News Summary
A report by Capitol Matrix Consulting reveals that California’s Assembly Bill 566 could significantly harm consumers, small businesses, and the digital economy. With projections of a 25% opt-out rate, the bill may lead to a $3.6 billion loss in advertising revenue, job cuts, and reduced tax revenues. The California Chamber of Commerce opposes the bill, emphasizing existing consumer rights under the California Consumer Privacy Act.
California Report Warns of Economic Fallout from Assembly Bill 566
A recent report by Capitol Matrix Consulting, commissioned by the California Chamber of Commerce, indicates that Assembly Bill 566 (AB 566) poses significant threats to California’s consumers, small businesses, and the broader digital economy. The report, titled “Economic and Fiscal Impacts of AB 566: Global Opt-Out for Internet Users,” outlines dire consequences stemming from the proposed legislation.
Key Provisions of AB 566
AB 566, introduced by Assemblymember Lowenthal (D-Long Beach), aims to implement a “global opt-out preference setting” for internet users in California. This would allow users to exclude their personal data from being sold or shared on websites, fundamentally changing how advertising works online.
Projected Economic Impact
The report warns that a projected 25% opt-out rate could result in the loss of approximately $3.6 billion in advertising spending in California. The ripple effects of this decline are expected to be substantial:
- 73,000 jobs lost.
- $6.4 billion decrease in labor income.
- $550 million lost in state tax revenue.
- $270 million reduction in local tax revenue.
Consumer Experience and Internet Fragmentation
The analysis contends that the assumption of a global opt-out allowing users to maintain access to ad-supported content is fundamentally flawed. A large-scale opt-out could lead to a diminished online experience, resulting in fewer ad-supported websites and less variety in available content. This potential outcome could lead to a fragmented internet characterized by increased paywalls, thereby limiting consumer access to free services and content.
Importance of Targeted Advertising
Research indicates that a significant majority, approximately 71% of consumers, expects personalized online services, underscoring the critical role of targeted advertising. This type of advertising is particularly vital for small and medium-sized businesses (SMBs), which rely on it to reach specific audiences effectively, often while operating under constrained marketing budgets.
The Role of Small and Medium-Sized Businesses in California
According to U.S. Census data, 87% of California businesses are classified as SMBs, which employ 47% of the state’s workforce. A downturn for these businesses would likely lead to widespread repercussions for the overall state economy. Industries such as online publishing, news organizations, shopping centers, and nonprofits that rely heavily on digital advertising could face particularly adverse effects.
Opposition and Alternatives
In light of the expected negative impacts articulated in the report, the California Chamber of Commerce and its business allies have voiced opposition to AB 566, highlighting concerns over job losses, decreased revenue, consumer confusion, and potential disruptions to internet accessibility.
Additionally, the report emphasizes that California consumers currently possess opt-out rights under the existing California Consumer Privacy Act (CCPA), along with access to various tools to manage their data without necessitating further legislation. The California Privacy Protection Agency is urged to focus on enhancing consumer education regarding these existing options rather than moving forward with AB 566.
Next Steps for AB 566
AB 566 will be pending action by the Senate following the summer recess, as stakeholders evaluate the implications of the proposed legislation on California’s economy and digital landscape.
Deeper Dive: News & Info About This Topic
- California Chamber of Commerce: AB 566 Threatens California’s Economy
- Wikipedia: California Consumer Privacy Act
- California Chamber of Commerce: New Report on AB 566
- Google Search: California economy impact AB 566
- California Chamber of Commerce: Report on Privacy Agency’s Cost Assessment
Author: STAFF HERE HOLLYWOOD
The Hollywood Staff Writer represents the experienced team at HEREHollywood.com, your go-to source for actionable local news and information in Hollywood, Los Angeles County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as the Hollywood Bowl summer concerts, the Hollywood Christmas Parade, film premieres at TCL Chinese Theatre, and festivals at the Magic Castle. Our coverage extends to key organizations like the Hollywood Chamber of Commerce and Visit Hollywood, plus leading businesses in entertainment, dining, and tourism that define the local economy. As part of the broader HERE network, including HERELosAngeles.com, HEREBeverlyHills.com, HEREAnaheim.com, and HEREHuntingtonBeach.com, we provide comprehensive, credible insights into Southern California's dynamic landscape.
