Facebook Drops Opposition to Proposed California Privacy Measure (1)

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By Sara Merken

In an about-face, Facebook Inc. withdrew its opposition to a proposed California ballot initiative that would give consumers a range of rights concerning their personal data, including the ability to ask a company to disclose what personal information it collects on users.

The move came April 11, the day Facebook chief executive Mark Zuckerberg finished the second of two days of testimony before Senate and House panels about the company’s data privacy practices.

Before the congressional testimony, Facebook contributed to a campaign against the California measure, along with Alphabet Inc.'s Google, Comcast Corp., Verizon Communications Inc., and AT&T Inc.

The proposed privacy ballot measure, named the California Consumer Privacy Act, would also give consumers the right to know whether a company sells or discloses their personal information to a third party. It would bar companies from discriminating against consumers who ask a company not to sell their personal information.

The measure would allow consumers to “sue businesses for security breaches of consumer data, even if consumers cannot prove injury,” according to a summary of the proposed measure by the California attorney general.

Zuckerberg testified April 10-11 before Congress about the company’s data collection practices following revelations that Facebook may have improperly shared up to 87 million users’ personal information. Zuckerberg told lawmakers that consumers have control over their information.

“We took this step in order to focus our efforts on supporting reasonable privacy measures in California,” a Facebook spokesperson said in a statement to Bloomberg Law April 12.

Proponents aim to get the measure on the state’s November ballot. Alastair Mactaggart, a San Francisco real estate developer who is a lead sponsor of the measure, said he hopes Facebook “will work with us proactively to protect the personal information of all Californians, and support us publicly and financially.”

“We call on the remaining corporations who have contributed to the Super PAC opposing this common-sense measure to drop their opposition,” Mactaggart said in an April 11 statement.

Non-profit group Consumer Watchdog also called on Google, Verizon, Comcast and AT&T to follow Facebook and withdraw opposition to the proposed measure April 12.

Social Media Business Model

The state ballot measure is a “blunt instrument that could seriously disrupt long established business models without meaningful consumer benefit,” Tim Tobin, a privacy and data security partner with Hogan Lovells LLP, told Bloomberg Law. Tobin, commenting on companies generally, said that the measure is “much more likely to harm consumers since it could reduce the availability of new and innovative services and content.”

“Business would not be able to offer both a free service supported by common and non-sensitive data monetization practices and a fee-based service for those more concerned about information sharing, as the dual offering would be viewed as discriminatory under the proposal,” Tobin said.

For her part, Harmeet Dhillon, founder of San Francisco-based Dhillon Law Group, said she expects the ballot measure to pass.

“If passed, it will alter the economics of the business model. The name of the game is disclosure,” she told Bloomberg Law. Many consumers are “happy to pay for more private services. Others are fine with their data being sold so long as it is disclosed,” she said.

To contact the reporter on this story: Sara Merken in Washington at smerken@bloomberglaw.com

To contact the editor responsible for this story: Barbara Yuill at byuill@bloomberglaw.com

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