California’s Proposed Universal Data-Sharing Opt-Out Law Will Hurt Small Businesses

Data-powered digital tools, including ads and analytics, are key to small businesses’ growth and success. So it’s worrying that California legislators are considering a bill, AB 566, that could significantly limit data availability. AB 566 requires web browsers like Chrome and Safari to let customers opt out of all online data sharing in a single step. Contrary to what the bill’s proponents say, that will do little to strengthen individuals’ privacy — and could badly hurt many of the state’s 4.2 million small businesses. Here’s why.

Used by nearly two-thirds of U.S. small businesses, data-powered digital ads allow small businesses to serve ads to audiences likely to be interested in their products. That doesn’t mean small businesses have access to people’s sensitive data. Instead, sophisticated algorithms serve the businesses’ ads to devices where data-use patterns indicate a good match for the businesses’ product or service. 

For example, if you’ve been searching online for local mortgage brokers and home inspectors, you might get an ad from a local real estate agency. That makes it easy to think someone at the agency is watching you. They’re not. Hundreds of other devices with similar data-use patterns will get the exact same ad. That kind of data-powered advertising helps small businesses use their limited advertising dollars effectively, allowing them to compete with bigger businesses that have bigger advertising budgets. It also helps customers connect with specialized local service-providers they actually need. 

Data analytics tools also help small business owners make smart marketing decisions so they can efficiently grow their businesses. For instance, e-commerce platforms like Squarespace and Shopify give online-store owners data showing how customers found their store — whether by clicking an emailed link, through a social media post, or by searching online. That’s valuable to small-business owners, because it shows them where to focus or optimize their marketing efforts. Similarly, small-business owners who run digital ads can see data showing which of their ads are most effective — allowing them to pull less effective ads and double down on high performers, boosting their top and bottom lines. 

Over 99 percent of California’s businesses are small businesses; they’re vital to the state’s economy and communities. Those businesses leverage data to find customers, grow, and succeed. If people opt out of data sharing — which many will, because they (mistakenly) believe it will save them from “surveillance” advertising — small businesses will lose valuable data-powered tools and insights. They’ll also lose critical customer relationships: opt-outs would even override existing consents, like participation in loyalty programs. That hurts businesses and customers.

Californians deserve smart legislation that both protects people’s privacy and allows small businesses to connect with customers, grow, and succeed. Click here to send a message to California lawmakers, telling them that AB 566 misses the mark.