While Democrats like Senator Mark Warner hemmed and hawed late last year about passing legislation that would make it easier for consumers to sue companies like Facebook and Google, California (which benefits from the fact that it's essentially a one-party state controlled by Democrats) has gone ahead and passed what NBC News described as "the nation’s strongest data privacy law".
The will require tech firms to disclose what data they collect from their users, and with whom they share that data. That means that companies like Facebook will need to start carefully tracking user data shared with third-party developers, after the Wall Street Journal reported Wednesday that Facebook's internal probe into potential data misuse has been stymied by the company's inability to track where much of the data went.
According to the law, tech companies must safeguard users' data or risk a hefty fine (the bill also allows for the creation of a "Consumer Privacy Fund" that will help fund enforcement of the law). And while tech firms wouldn't face penalties for violations in other states, it's expected that California's law will effectively be enforced for all US users, as changes - like the "opt-out" feature - will probably be rolled out nationwide.
The law, passed by the state legislature on Tuesday and signed by Gov. Jerry Brown, requires companies to disclose the types of data they collect about consumers and with whom they share that information. Companies will be forced to let consumers opt-out of having their data sold. The law will also prohibit companies from charging a consumer or treating them differently because they opted out of having their data sold.
While NBC says the "spirit of the law" is similar to Europe's General Data Protection Regulation, which took effect last month, the law doesn't go quite as far. In response to that law, US tech firms adjusted their privacy policies and allowed users more control over what data they collect.
But the law falls short of a ballot measure entitled Mactaggart's Californians for Consumer Privacy bill - proposed by Alastair Mactaggart, a wealthy real estate developer - which would've given consumers more power, including the ability to sue companies that have mishandled their data privacy. However, Mactaggart threatened to pull the measure if the consumer privacy act passed, which it did.
James Steyer, the founder and CEO of nonprofit tech watchdog Common Sense, said the bill's passage is a "huge victory", though he admitted it isn't perfect. Personally, Steyer says he'd like to see legislation requiring an "opt-in" for users to approve sharing of their data. Still, "California's law will become the law of the land," Steyer said. "Waiting for Congress and this current executive breach to be functional is like a joke." Facebook CEO Mark Zuckerberg memorably argued during testimony before Congress in April that consumers often prefer to share their data, because it helps social media firms target their ads so that they reflect the users' interests. With this in mind, perhaps it's not so surprising that Facebook's Sheryl Sandberg told employees Thursday morning that the company supported the law.