August 12, 2025

California’s Economic Concerns Over Assembly Bill 566

News Summary

A report by Capitol Matrix Consulting warns that California’s Assembly Bill 566 could lead to significant economic repercussions, including job losses and reduced ad revenue. The bill proposes a global opt-out for internet users, which might diminish the online experience and threaten small businesses. With projected losses of $3.6 billion in advertising and over 73,000 jobs at risk, opposing entities urge a focus on educating consumers instead. As the Senate considers the bill, its potential impact looms over California’s digital landscape.

California faces potential economic turmoil and disruption in its digital landscape due to Assembly Bill 566 (AB 566), according to a new report by Capitol Matrix Consulting. Commissioned by the California Chamber of Commerce, the report outlines alarming projections regarding job losses, revenue decreases, and adverse effects on consumer experience if the bill is enacted.

The report, titled “Economic and Fiscal Impacts of AB 566: Global Opt-Out for Internet Users,” warns that the bill could usher in unintended consequences detrimental to consumers, small businesses, and the broader state economy. AB 566 seeks to establish a “global opt-out preference setting” for California internet users, allowing them to exclude their personal data from being sold or shared online.

Should this bill pass, the anticipated opt-out rate could reach 25%, resulting in a staggering loss of approximately $3.6 billion in advertising spending within California. The fallout from these changes could lead to the elimination of over 73,000 jobs, a drop in labor income amounting to $6.4 billion, and substantial decreases in state and local tax revenues totaling $550 million and $270 million, respectively.

The report challenges the notion that a universal opt-out would still allow consumers the same level of access to ad-supported content. It predicts that widespread opting-out could lead to a diminished online experience for users, resulting in fewer ad-supported websites and less diverse content available. This scenario could create a fragmented internet landscape largely dominated by paywalls, which would significantly limit consumer access to free online services.

Research indicates that a substantial 71% of consumers prefer personalized online services, underscoring the critical role that targeted advertising plays in online interactions. Targeted advertising is especially vital for small and medium-sized businesses (SMBs), which rely on it to effectively reach specific audiences despite often having limited marketing budgets. Notably, the U.S. Census Bureau reports that 87% of California businesses qualify as SMBs, employing 47% of the state’s workforce, thereby highlighting the potential for widespread economic repercussions if these businesses experience downturns.

Particularly vulnerable industries include online publishing, news organizations, shopping centers, and nonprofits, which heavily depend on digital advertising for their economic viability. The negative impacts of AB 566 extend beyond immediate financial losses, as the bill poses the risk of job losses and consumer confusion while disrupting the overall internet ecosystem.

The California Chamber of Commerce and various business allies are firmly opposed to AB 566 due to its anticipated detrimental effects. They assert that the bill would not only threaten jobs and revenue but also complicate consumer choices regarding digital privacy and data management. Currently, California consumers already possess opt-out rights under the California Consumer Privacy Act (CCPA) and have access to tools that allow them to manage their data without the necessity for further legislated measures.

Given these findings, the report encourages the California Privacy Protection Agency to shift its focus toward educating consumers on their existing options rather than advancing AB 566. With the bill currently pending action by the Senate after the summer recess, the potential consequences of its passage bear a heavy weight on the future of California’s economy and digital landscape.