The Florida legislature is considering a piece of data privacy legislation, HB 9, that would require for-profit companies meeting certain thresholds to comply with onerous regulations. Data privacy is important, and while this legislation is well-intentioned, it would come with significant costs for Florida businesses and consumers. Florida should not follow California’s heavy-handed approach and should maintain their pro-growth focus.
HB 9’s regulations would apply to any for-profit business that buys, sells, or shares personal information of Florida consumers and meets two of the following thresholds:
- Global annual gross revenue in excess of $50 million (adjusted for inflation);
- Annually buys, sells, or shares the personal information of 50,000 or more consumers, households, and devices for the purpose of targeted advertising; and/or
- Derives 50 percent or more of its global annual revenues from selling or sharing personal information about consumers.
At first glance, a $50 million and 50,000 consumer threshold may seem like a bill targeting Big Tech, or at least large technology companies, but that is not the case. These regulations would include small and mid-sized businesses in Florida. Meeting the bill’s threshold of 50,000 consumers would require serving just .29 percent Florida-based adult consumers. Even a small company would be subject to these regulations if they hit that threshold and also derived 50 percent of their profits from data, a relatively low bar and certainly not one aimed exclusively at large technology companies.
Florida garnered a great deal of praise over the last couple of years for focusing on keeping the economy and businesses open. Much of the state is thriving economically, for instance Miami is a growing technology hub. But HB 9 would set back the Florida economy. A report from Florida TaxWatch, a Florida-based nonpartisan taxpayer research group, estimated the initial compliance cost for HB 9 would be between $6.2 billion and $21 billion, with ongoing compliance costs ranging from $4.6 billion and $12.7 billion annually. For perspective, $21 billion would be 2.24 percent of Florida’s 2020 real Gross Domestic Product.
These high compliance costs would have harmful effects on Florida’s economy. Florida-based businesses would face higher costs that would be particularly problematic after the past two years in which the U.S. economy has faced challenges from labor shortages to supply chain issues. It could also make the Sunshine State a less attractive place to start a business by raising barriers to entry. Finally, the increased compliance costs would likely be passed on to consumers, leading to higher prices. With high inflation and rising gas prices, consumers do not need this additional burden.
However, there is a sector that would likely benefit from this legislation — lawyers. HB 9 includes a private right of action, allowing for a flurry of lawsuits to hit Florida businesses and business owners. Businesses, even those who comply with HB 9, could be forced to litigate numerous lawsuits. As Florida TaxWatch notes, “it is plausible that a bad actor could file mass correction/deletion requests with the intent of catching at least one company by surprise, leading to a noncompliance violation and potential litigation.” This would not benefit consumers or help protect their data.
Florida is not the first state to consider data privacy legislation. California, Virginia, and Colorado have all passed legislation around data privacy. However, Florida should not follow California’s lead with heavy-handed regulations. California’s data privacy legislation would create a $78 billion annual economic burden on the U.S. economy, according to the Information Technology & Innovation Foundation. NTU Foundation shares the concerns of spillover effects, warning that California’s privacy legislation would hamper internet infrastructure and pose significant in-state and out-of-state costs for businesses and consumers.
Data privacy is an important issue and should be addressed in a targeted manner. Unfortunately, HB 9 would hamper Florida’s economic growth, place an immense strain on businesses, and likely lead to higher prices for consumers. Florida has focused on pro-growth economic policies, and it shouldn’t follow in California’s footsteps by imposing onerous regulations.