U.S. Internet companies are engaged in a two-front effort to defend the $100 billion they earn from online advertising. Companies such as Google and Facebook have been fighting proposed European Union privacy laws they say would slow innovation. Now, they are fighting in their backyard against California privacy bills that are almost identical, according to a recent analysis by Bloomberg Government’s top global business and technology analysts, Sanford Reback and Allan Holmes.
Among California’s more than two dozen privacy bills pending, one would require companies to tell customers who ask what personal information was shared with other companies and the contact information of the company the information was shared with.
Another bill would require social networking websites to remove a user’s personal information within four days of a request. Companies would face a fine of up to $10,000 for each violation.
The bills are similar to provisions in a proposed EU law that would give individuals the right to have their personal data removed from a company’s files. The EU calls it “the right to be forgotten.”
The California and EU proposals may form a two-front assault on the ability of U.S. Internet companies to use personal data they collect to sell ads targeted to individuals and members of social networks. Google led companies in online revenue in 2012, followed by Yahoo and Facebook.
To win, Reback and Holmes argue, Internet companies may need to prevail on both fronts. If either a California or an EU proposal becomes law, it may become the de facto standard that online businesses would choose to follow. It may be too complex and expensive for Internet companies to adopt one set of privacy practices for one group of customers and another set for everyone else. The least costly path may be to follow the most stringent privacy rules for all customers.
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