Consumer privacy initiatives could slow the internet economy

internetSACRAMENTO – As the legislative session ends, California political junkies will soon turn their attention to the slate of initiatives making their way to the November 2018 ballot. One of the more significant proposed statewide measures is the California Consumer Privacy Act of 2018, which would give consumers the “right” to know what information businesses collect and to stop them from using it for commercial purposes.

The initiative promises consumers “control” over the personal information businesses glean from “tracking and collection devices” – and seeks to restore privacy rights at a time of “accelerating encroachment on personal freedom and security.” It would apply to all businesses, ranging from internet service providers to websites to cellphone companies.

The proposal has sparked concern in tech-friendly California, given that it could impose significant costs on everything from small-time websites to major internet players such as Facebook, Google and Amazon. If the measure qualifies for the ballot and is approved by voters, it would apply not only to California-based internet companies, but to any entity that does business in the state. So, it could have national reverberations.

“Forcing companies to allow consumers to opt out of tracking, and not allowing those companies to charge more or deny service to consumers who do opt out, would be burdensome for websites and application developers, and would significantly hurt the advertising industry since it would decrease the amount of targeted advertising they can do,” said Tom Struble, tech policy manager at the R Street Institute in Washington, D.C.

The initiative would provide consumers with four new “rights” that would be inserted into the state Constitution. First, consumers would have the right to learn about the categories of personal information that any business has collected from them. Second, consumers would have the right to know how that specific personal information is being used – i.e., whether it has been sold or shared for marketing or advertising purposes.

Third, consumers would have the right to “direct a business” not to sell or share that information. Finally, the initiative grants consumers the right to “equal service or price,” which means the business would be forbidden from charging different prices or limiting services if a consumer directs a business not to use the information.

Companies would be required to honor a consumer’s information request within 30 days and provide it at no charge. The initiative requires companies to set up a toll-free telephone number and website by which consumers could make a “verifiable” request.

The initiative’s backers argue that consumers “are in a position of relative dependence on businesses” that collect this information and that it is difficult for them “to monitor business operations or prevent companies from using your personal information for the companies’ financial benefit.”

Critics, however, argue that the measure doesn’t make necessary distinctions. Unlike a bill now in the California Legislature, it doesn’t distinguish between, say, internet service providers that operate essentially like paid utilities and businesses that offer access to their websites and are paid based on advertising fees. It also does nothing about a potentially greater threat to privacy – collection of data by state and local governments.

The issue has gotten more attention since April, when President Donald Trump signed a law that repealed some Obama-era Federal Communications Commission rules. The rules would have required internet service providers to get permission before using a customer’s information, such as their browsing history, to create targeted online advertisements.

The California Legislature is now trying to restore some of those Obama-era rules. Assembly Bill 375 was designed to “protect California consumers since Congress and the Trump administration effectively halted a set of federal consumer privacy protection rules on internet service providers that were scheduled to take effect,” according to the state Senate Judiciary Committee analysis.

AB375 applies only to broadband providers. As the thinking goes, “people pay heavily for internet service,” which “is akin to a must-have utility,” explained the San Diego Union-Tribune in an editorial supporting the bill. By contrast, Facebook and Google provide their services for free. Consumers presumably know that the “cost” of maintaining a Facebook page and searching for information on a web browser is that those companies can sell targeted advertisements based on one’s search and buying habits.

The bill was referred to the Senate Rules Committee Tuesday following some technical amendments and is likely make it to the Senate floor by Friday’s end-of-session deadline. The initiative has been cleared for signature-gathering. It would go far beyond the intent of AB375 by imposing new requirements on every type of firm that operates in the state.

Consumer initiatives have met with varied levels of success in California over the years. The most recent, Proposition 45, would have “required changes to health insurance rates, or anything else affecting the charges associated with health insurance, to be approved by the California Insurance Commissioner before taking effect.” It lost 59 percent to 41 percent.

The big question with all initiatives is whether their backers have the millions of dollars necessary to collect signatures and then run a successful general election campaign. Given the far-reaching implications of the proposal, Californians can expect aggressive push-back from the tech community if this one starts looking like a serious deal.

Steven Greenhut is Western region director for the R Street Institute. Write to him at sgreenhut@rstreet.org.

This article was originally published by CalWatchdog.com

CA Jurors Misusing the Internet Could Face Fines

As reported by ABC7:

But that may soon change in California. Legislation supported by state court officials would authorize judges in some counties to fine jurors up to $1,500 for social media and Internet use violations, which have led to mistrials and overturned convictions around the country.

