A recent report by Capitol Matrix Consulting, commissioned by the California Chamber of Commerce, has raised concerns over Assembly Bill 566 (AB 566). The report suggests that AB 566 could pose significant risks to consumers, small businesses, and the digital economy in California.
The legislation, introduced by Lowenthal, aims to establish a “global opt-out preference setting” for internet users in California. This would allow users to opt out of the sale or sharing of their personal data across various websites. However, the report warns that this change could have unintended negative consequences on jobs and the economy.
The potential economic impact is significant. The report estimates that a 25% opt-out rate could lead to a $3.6 billion loss in advertising spending within California. This reduction could result in more than 73,000 job losses and a decrease of $6.4 billion in labor income. State taxes could fall by $550 million, while local taxes might see a $270 million drop.
Consumer experience is also at risk according to the report. It argues that if many users choose the global opt-out option without understanding its full implications, it could lead to fewer ad-supported websites and less content diversity online. This might result in more paywalls and reduced access to free services currently enjoyed by consumers.
Small businesses may face disproportionate challenges as well. Targeted advertising is crucial for these businesses with limited marketing budgets to reach specific audiences efficiently. If AB 566 results in widespread opting out from personalized advertising, it would remove an essential tool for customer acquisition and retention.
The California Chamber of Commerce opposes AB 566 due to its potential job losses and revenue decline for the state. They argue that current consumer rights under the California Consumer Privacy Act already provide sufficient opt-out options without harming small businesses financially.
For further details on this study, readers can refer to the complete report provided by Capitol Matrix Consulting.
