Consider the Harms of Digital-Tech Regulations

Digital technology and digital business tools are helping entrepreneurs succeed in ways that were unthinkable when I joined the corporate world 20 years ago. Today millions of small-business owners – including me – rely on digital platforms to build storefronts, market products and services, transact business, and secure financial data. But many are growing nervous, as Congress and the State of California, with its new California Consumer Privacy Act of 2018, are regulating digital platforms in ways that could harm our small businesses.

After 17 years in corporate accounting, and two with a small accounting firm, I recently decided to strike out on my own and open my own bookkeeping business. After only eight months in business I have several clients and two employees. QuickBooks Online helps me work efficiently with multiple clients and employees, even when they are in other states and time zones. Facebook is my marketing partner, as I offer accounting tips that reach targeted groups of small businesses, women entrepreneurs and fellow accountants.

Small businesses cannot compete with large competitors’ marketing budgets, but with data and analytics we can identify opportunities, win business and succeed. As an accountant I don’t know much about data science and analytics. But Facebook offers small businesses access to its data and analytics, and for a small investment of time or money we can reach potential clients and employees in target markets nationwide and globally. Similarly, I know very little about data security, but QuickBooks provides state-of-the-art security for millions of businesses and individuals.

With so many digitally-powered small businesses succeeding, it is perplexing to hear elected officials proposing new regulations that could really harm us. Perhaps Washington, DC and Sacramento do not understand that when they attack digital platforms, millions of small businesses worry that we will be collateral damage. California’s 3.7 million small businesses should be consulted.

The new European privacy law, the EU General Data Protection Regulation (GDPR), was enacted in May of this year. The new law, which has global impact and may be a model for Congress, requires almost all digital businesses to hire Data Privacy Officers. Our business is entirely digital and we have access to a lot of sensitive information, but we are so small that I hope if Congress adopts this rule we will be exempt.

The new California privacy law broadly requires digital businesses to encourage people to opt-out of sharing their data. I agree that sensitive health care and financial data should be private, but I would like to send digital advertisements to people who seem to be looking for a new bookkeeper or accountant. Today Facebook collects this valuable but relatively innocuous data and utilizes it to help small advertisers – some of which pay only $1 or $2 to advertise.

Consumer privacy and data security are important, but when the 2019 Congress considers national privacy legislation, it must focus precisely on serious risks and real harms. When policymakers are regulating the Internet and digital technology, they must understand that the large companies and powerful technologies enable millions of small businesses to succeed. If new regulations mean I cannot market or manage my business efficiently, or that I will need lawyers and cybersecurity experts to validate my compliance, then I might as well shut my business and go back to working in a big company.

I know firsthand that the digital revolution is fundamental to small business. I have friends who spend only $1 or $2 each day on targeted advertisements that meaningfully help grow their businesses. I know that lawmakers in Sacramento and Washington do not want to harm my business or my friends’ businesses. But the road to disaster is paved with good intentions, so it is critical that digital policies be thoroughly considered and small business treated well.

Jessica Martinez is the owner of Leading Financial Accounting based in San Diego, CA.

Article originally published in the San Diego Business Journal.