Technologist - The FindLaw Legal Technology Blog

Will California Consumers Share in Wealth From Their Online Data?

FindLaw columnist Eric Sinrod writes regularly in this section on legal developments surrounding technology and the internet.

Technology companies collect all sorts of data on their users. The terms of service located on their web sites spell out for users the types of data collected and how that data will be used. The data collected from users is extremely useful for tech companies in terms of how to market to them further, and accordingly, that data has tremendous economic value.

Along comes the Governor of California, Gavin Newsom, who according to APNews.com, has announced that California consumers should share in the billions of dollars that tech companies make on personal data they collect. Indeed, Governor Newsom reportedly has asked his aides to come up with a proposal for what has been referred to as a "data dividend" for California residents. However, it is not clear whether he envisions a tax on tech companies, refunds to users, or some other idea.

In his first State of the State speech, Governor Newsom said that "companies that make billions of dollars collecting, curating, and monetizing our personal data have a duty to protect it." And, he went on to state that "California consumers should also be able to share in the wealth that is created from their data."

James Steyer, the founder and CEO of Common Sense Media, an organization that contributed to the passage of California's recent digital privacy law, reportedly has said that his organization plans to come up with proposed legislation soon that would flesh out Governor Newsom's recent proposal relating to consumers financially benefiting from the collection of their personal data. There have been reports that somehow there would be a return of 25% to consumers regarding the collection of their data.

A spokesperson for Governor Newsom is reported to have said that the governor is open to constructive input from experts and lawmakers from around the country.

Undoubtedly, we will be hearing more about this in the coming weeks and months.

On the one hand, there likely will be arguments that data collected by tech companies is properly owned by them under their terms of service and that potentially offering small amounts of money to users could entice them to give up their privacy for very little in return.

On the other hand, we probably will see arguments that data is personal to users as it relates to them specifically, and accordingly, they should be entitled to a least a portion of the economic value related to that data.

Eric Sinrod (@EricSinrod on Twitter) is a partner in the San Francisco office of Duane Morris LLP, where he focuses on litigation matters of various types, including information technology and intellectual property disputes. You can read his professional biography here. To receive a weekly email link to Mr. Sinrod's columns, please email him at ejsinrod@duanemorris.com with Subscribe in the Subject line. This column is prepared and published for informational purposes only and should not be construed as legal advice. The views expressed in this column are those of the author and do not necessarily reflect the views of the author's law firm or its individual partners.

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