14/5/2018 Silicon Valley Faces Regulatory Fight on Its Home Turf - The New York Times

Silicon Valley Faces Regulatory Fight on Its

Home Turf
By Daisuke Wakabayashi

May 13, 2018

OAKLAND, Calif. — The staging ground for one of the biggest regulatory fights facing the
technology industry is far removed from Washington or Brussels, tucked into an alley next to a
wine and cheese shop about 30 miles from Silicon Valley.

A barely furnished real estate office in an upscale Oakland neighborhood is the headquarters for
backers of a proposed California ballot measure that would provide consumers with increased
privacy rights, including the ability to demand that companies do not sell their personal data.

If the initiative, called The California Consumer Privacy Act of 2018, passes, privacy advocates say
it will be one of the most meaningful checks in the United States on the growing power of internet
behemoths.

The proposed ballot measure is the passion project of an unlikely trio: a real estate developer, a
former Central Intelligence Agency analyst and a financial industry executive. They say they have
no political aspirations. They’re not techies and they aren’t your run-of-the-mill privacy zealots.
Instead, they say they are like many internet consumers — a little freaked out about tech firms
gobbling up people’s personal data.

“People want some basic rights,” said Alastair Mactaggart, the 51-year-old real estate developer
who has put more than $2 million of his own money to get the measure off the ground. “People are
resentful but accepting because there isn’t any sense of control about their data.”

The California measure has three major components: It gives consumers the right to ask
companies to disclose what data they have collected on them; the right to demand that they not
sell the data or share with third parties for business purposes; and the right to sue or fine
companies that violate the law.

Google, Facebook, major telecommunications companies and California’s Chamber of Commerce

have already come out against the initiative, saying it is flawed and a threat to the economic model
supporting the internet. They’ve created an organization to fight the measure with a decidedly
populist name, “The Committee to Protect California Jobs.”

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14/5/2018 Silicon Valley Faces Regulatory Fight on Its Home Turf - The New York Times

Political consultants have told the initiative’s backers that they should prepare for the opposition
campaign to spend $100 million. Steve Maviglio, a spokesman for the opposition, declined to put a
number on the campaign spending, but acknowledged that there is a lot at stake. “It’s California,”
he said. “It’s expensive.”

California’s privacy initiative hasn’t been certified yet by state officials for the November election,
but it is expected to appear on the ballot. The measure’s backers said they have submitted over
600,000 signatures, far eclipsing the 366,000 minimum requirement.

Mr. Mactaggart said he first became concerned about data privacy when he asked a Google
engineer at a cocktail party if he should be worried about all the information companies were
collecting about users. The engineer’s response surprised him: Mr. Mactaggart was right to be
worried.

Mr. Mactaggart said he then reached out to Rick Arney, a finance industry executive who had
worked in the California State Senate as a legislative analyst 20 years ago. Their children go to the
same school, and Mr. Mactaggart knew that Mr. Arney was a supporter of ballot measures as a way
for ordinary citizens to get something done outside of the political system.

“One of the reasons why it’s brought as a ballot initiative is that there is consensus that Silicon
Valley owns Sacramento,” said Chris Hoofnagle, an adjunct professor at the University of
California, Berkeley School of Law and an adviser for the initiative. “There’s no prospect of any
consequential consumer privacy legislation.”

But there was a small problem: neither Mr. Mactaggart nor Mr. Arney was a privacy expert or
policy wonk. So they hired Mary Stone Ross, another neighborhood friend, who worked at the
Central Intelligence Agency and had been legal counsel for the House of Representatives
Intelligence Committee, to oversee the effort.

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14/5/2018 Silicon Valley Faces Regulatory Fight on Its Home Turf - The New York Times

A barely furnished real estate office in an upscale Oakland neighborhood is the headquarters for the backers of the proposed
ballot measure on data privacy. Jason Henry for The New York Times

They spent months talking to technologists, academics and lawyers. They conducted polls and
focus groups to understand what people wanted.

After considering various options, they decided against taking a hard-line approach. Companies
can still use personal data for their own purposes to sell advertising or improve products. They
would be restricted, however, from selling or disclosing that data to someone else for “business
purposes” upon a consumer’s request.

The proposed ballot measure is the latest challenge facing Silicon Valley’s web giants. There is a
backlash to the data collection practices that underpin how they make money.

In the rest of the world, the clamor for regulation is building. The most notable effort is coming
from Europe, which is preparing to enact later this month a stringent set of laws that will restrict
how tech companies collect, store and use personal data from people across the region.

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14/5/2018 Silicon Valley Faces Regulatory Fight on Its Home Turf - The New York Times

In the United States, the California ballot initiative is part of a wave of activity aimed at reining in
the sprawl of personal data across the internet in the wake of revelations that the voter profiling
firm Cambridge Analytica gained access to the personal information of up to 87 million Facebook
users.

Last month, Senators Richard Blumenthal, a Democrat from Connecticut, and Edward Markey, a
Democrat from Massachusetts, introduced a bill that sought to establish online protections for
consumers by forcing companies to get consent to share or sell personal data. Senators Amy
Klobuchar, a Democrat from Minnesota, and John Kennedy, a Republican from Louisiana, also
introduced a privacy bill in April.

Gabriel Weinberg, chief executive of DuckDuckGo, a privacy-minded search engine, and a

supporter of the California initiative, said he wished the measure had gone further — but any
progress is good. “You have to start somewhere,” he said.

Mr. Hoofnagle said, however, that the measure’s financial punishments for violators give the law
teeth that previous attempts at privacy regulation lacked. It also takes a broader view of what
constitutes personal information beyond real names and Social Security numbers — including
biometric data and numbers that identify the devices people use.

Opponents of the measure say that those broad definitions of personal data are excessive and that
companies can adopt their own privacy rules faster and more effectively.

“Something that takes such a sledgehammer approach to regulating data is extraordinarily

concerning,” said Robert Callahan, a vice president of state government affairs at the Internet
Association, an industry trade group. “We think the initiative is filled with flaws and it will have
really dangerous consequences for the California economy.”

Google, Facebook, Verizon, Comcast and AT&T each made $200,000 contributions to the
committee opposing the proposed ballot measure. After Mark Zuckerberg, Facebook’s chief
executive, testified on Capitol Hill about data privacy last month, the company said it was leaving
the group even though it still had concerns about the measure and didn’t take back its initial
contribution. Verizon also pulled out of the coalition earlier this month, saying it wanted to deal
with privacy on a national level rather than a state-by-state approach.

The initiative’s backers said they were raising money for their campaign using a crowdfunding
approach. But to get their message out and raise awareness of the measure, they are advertising on
— where else? — Facebook.

Reflecting on his transformation from wealthy real estate developer to privacy activist, Mr.
Mactaggart said that after devoting two years and millions of dollars, he’s more certain than ever
that this initiative is important and necessary — a point brought home during a focus group

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14/5/2018 Silicon Valley Faces Regulatory Fight on Its Home Turf - The New York Times

session that took place in Sunnyvale, a city in the heart of Silicon Valley, with a room full of
engineers.

“Of all the focus groups we did around the state, that was the one most vehement about the need
for this,” Mr. Mactaggart said. “That was really one of the catalyzing moments for me when I was
like, ‘Oh, we’re onto something here.’”

Follow Daisuke Wakabayashi on Twitter: @daiwaka

A version of this article appears in print on , on Page B1 of the New York edition with the headline: Silicon Valley Privacy Fight Hits Home

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