DeSantis takes aim at Big Tech but clocks small businesses instead
Ganon Evans
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In his latest crusade against big business, Gov. Ron DeSantis (R-FL) is trying to pass several bills that will moderate how much access online sites have to user data. While his Republican followers frame the issue as a fierce battle against Big Tech, these new regulations could hurt ordinary businesses and citizens the most.
The bills, HB 1547 and SB 262, focus broadly on “technology transparency” and include some provisions that would doubtless improve user data security. But their heavy-handed approach to limiting the transfer of user data would make ads ineffective, reducing traffic for small businesses that depend on these media and making them worse off.
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Online advertisements function through the collection of user data. Companies gather information about how to market their products based on user interaction with their ads. What someone views online is used to determine what products would be attractive to them. Similarly, the data on how someone interacts with an advertisement gives businesses an idea of a potential customer. This is especially important for small businesses, who are often targeting a niche clientele or may not have the resources to cast a “wide net” in advertising to thousands of people, instead opting to focus on a smaller audience.
A recent report from Data Catalyst about how digital ads help small businesses stay competitive showed that small and medium businesses with less than 10 employees spend 74% of their advertising budget on digital media. Nearly 80% of small and medium businesses reported that digital ads were a way that they could compete against bigger businesses with larger advertising budgets capable of bigger campaigns. I work for a small nonprofit group: Without targeted advertisements enabling us to isolate and appeal to people who engage with similar content, we wouldn’t be able to compete with businesses whose budgets can afford larger mass media campaigns.
Advertisers and the websites they are on have a mutually beneficial relationship. Websites, and smaller sites in particular, depend largely on advertising revenue to operate. Similarly, online advertising is anticipated to reach over $1 trillion by 2027. More people are online than ever, and companies are desperate to access that market. Data is the driving tool of all of this business.
SB 262 defines a series of metrics as personal information, and specifies that consumers have the right to opt out of the sale or sharing of said information with third parties. Currently, any website could sell user data to whomever they choose without the user knowing at all. Limiting the sale of data would promote transparency, but it would simultaneously throw a wrench in how the entirety of online marketing works. This would only harm small businesses’ ability to stay afloat while big businesses market to consumers elsewhere.
Creating opt-outs for ads or banning their ability to employ user data to advertise effectively hamstrings small businesses’ ability to compete. An ad for a local brewery would be just as likely to show up for someone who purchases local beers online as for someone who abstains from drinking. The utility of online ads would be diminished.
This is bad news for both businesses and the sites posting their advertisements. For one, small businesses will no longer have specialized ads to compete against the sheer number of ads that big businesses can afford. When businesses start pulling ads due to their newfound ineffectiveness, the sites ranging from local newspapers to social media networks will see a hit to their revenue that could be made up by increasing user fees.
Government intervention in the economy creates a ripple effect often unintended by the original policy. In this case, big businesses have the resources to comply or find a workaround to data restrictions. Policies such as those DeSantis is trying to push through will leave small businesses practically locked out of digital tools to thrive in today’s economy.
DeSantis claims to support small businesses, but he’s got a strange way of showing it.
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Ganon Evans is a policy analyst at Kansas Policy Institute and a contributor to Young Voices. His research focuses on state and local tax and spending, corporate welfare, and technology.