder Reid Hoffman in a bizarre appeal this week to
innovation in authoritarian societies.
“They’re never going to say anything good about a law
they didn’t write,” said Mactaggart. “If they write it, they will say it’s not
great, but they can live with it.”
Senators have expressed bipartisan interest in federal
privacy legislation, but have not yet moved ahead on such an effort because
they didn’t think it would pass this year. Democrats, whose votes would be
needed to break a filibuster, on Wednesday called out the industry’s gambit.
Sen. Brian Schatz, D-Hawaii, called pre-emption of state rules “the holy
grail,” adding that Democrats would refuse to replace “a progressive California
law with a non-progressive federal law.”
However, the industry has a major home-field advantage in
Washington. Tech firms have become the most prodigious spenders on lobbying in
America. In 2017, Amazon, Facebook, Apple, and Google alone spent $50 million
on Capitol Hill, and they’re expected to spend more than that by the end of
this year.
At the hearing, lawmakers discussed two possible routes
to enacting a privacy measure. Either
lawmakers, who hear from tech lobbyists constantly, would write new rules
directly into statute, or the Federal Trade Commission, whose revolving door
perpetually spins, would be given the authority. The tech industry is well
represented at the FTC. The agency’s head of the Bureau of Consumer Protection
represented Facebook, Uber, and Equifax as a corporate lawyer, and it just
hired a deputy director of the Bureau of Competition who was the director of
competition law at Uber.
But the California statute has popular support in the
state, which could make a difference, Mactaggart said. “One in 8 Americans are
protected by this new law,” he said. “Not one person in either party voted
against us. It’s hard, if you’re a Democrat or a Republican, to say you’re
going to gut what our legislators voted for unanimously.”
In addition, the continuing cascade of stories about big
tech’s intrusions into its users’ lives could damage chances to water down
privacy rules. Just this week, reports revealed that Facebook gives advertisers
the phone numbers users provide for two-factor authentication — a security
measure to protect individual privacy — for use in targeting. Facebook announced on Friday that it just
identified a security breach affecting 50 million user accounts.
A report released this week warns that big tech cannot be
trusted to police itself, because the business model of drawing in eyeballs to
maximize data collection is simply at odds with individual privacy. Dipayan
Ghosh, a former Facebook executive and one of the report’s co-authors, said “we
need to completely re-organize the way that industry works.”
The Trump administration may also pose another barrier to
the tech industry, Mactaggart noted. Indeed, the White House has been sharply
critical of tech companies for perceived bias of conservatives. Attorney
General Jeff Sessions brought together state attorneys general in both parties
this week to discuss how to deal with the power and influence of tech
companies.
It was always a risk that Washington would get involved
to nullify the advances in California, Mactaggart said. However, there’s also a
history of California imposing standards that eventually spread nationwide,
like its air quality rules for tailpipe emissions.
Mactaggart will testify on the matter before the Senate
Commerce Committee in a couple weeks. “I wouldn’t have gotten into this if I
wasn’t an optimist,” he said. “But these are the most powerful companies in the
world.”
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