As jurors and judges have become more technology savvy in recent years, the perils of jurors playing around with their smartphones have become a mounting concern, particularly in technology-rich California. A 2011 state law made improper electronic or wireless communication or research by a juror punishable by contempt.

Supporters of the latest California measure say a potential fine would …

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CA to legalize online poker?

As reported by the San Diego Union-Tribune:

 — Will 2015 be the year California legalizes online poker?

Two lawmakers at the state Capitol are betting big that it will be.

But their competing bills, introduced early this session, show there’s still strong disagreement about which industry players should control and benefit from the popular, and lucrative, business.

Candidates include card clubs, Indian tribes, race tracks and out-of-state gaming companies.

Lawmakers and these groups have failed for nearly a decade to craft rules … 

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Net Neutrality = Regulate My Competitor

In a major development in the ongoing debate over net neutrality, President Obama announced his support for a strict regulatory regime to govern the Internet. The President framed the discussion around a good-faith need to protect innovators and entrepreneurs. Unfortunately, he has fallen for a cynical ploy that some Silicon Valley companies and advocacy groups are using to push an extreme regulatory agenda for the Internet.

Unfortunately, the innovative companies we take for granted to enrich our lives are not always the altruistic companies we think they are especially when it comes to exerting influence in Washington.

Take for example Netflix, who has transformed from a DVD mail order business to a dominant leader in streaming video. They have mastered the ability to provide almost any digital programming directly to smartphones, tablets, and TVs. What Netflix is not yet known for is the age-old practice many companies have come to rely on, known as “regulate my competitor,” or what economists call “rent-seeking.”

By hijacking the debate over network neutrality and conflating it with a regulatory arbitrage scheme to pad its bottom line, Netflix is putting its interest above all Internet users. The network neutrality debate has always been about treating all content on the Internet the same – no blocking or impeding traffic. Now, Netflix is trying to convince the Federal Communications Commission (FCC), to adopt a new proposal that would change the current bipartisan “light-touch” regulatory structure of today. Netflix and now President Obama want to “reclassify” broadband networks under 1930s rotary telephone laws that would make ISPs public utilities under the guise of no blocking or prioritization. However, making ISPs into utilities still won’t prevent prioritization, further revealing the “regulate my competitor” strategy Netflix has embarked on with other advocacy groups.

The Communications Workers of America recently noted that investment by the 11 largest publicly traded broadband companies rose from $56.5 billion in 2010 to $70.1 billion in 2013 while investment by content companies only rose from $9 billion to $13.2 billion in the same time frame. Clearly, the investments made by ISPs to expand Internet service dwarfs that of the content companies. ISP investments translate directly into good, U.S.-based union jobs, a situation not matched by the largely non-unionized global content companies.

It’s also important to remember that Silicon Valley’s giants rely on the investment that creates the robustness of these networks for their success. Public utility regulations will only dry up investment in networks – ultimately hurting the innovators the President and advocates claim to protect.

Analysts have noted that Netflix generates about 1/3 of all Internet traffic at peak times in the US. Traffic is so high it puts significant strain on the ISPs’ networks. To alleviate this strain, ISPs, for years, have made arrangements to connect directly with content companies in order to keep the Internet free from this congestion. These arrangements are a win for content companies, ISPs and consumers.

But these types of traffic routing arrangements, called “paid interconnection,” are not good enough for Netflix’s profit motives. Instead, by using the neutrality debate to try to force ISPs to deliver Netflix traffic for free over ISPs’ networks, subsidizing the delivery of Netflix’s massive content bandwidth. This would ultimately force all Internet users to subsidize Netflix’s bandwidth needs.

Instead of urging the FCC to regulate its competitors as public utilities, Netflix should be doing what many other content companies like Amazon and Google have done – make interconnection arrangements with ISPs or invest in their own networks to bring content closer to the end customer. This strategy will create high paying jobs in California and avoid age-old tactics like “regulate my competitor.”

This article was originally published on Fox and Hounds Daily

Eric Lindberg is Secretary-Treasurer Local 9423 and Next Generation Lead Activist for Communications Workers of America. Carlos Solórzano-Cuadra is CEO of the Hispanic Chambers of Commerce of San Francisco.

Net Neutrality

Net Neutrality

Nate Beeler, The Columbus Dispatch