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Privacy is too complicated for California to understand, mobile industry panel says

by Steve Blum • , , , ,

Flashers

California’s consumer data privacy law will be the default privacy standard across the U.S., at least for the coming year, and that’s upsetting the Washington, D.C. crowd. A panel discussion on privacy legislation at the Mobile World Congress trade show in Los Angeles last week featured three industry lobbyists, the head of an industry front organisation and a Federal Trade Commission lawyer. All of them are based in D.C., and shared Beltway-centric advice on who should be calling the shots.

The panel was dismissive of state lawmakers’ ability to deal with the complexities of issues that lobbyists and federal regulators have been dancing with since at least 2012, when the FTC published a lengthy set of consumer privacy protection recommendations. Michelle Rosenthal, a former FTC lawyer who left through D.C.’s revolving door and is now a staff lobbyist for T-Mobile, worked on that report and praised its sophistication and subtlety – they even used a whiteboard!

On the other hand, CCPA “was drafted very quickly and passed very quickly”, Rosenthal said. “A lot of the state legislation – which I won’t get into – you know, unfortunately happened so quickly that that process isn’t a thing”.

The discussion would have been better informed if organisers invited someone from, say, California or Nevada who could explain what their thing is. Electronic privacy has long been a policy issue in California, but Sacramento lawmakers didn’t “jump in” until federal regulators tore up their own rules. Even so, the first attempt to pass a Californian privacy law was shot down by the same big telecoms and tech companies that have been so helpful in D.C.

The panel members offered a not-so-surprising consensus on three points:

  • The federal government should set consumer privacy rules because everything will be complicated and everyone will be confused if state legislatures do it.
  • Congress isn’t going to do anything about it this year, and next year isn’t looking good either.
  • The California Consumer Privacy Act (CCPA), which takes effect in January, will be the de facto privacy rulebook for the rest of the country, at least until something even tougher comes along. Which could easily happen, because other states, including Nevada and Maine, are in the game now.

CCPA “in effect, could become, sort of, the law of the land as it becomes implemented”, said Melanie Tiano, privacy and cybersecurity director for CTIA, the mobile industry’s D.C. lobbying group (and a co-sponsor of the show).

“Firms just ratchet up to the highest standard, and that’s sort of the general rule of thumb, and that seems manageable”, said Jared Ho, an FTC privacy attorney. “It seems like one of the greatest concerns is going to be potential conflict”.

Privacy panel mwc la 2019 23oct2019

Draft rules for businesses add enforcement detail to California’s consumer privacy law

by Steve Blum • , , ,

Gagged by privacy

California’s tough consumer privacy law technically takes effect in January, but enforcement won’t begin until next July. The California attorney general has the job of writing the detailed rules that businesses will have to follow, and then enforcing those rules.

The first draft of those new rules was posted for public review and comment. They apply to businesses with more than $25 million in “annual gross revenues”, or collects or deals in “the personal information of 50,000 or more consumers, households, or devices”, or that deal in people’s personal information for a living.

Such businesses have to let customers know what kinds of information they’re collecting, and give them an easy way to opt out of any sale of their info to third parties. The California Consumer Privacy Act was designed with online businesses in mind – the default assumption is that businesses will post notices and receive opt out orders via their websites – but it applies equally to companies that have no online presence at all, or that only interact with customers in person. The draft rules cover those situations, too.

There are separate and stricter rules about gathering information from children and teens.

Opting out is not supposed to result in higher prices for consumers, unless a discount offered in exchange for permission to sell is “reasonably related to the value of the consumer’s data”. Otherwise, discounts have to be available on a non-discriminatory basis to all customers. The draft doesn’t provide a lot of guidance as to what’s discriminatory and what’s not, but it does offer a couple of examples, such as…

A music streaming business offers a free service and a premium service that costs $5 per month. If only the consumers who pay for the music streaming service are allowed to opt-out of the sale of their personal information, then the practice is discriminatory, unless the $5 per month payment is reasonably related to the value of the consumer’s data to the business.

Public hearings are scheduled around California to get input on the draft, and written comments can be submitted by the 6 December 2019 deadline.

