Why digital advertisers are concerned about California's latest privacy law
Californians passed a new privacy law that gives the state more power to squeeze companies over data practices—particularly as they relate to advertising—and the industry is concerned about a hodgepodge of similar laws sprouting all over the U.S. Meanwhile, a divided Washington might not step in to offer consistent national guidelines in 2021, leaving brands at the mercy of 50 separate data policies.
On Wednesday, California’s desire for stricter privacy regulations was one of the few certain outcomes of Election Day. California reported that Proposition 24 was on track for an easy victory, approving the California Privacy Rights and Enforcement Act (CPRA). The CPRA is basically a sequel to CCPA, the California Consumer Privacy Act, which took effect only this summer. Both acts strike at the heart of how companies collect data on consumers and how they use that data, especially in online advertising.
CCPA became enforceable just four months ago, says Dave Grimaldi, EVP for public policy at the Interactive Advertising Bureau, the industry trade group. “We need more time to assess what works and doesn’t work in CCPA, not CPRA,” Grimaldi says.
California has been the most aggressive state pushing for new rules around data. To comply with CCPA, brands needed to adopt ways to give consumers more transparency about the data they collect and get permission to use that data. The law has made it more complicated to, say, target ads from data collected on one website to a user visiting another website like Facebook.
Now comes CPRA, which brings a whole new regulatory framework. “The important piece CPRA creates is a new administrative agency whose only function is to police privacy,” says Dan Jaffe, head of public policy at the Association of National Advertisers.
There will be a California privacy czar who will be able to make rulings that control the way companies can use consumer data. Industry groups like IAB and ANA say they favor regulation, but they are pushing for a national law, otherwise all the states could create a confusing tangle of regulations. “There has to be a national law on this stuff,” Grimaldi says. “There has to be national reform and taking it out of the states.”
No incentive for divided Congress
The prospects for such a national plan could hinge on control of the Senate, Grimaldi says. If Republicans retain control, which seemed to be the most likely outcome on Wednesday, then Grimaldi expects less movement on national privacy laws.
Grimaldi said the most powerful Democratic senators, including Elizabeth Warren and Cory Booker, would be active as committee leaders calling for privacy hearings and drafting new laws. Also, a divided Congress might not have much incentive to move forward.
The consulting industry stands to gain from California’s new privacy law and the prospect of dozens more from other states, as brands look for guidance on how to come into compliance.
“It’s definitely way too soon to understand how this will impact companies,” says Derek Zolner, VP of legal affairs at Centro, a digital marketing platform. “But along the way, this is going to be a strong business for consultants and advisors for implementation and compliance.”
As for the everyday consumer, they will “notice little or no change to their daily commerce nor their media consumption,” Zolner says.