California May have some of the strictest data privacy and security laws on the books, but Gov. Gavin Newsom has floated a “new data dividend” that would compel Google, Facebook and the like to pay consumers in the state who choose to share their data.
Noting that tech companies make billions from collecting and using personal data, Newsom said “California's consumers should also be able to share in the wealth that is created from their data.” He will put together a committee to come up with a plan for the data dividend.
The idea drew support from one of the architects of California’s stringent landmark privacy bill, state Sen. Bob Hertzberg (D), who CNBC said called it "the next frontier of the online and privacy conversation."
Another of the California Consumer Privacy Act’s proponents, Alastair MacTaggert, told the Sacramento Bee, “We are so pleased that Governor Newsom is at the forefront of leaders recognizing that California consumers are fed up with being presented with no choice about what happens to their data, and forced to stand by and watch it sold to hundreds of companies they’ve never heard of, for uses they’d never approve.”
But Dan Goldstein, president and owner of digital marketing agency Page 1 Solutions, called Newsom’s advocacy of a data dividend “pure political posturing” that wouldn’t yield significant returns for consumers or overcome their apathy as to to how their data is used.
“There a huge discrepancy between the aggregate value of the data gathered by big tech companies on the one hand compared to the pittance of a benefit consumers might get through the proposed "profit-sharing for data,” said Goldstein. “Moreover, consumers have consistently demonstrated that they are not willing to take the time to understand what data is being collected, let alone take basic action to protect their data privacy.
He pointed to a survey of Facebook users by the Center for Data Innovation, which “demonstrates that most people aren't willing to pay for more data privacy. Given the consumer apathy toward data privacy, Facebook has little incentive to offer to pay consumers for their data.”
While a tax on tech companies might be a way to address consumer apathy, Goldstein said it wasn’t clear a tax would benefit consumers.
And given that the state’s privacy law was passed shortly before Newsom took office, “it seems unlikely that he would propose such a controversial tax on some of the biggest job creators in his state,” he said.
Newsom had praised the privacy law and acknowledged California’s tech muscle on Tuesday during his State of the State address.