California Department of Justice CCPA documents:
Proposed Text, California Consumer Privacy Act Regulations, 11 October 2019
Initial Statement Of Reasons, Proposed Adoption of California Consumer Privacy Act Regulations, 11 October 2019
Notice of Proposed Rulemaking Action, California Consumer Privacy Act, 11 Oct 2019
Economic and Fiscal Impact Statement, California Consumer Privacy Act Regulations, 14 August 2019
Standardised Regulatory Impact Assessment, California Consumer Privacy Act of 2018 Regulations, 14 August 2019

Proposed California initiative would toughen and lock in consumer privacy rules

by Steve Blum • , ,

The man behind California’s new privacy law doesn’t like what lobbyists are trying to do to it in Sacramento, and plans on taking his case directly voters. In 2018, Alastair Mactaggart and his organisation – Californians for Consumer Privacy – collected enough signatures to get a tough privacy law on the ballot, but withdrew the initiative after a deal with was cut with lawmakers to enact most of its provisions. But anything the legislature can do, it can also undo, so Mactaggart is going back to the voters. According to the initiative’s text, filed with the California attorney general’s office yesterday…

Even before the [California Consumer Privacy Act] had gone into effect, however, businesses began to try to weaken the law. In the 2019–20 legislative session alone, members of the Legislature proposed more than a dozen bills to amend the CCPA, and it appears that business will continue to push for modifications that weaken the law. Unless California voters take action, the hard-fought rights consumers have won could be undermined by big business.

If enough valid signatures are collected and it’s approved by Collected voters, the initiative would generally tighten restrictions on the kind of personal information that businesses can collect from consumers and required them to disclose, in advance, “the specific purposes” for which the data will collected or used, and to go back and notify consumers if they want use the information for other reasons. It would ban the collection of personal information from children less than 13 years old without parental permission, and from teenagers between 13 and 16 without their permission. Consumers all ages would gain the right to demand that a business delete or correct personal information, within limits, even if it was collected with permission.

The initiative would also create the “California Privacy Protection Agency”, with an initial budget of $5 million a year. It would be run by a five person, politically appointed board, and have the “power to audit a business’s compliance” with the new privacy law, including the authority to subpoena “books, papers, records or other items”. The agency could issue fines for violations.

If passed, the California legislature’s ability to water down the initiative’s provisions would be severely limited. Mactaggart needs signatures from more than 600,000 registered voters to get it on the 2020 ballot.

California’s consumer data privacy law survives lobbyist blitz, more or less intact

by Steve Blum • , , ,

Sf naked the streets

Big tech, big telecom and big business made a big push in the legislature to water down California’s landmark data privacy law, AKA the California consumer privacy act. They won some minor victories as the 2019 session ended, but did not succeed in making major changes.

A blog post by Christina Hyun Jin Kroll in the National Law Review has a good run down of the bills that did and didn’t make it out of the legislature and onto governor Gavin Newsom’s desk. Companies won a year’s delay in implementation of some of the protections that apply to employment-related information and data collected as a result of some business-to-business transactions, and expanded the scope of what can be considered “public information” that’s not subject to privacy restrictions. “Deidentified” and/or “aggregate” consumer information was also excluded – it’s no longer defined as “personal information”.

The battleground now moves out of the California legislature and into the governor’s and attorney general’s offices, and to federal lawmakers in Washington, D.C. Newsom has to decide whether to sign the bills into law (it’s expected he will). California attorney general Xavier Becerra has to issue detailed rules for complying with and enforcing CCPA. The law technically takes effect in January, but Becerra’s rules won’t kick in until July. His first draft is expected in the next few weeks.

So far, California is out in front of both the federal government and other states on privacy policy, which is making business interests nervous. Dozens of CEOs from major corporations signed a letter addressed to key congressional leaders that urges them to preempt state laws, because otherwise their customers might be confused by “rules that may change depending upon the state in which they reside, the state in which they are accessing the Internet, and the state in which the company’s operation is providing those resources or services”. Their altruism is touching.

There seems to be widespread agreement in D.C. that something should be done, but, naturally, no one can agree on what that something is. For now, California’s data privacy law is on track to become the de facto national standard.

California sits out Google anti-trust investigation

by Steve Blum • , , ,

Attorneys general from forty-eight states, plus the Commonwealth of Puerto Rico and the District of Columbia, launched a joint anti-trust investigation against Google on Monday, looking specifically at how the company handles online advertising. The group isn’t accusing Google of anything in particular yet, but they have their suspicions and if those prove out, an anti-trust lawsuit is sure to follow.

Only two states opted out of the investigation: Alabama and California. The absence of California attorney general Xavier Becerra from the group is puzzling to many, and he isn’t offering any hints. According to a story in the Los Angeles Times by Suhauna Hussain, maybe Becerra has something else up his sleeve…

Citing a need to protect the integrity of “potential and ongoing investigations,” Atty. Gen. Xavier Becerra declined to say why he refused to join the chief law enforcement officers of 48 other states, plus Washington, D.C., and Puerto Rico, in examining the Mountain View-based internet giant’s dominance in online advertising.

Or maybe he has something else on his mind…

As a candidate for the House of Representatives, Becerra was the recipient of considerable largess from Google. From 2010 through 2016, Becerra’s campaign received $23,000 from Google’s corporate political action committee, Google Inc. NetPAC, according to Federal Election Committee records. Two Google executives donated $2,600 and $5,300, respectively, to Becerra’s campaigns over that span. Google also contributed $7,300 to Becerra’s 2018 campaign for attorney general, and $3,000 to Marshall’s, according to data from FollowTheMoney.org.

