FOCUS: Silicon Valley Uses Growing Clout to Kill a Digital Privacy Bill

Silicon Valley has wielded its growing political clout at the state Capitol to kill a digital privacy bill that would have given consumers access to information about them being collected online.

Had the Right to Know Act become law, California would have been the first state to take direct aim at an online industry that stockpiles and trades in a wide range of personal data about nearly every adult in the United States.

In a major defeat for consumer groups and privacy watchdogs, AB 1291 will instead become a two-year bill, effectively putting it into a deep freeze until next year.

California Assemblywoman Bonnie Lowenthal said she preferred to wait rather than “water down” the substance of her bill.

“Californians don’t need to be persuaded that they should be able to ask a business what it knows about them and who it’s sharing that information with. But in the Legislature, it has become clear that we still have our work cut out for us,” she said.

The bill faced vehement opposition from a powerful coalition of technology companies and business lobbies that included Facebook Inc., Google Inc., the California Chamber of Commerce, insurers, bankers and cable companies, as well as direct marketers and data brokers. Their members collectively give millions of dollars to lawmakers and politicians.

Looking to sway public policy, the technology industry has significantly ramped up its presence and spending in Sacramento, as it has in Washington. Silicon Valley companies now employ a phalanx of lobbyists in the state Capitol and, in the last six years, have more than doubled spending on lobbying to about $18 million in the 2011-12 legislative session from $8 million in 2005-06.

It’s part of a new wave of political action, as Silicon Valley leaders – such as Facebook CEO Mark Zuckerberg, who is personally lobbying for comprehensive immigration reform in Washington – become more engaged in the issues that directly affect their businesses. Silicon Valley has become a regular stopover for President Obama, whose visits highlight the tech industry’s increased political activism. They also afford the president and the Democratic Party the chance to raise money from the affluent region and cash in on its “cool” factor.

With Silicon Valley’s political influence on the rise in the state and national capitals, political observers said AB 1291 had little chance of survival, just like a dozen other bills dealing with internet privacy that have been defeated in the California Legislature or vetoed by a governor over the last 14 years.

The industry gets a sympathetic hearing from both business-friendly Republican legislators and more liberal Democratic colleagues – especially those representing districts, like the San Francisco Bay Area and the Silicon Beach section of Santa Monica and West Los Angeles, that reap the benefits of mining personal data – said Dan Schnur, a former political consultant and director of the Jesse M. Unruh Institute of Politics at the University of Southern California.

“Most voters tend to think of technology companies in an entirely different context than most other businesses,” said Schnur. “It’s not that difficult to pass a bill to make life hard on oil companies, but when you take on Apple or Google, you’re running a bigger risk. Not only do voters enjoy their products, but they have an intuitive sense that Silicon Valley is a critical component of the state’s economy.”

Yet many consumers say they are in favor of shining a bright light on the shadowy way their personal information is gathered and shared on the internet. Some 82 percent of California voters say they are concerned about how their information is being collected by companies, according to a USC Dornsife/Los Angeles Times poll taken last year.

The current fight over personal information on the internet comes as consumer groups and privacy advocates say they are increasingly alarmed by the number of companies that glean detailed information about people’s buying habits, financial activities and health concerns from their online activities. These companies deploy sophisticated tracking techniques that sometimes yield very sensitive data, yet consumers have little control over what becomes of it.