California’s Black-owned businesses are woven throughout our state’s innovative and dynamic economy, creating hundreds of thousands of jobs and generating billions of dollars in fiscal impact, contributing to California’s global leadership in technology and innovation. As President & CEO of the African American Chamber of Commerce, I’m highly attentive to the regulatory environment these businesses face and deeply concerned about the California Privacy Protection Agency (CPPA)’s proposed rules on automated decision-making technology.
The proposed rules from the unelected bureaucrats at the CPPA would impose significant costs on my members and small businesses across the state without addressing any real or significant privacy concerns. The regulations wouldn’t just impact artificial intelligence or sophisticated algorithms, but also regulate basic business tools that small companies rely on every day – from simple Excel spreadsheets used to track employee performance to standard software that helps businesses offer relevant products to their customers.
The proposed regulations seem relatively unremarkable and benign – after all, who doesn’t support privacy protection? Under the hood, however, you’ll find an alarming government overreach that could devastate Black-owned small businesses already struggling to compete in California’s challenging business environment, which should greatly concern the Governor and legislative leadership who appointed the current CPPA board.
CPPA admits the proposed regulations could cost California businesses $3.5 billion – and that’s likely an underestimate. For small businesses operating on thin margins, such as neighborhood staples like restaurants, dry cleaners, and coffee shops, the financial burden of conducting extensive internal audits, filing reports, and creating new systems to handle consumer opt-outs could be the difference between survival and closure.
For example, a retail business that uses basic software to tailor promotions to regular customers would, under the proposed rules, need to build new systems letting customers opt out of receiving relevant offers, potentially hire compliance staff they can’t afford, and file complex and time-consuming reports about their use of ordinary business technology.
Consider a staffing agency that uses standard HR software to track employee attendance and performance. They’d face burdensome new auditing requirements and could be forced to publicly reveal proprietary information to their competitors about how they operate.
This is not what voters intended when they supported privacy protections in 2020. That ballot measure focused on preventing the sharing of personal data and limiting how businesses can use particularly sensitive information. The unelected CPPA board has misconstrued it as a sweeping regulation of everyday business operations that goes far beyond privacy concerns.
The CPPA’s proposed rules are so broad that they would consider even basic Excel spreadsheet analysis as “automated decision-making” requiring extensive oversight. The proposed rules are extreme regulatory overreach ignoring both the intended scope of the agency and shows a complete disconnection from the realities of running a small business.
While I urge the CPPA’s current board to reconsider and significantly amend the rules, the responsibility to stop this ultimately falls on Governor Newsom and legislative leadership, who control appointments to the CPPA board. They must rein in this runaway agency before it imposes billions in unnecessary costs on innovative California businesses, potentially driving them to other states.
California’s Black-owned businesses already face enough challenges – from the state’s notoriously high costs of living to retaining skilled workers and access to capital – without having to navigate unnecessary regulations that restrict basic functions of running small businesses. Our state’s privacy regulators need to go back to the drawing board and craft rules that protect small businesses and genuinely address real privacy risks – not burden businesses with solving problems that don’t exist.
Ahmad Holmes is the President & CEO of the California African American Chamber of Commerce, the largest statewide African American Chamber organization driving economic opportunity and wealth creation for African American businesses.