Another consideration is California’s new privacy law, which is of particular interest to online companies. Becerra is responsible for coming up with new rules and procedures, and enforcing them when the law takes effect in January. So he might be in some kind of legal or policy arm wrestling match with Google already. There are also two days left to go on the California legislature’s 2019 regular session, and there are bills in the hopper that could change that privacy law, in one direction or the other. Or both.

Big broadband’s permission for, collection and use of customer info gets a federal review

by Steve Blum • , , , ,

The privacy practices of four major broadband service providers and one big disruptor are getting a hard look from the Federal Trade Commission. Comcast, AT&T, Verizon, T-Mobile and Google Fiber were given 45 days to produce detailed information about their business practices and subscribers, with particular emphasis on how they collect information about customers, whether it’s done with genuine permission, and what they do with it.

The information demanded by the FTC includes statistics on how many people actually read privacy policies, along with what promises to be a tall stack of those policies – every single one that’s been written by the companies, including copies that might be “different from the original because of notations on the copy”.

One particular concern of the FTC is whether the companies treat customers differently based on the degree of privacy they’re willing to surrender…

Has the Company ever offered different levels of service, quality of service, rates, pricing, rewards, or other incentives for consumers who opt-in to the collection of information about themselves, their Devices, their communications, their viewing history, or their online activities? If so, Describe in Detail such practices and produce Each materially different notice provided to consumers concerning the practice…

Has the Company ever denied service, or otherwise degraded the quality of service, for consumers who fail to opt-in to the collection of information about themselves, their Devices, their communications, their viewing history, or their online activities, beyond information that is necessary for the provision of Internet or cable services? If so, Describe in Detail such practices and produce Each materially different notice provided to consumers concerning the practice.

AT&T and Verizon will have to produce information about both their wireline and mobile subsidiaries. It’s probably a good assumption that Comcast will have to submit data about its wireless business practices too. One company that’s notably absent from the list is Charter Communications, which has nearly as big a market share as Comcast. Sprint is missing too, but it’s the smallest of the major mobile carriers and might not be around much longer anyway.

Intentional or not, the FTC’s fishing – whaling – expedition is a welcome response to a damning assessment by the federal general accounting office assessment that the agency is largely clueless about the online world.

Federal online privacy cop needs direction, says GAO study

by Steve Blum • , , , ,

Police academy

The federal government’s primary consumer protection agency – the Federal Trade Commission – doesn’t think too hard about policing online privacy violations, according to a report by the General Accounting Office. Generally, the FTC can act when a company engages in unfair or deceptive business practices. Figuring out what’s fair and what’s not in cyberspace is a complete puzzle, and impenetrable terms of service and other digital fine print typically give companies a get out of jail free card to companies, the report notes…

Some stakeholders said that FTC relies more heavily on its authority to take enforcement action against deceptive trade practices compared with the agency’s unfair trade practices authority. This was confirmed in our analysis of FTC’s Internet privacy enforcement actions discussed previously. However, a representative from a consumer advocacy group said that FTC’s ability to take such action is limited practically to instances where a company violates its own privacy policy—companies generally can collect and use data in any way they want if they include language in their policies asserting their intent to do so. According to a former FCC commissioner, a privacy statute could clarify the situations in which FTC could take enforcement action.

The report notes that both California and the European Union have online consumer privacy laws in place, but there’s no federal equivalent in the U.S. It concludes with a recommendation to congress that it “should consider developing comprehensive legislation on Internet privacy”, including identifying which agency is responsible for what and, somehow, balancing “consumers’ need for Internet privacy with industry’s ability to provide services and innovate”.

There’s also an interesting list of FTC privacy enforcement actions at the end of the report. It summarises 101 cases over ten years, between 2008 and 2018. Most ended with no penalties or other meaningful result at all, although a rumored multibillion dollar smack at Facebook would, if true, change that calculus. A few resulted in million dollar-plus penalties but the remainder ended with relative slaps on the wrist. It’s a clear illustration of why the FTC needs better direction and motivation if it’s to be the “nation’s premier consumer protection cop”.

Spreading high tech wealth and restricting self-employment on California governor’s to do list

by Steve Blum • , , , ,

California governor Gavin Newsom took aim at technology companies during his state of the state address on Tuesday. Although bullish on California’s high tech economy, he dangled the possibility of a tax on data…

California is proud to be home to technology companies determined to change the world. But companies that make billions of dollars collecting, curating and monetizing our personal data have a duty to protect it. Consumers have a right to know and control how their data is being used.

