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California: Making Social Media Policy For America

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Apparently, while I was spending several months in a courtroom and away from this blog (although not from Twitter!) the state of California officially became ambivalent about social media and the Internet Age more generally.   Of course, as is usually the case, California’s discomfort may create rules for the rest of us.

Allow me to explain.

This next paragraph represents a completely simplistic and borderline inaccurate description of our government, but is important to understand why California has such an out-sized impact in our country: In the United States, we like to think of ourselves as having a federalist system: the individual states make most of the rules unless there’s a law or regulatory scheme at the Federal level.  But implicit in all of this is that the laws of one state don’t have much of an impact on the laws of another state — that’s why, for example, states can’t collect the sales tax spent on companies with no presence in their borders, permitting Amazon and Zappos to thrive and local merchants to seethe with anger.

But some states are more important than others.  It doesn’t behoove companies to have 50 different approaches to their customers, so they often craft their policies to fit the states with the most customers, or the most significant risks.  Thus, a single state can often impact how the rest of us interact with our consumer experience.

California is often that state.  And now, in two separate bills, California’s legislature is trying to get out in front of the national debate on Internet privacy by creating rules that will, in all likelihood (and for better or worse) affect us all.

The first bill, SB242, would force social networking sites to let users set their privacy settings when they register, rather than after they’ve already joined (and often never will).  The bill would also force those same sites to default to certain privacy settings to keep more information private.   Of course, the social media sites are opposed, saying that all of this limits consumer choice, but the legislators who introduced the bill are not impressed, and a $10,000 fine per violation could easily add up to real money for even the largest sites.

The other bill, SB761, would create the “do not track” rules that privacy advocates have hoped for on the Federal level for some time.  The bill, which is far reaching in its scope, would effectively prevent websites from tracking their users.

At all.

In other words, you can effectively opt out of any of the benefits that companies get from interacting with you, even as you interact with them.  This goes quite a bit further than, say, Jay Rockefeller’s proposal in the U.S. Senate introduced this week, a bill that does include exceptions that industry believes to be necessary for modern e-commerce.

Now will these California proposals become law? Probably not in their current forms, but in this atmosphere of paranoia about Internet privacy it is not at all a bad bet that something will pass.  And if it does, social media sites (and, in fact, almost everyone who does business on the ‘net) will have to decide how far they can go in carving out California customers for special treatment, and whether they will simply have to give America the rules that California has chosen.