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article imageCalifornian businesses will pay $55 billion for data privacy law

By Tim Sandle     Oct 5, 2019 in Business
A new regulatory impact analysis on the impact of the California Consumer Privacy Act (CCPA) estimates the initial costs for state business compliance with the new data privacy law to be $55 billion.
The new estimate comes from analysis by the California Attorney General’s Office, and it outlines the measures (together with the respective costs) that businesses need to undertake in order to comply with the legislation.
The California Consumer Privacy Act (CCPA) AB375, goes into effect in January 2020. Included within the framework of the act is the proviso that from January 1, 2020, any Californian resident will have legal right to ask any major firm in the U.S. what is being done with their data, and each company will have to respond within 45-days. Privacy experts expect the new law to apply to more than 500,000 U.S. companies.
The legislation is similar to (but not quite as wide in scope as the European Union GDPR - The General Data Protection Regulation, Regulation (EU) 2016/679).
The origin of the privacy legislation is in part a response to mass data misuse in the U.S., such as the practices of data scraping, data harvesting, psychological profiling, and microtargeting, which practices associated with many digital marketing departments. Arguably, the implications of those practices are starting to be felt by our citizens and democratic institutions across the world.
READ MORE: What the California Consumer Privacy Act means for business
The regulation is expected to put significant financial and organizational pressure on companies. They also impose restrictions on companies who do business in their geographic zone, regardless of where the company is located. This is not least because California is a $2.7 trillion economy, the 5th largest in the world, and is built on big data -- specifically the buying and selling of big data.
The Association of National Advertisers (ANA) Group has recently released analysis of the impact on businesses. According to Dan Jaffe, Group Executive Vice President of government relations for the Association of National Advertisers: “It is clear from this impact analysis that the CCPA potentially will have a very significant negative impact on California’s business community and economy. The report’s wide-ranging estimates of future costs reflect the substantial uncertainty and potential disruption the law presents for businesses, regulators, and consumers.”
These ‘negative impacts’ include legal fees and what is described as a disproportionately large impact upon small businesses. Initial costs are expected to be $55 billion for businesses; potentially running up to $16.45 billion over the next decade.
There are not only costs to consider, there is considerable planning, reorganization and adopting new data practices to consider. Such is the extent of the challenge faced by businesses, one survey finds that 86 percent of U.S. companies describe CCPA compliance as a “work-in-progress.”
More about Data privacy, California privacy, data security, Privacy, California Consumer Privacy Act
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