I applaud this legislature for passing the first-in-the-nation digital privacy law last year. But California’s consumers should also be able to share in the wealth that is created from their data. And so I’ve asked my team to develop a proposal for a new Data Dividend for Californians, because we recognize that your data has value and it belongs to you.

He didn’t explain what a “data dividend” is, but given his long list of new and expanded state programs, it seems likelier that he’s thinking in terms of taxing tech companies rather than requiring them to send dividend checks to everyone.

Newsom also talked about changes in employment law but, again, was short on details. Referencing a California supreme court decision that limited the ability of individuals to work as self-employed contractors – Uber drivers, for example – Newsom called for…

A new modern compact for California’s changing workforce…to ensure technological advancements in AI, blockchain, big data, are creating jobs, not destroying them, and to reform our institutions so that more workers have an ownership stake in their sweat equity.

He plans to give the job of figuring out how to do that to a new commission that will include representatives from businesses, but also from labor unions, which have actively worked to hinder self-employment in California in the past.

There was no mention of broadband or other telecoms issues in Newsom’s speech, but he did talk about electric utilities, primarily PG&E. He promised to be an active participant in PG&E’s bankruptcy case, saying he’s “convened a team of the nation’s best bankruptcy lawyers and financial experts from the energy sector” to “seek justice for fire victims, fairness for employees, and protection for ratepayers” while never wavering on safety or pursuit of clean energy goals. As with most everything else, Newsom didn’t say how he would do all that, but at least he offered a 60-day deadline for coming up with answers.

Consumer privacy law is back in play in Sacramento

by Steve Blum • , , ,

Sf naked the streets

Monday’s brief meeting of the California legislature didn’t produce any broadband-related bills, with the possible exception of a placeholder introduced by assemblyman Ed Chau (D – Los Angeles). Assembly bill 25 would amend the privacy bill that California lawmakers passed in 2018, but it doesn’t say how.

California’s new privacy law puts tight restrictions on how online companies can use customer data, and how they have to safeguard it. Chau was the author of that bill, which was passed as part of a deal to keep an even tougher privacy initiative off of the November ballot. But what the legislature gives, it can also take away. A coalition of various kinds of advocacy groups sent a letter to lawmakers on Monday, asking them to strengthen the law, and resist attempts to change it…

Irresponsible data practices lead to a broad range of harms, including discrimination in employment, health care, and advertising, data breaches, and loss of individual control over personal information. Technology practices and resulting concerns can limit adoption and use of new technology such as internet-connected devices, threaten e-commerce, and even decrease democratic engagement and speech. Many individuals do not understand and are worried about how their information is used or shared online. They feel that they have lost control of their data and they want government to protect them.

Whether or not consumers are really clamouring for more government protection is an open question. But there doesn’t seem to be much interest in having less, except among the telecoms and online services companies that opposed California’s new privacy law. Some of those companies give millions of dollars to lawmakers, and particularly to senators and assembly members that sit on key committees in Sacramento. With the help of those friend, their lobbyists are adept at carving up laws they don’t like. Chau’s new bill needs to be watched carefully.

Charter, Comcast tell FTC to kill California broadband laws

by Steve Blum • , , , ,

Comcast and Charter Communications want the Federal Trade Commission to preempt California’s data privacy law, and any other state laws regarding broadband service. In comments filed last week, the National Cable and Telecommunications Association (NCTA), which serves as a Washington, D.C. lobbying front for Comcast, Charter and other cable companies, ask the FTC to tell state lawmakers and officials that they can’t enforce broadband service rules beyond what federal regulators think is appropriate (h/t to Jon Brodkin at Ars Technica for the pointer)…

The FTC should ensure that the Internet is subject to uniform, consistent federal regulations, including by issuing guidance explicitly setting forth that inconsistent state and local requirements are preempted…

California’s recently enacted California Consumer Privacy Act of 2018 imposes numerous requirements that differ from, and even conflict with, federal law.174 Moreover, a patchwork of state-level rules applying only to BIAS providers would undercut existing federal policy basing enforcement on what information is collected and how it is used, rather than on who is collecting the information. Any FTC guidance to state entities on the need to ensure consistency with FTC and FCC policy and precedent in the Internet arena thus should cover privacy and data protection issues as well.

NCTA argues, falsely, that the market for broadband service is “substantially” and “increasingly”. That’s true in a few isolated areas, but overall the trend is toward greater monopolisation of the Internet service industry. The minimum speed level necessary to take advantage of what NCTA calls “a wide array of Internet-delivered video offerings” continues to rise. More and more, cable operators are the sole source of broadband service that meets contemporary needs.

Charter and Comcast are preparing a new line of attack against state-level privacy and network neutrality rules. If, as some legal experts believe, the Federal Communications Commission has taken itself out of the broadband regulation business, then the FTC is their best hope to kill those laws. Particularly California’s new consumer privacy law and its pending resurrection of network neutrality standards.