Congress should balance privacy protections with small business needs

A view of the U.S. Capitol in September 2012. (Architect of the Capitol)

Small businesses have taken it on the nose these past few years. Between COVID, inflation, and rising interest rates, it feels like the deck is stacked against many of us.

That’s why we feel it’s important to speak out against proposed legislation in Congress called the “American Privacy Rights Act.” While well-intentioned, this bipartisan privacy proposal fails to distinguish between legitimate privacy concerns and the real-world benefits provided by big tech firms.

The crux of the issue lies in a misunderstanding among lawmakers about the role of data-driven digital advertising. These tools, developed by big tech companies, are vital for small businesses. Digital advertising has been a cornerstone of our business’s strategies, enabling us to reach our target audience. Furthermore, speaking from experience, we know the potential digital advertising has for marginalized communities — which gives us the ability to compete directly with big businesses in a cost-effective way. They should also take into consideration that digital advertising is a major source for minority-owned businesses to penetrate market share over major corporate conglomerates.

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If the current draft of the American Privacy Rights Act becomes law, small businesses will lose the ability to effectively use digital advertising, which has been a key driver of growth. Lawmakers need to understand that it is possible to protect personal privacy without dismantling the digital advertising ecosystem that benefits both businesses and consumers.

Policymakers must recognize that big tech companies have created an advertising model that works exceptionally well. Rather than breaking up these companies, which would harm small businesses, we should focus on targeted reforms that address specific harms without undermining the entire system.

Consumers generally prefer targeted ads over generic ones, because they are more relevant to their interests. A recent study found that most consumers favor receiving digital advertising rather than paying for access to websites and apps. Additionally, nine out of 10 consumers prefer personalized online ads, and nearly as many are more likely to respond to them.

Protecting online personal information is a worthy goal for Congress. However, legislators must carefully separate harmful practices from beneficial ones. They should craft legislation that addresses privacy concerns while preserving the tools that help small businesses thrive.

By doing so, they can safeguard consumer privacy without stifling the innovation and growth that digital advertising brings to small businesses and the broader economy.

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