Tech Industry Seeks Veto Of Vermont Bill That Would Regulate Data

The tech industry group NetChoice has asked Vermont Governor Phil Scott to veto a bill that would impose sweeping restrictions on companies' collection and use of data, and would also create an “age-appropriate design code” that would restrict how social media platforms serve content to minors.

Those privacy restrictions and design-code provisions were originally proposed as separate laws, but combined into one piece of legislation at the last minute. 

The privacy portions of the bill, passed in the early morning hours of May 11, would limit the amount of data that companies can collect, curb online ad targeting, and allow consumers to bring private lawsuits in some circumstances.

The design-code includes a mandate that would prohibit social platforms from using minors' data in ways that could result in “emotional distress” or compulsive use.



That prohibition would violate minors' right to access content, and platforms' First Amendment right to wield editorial control over the material on their services, NetChoice argues.

“In state after state, courts have invalidated restrictions on internet communications or content deemed harmful to minors,” NetChoice writes in its veto request.

The group notes that the Supreme Court in 2011 struck down a California law that banned the sale of violent video games to minors, without parental consent.

“No doubt a State possesses legitimate power to protect children from harm ... but that does not include a free-floating power to restrict the ideas to which children may be exposed,” Justice Antonin Scalia wrote for the majority in that case.

NetChoice adds that social media platforms also have a First Amendment right “to decide which messages to host, how to curate those messages, and how to disseminate them.”

The organization challenged a similar California bill in court, and last year obtained an order blocking enforcement.

The ad industry is expected to separately ask Scott to veto the bill due to its privacy terms -- including one that would allow consumers who have been harmed by the collection or transfer of sensitive data to bring private lawsuits. 

That provision, known as a private right of action, “would foment a flood of feckless filings, driving up costs for Vermont residents and businesses while enriching unscrupulous out-of-state trial lawyers,” Chris Oswald, executive vice president of Association of National Advertisers, said after the bill was passed.

Advocacy groups like Consumer Reports and the Electronic Privacy Information Center have praised the measure, calling it stronger than other state privacy laws.

Other privacy provisions would require businesses to let consumers opt out of targeted advertising -- meaning ads served based on non-sensitive data collected across distinctly branded sites or apps.

The bill also would obligate companies to honor opt-outs made through mechanisms like the Global Privacy Control, which transmits opt-out requests to every site consumers visit. Additionally, the bill would prohibit companies from collecting or harnessing sensitive data -- including biometrics, location data and information that reveals consumers' race, religion, citizenship, sexual orientation or health -- without opt-in consent.

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