Data privacy has emerged as a growing concern in the digital age, prompting states to enact laws that safeguard consumer information while maintaining the online marketplace that has become foundational to our economy. The intent behind these measures is admirable, but the scope and implications of such laws must be carefully considered to avoid disrupting the online marketing that has become key to growth for small and large businesses alike.

The impact on small businesses is particularly important in Maine, where more than 80% of our businesses are classified as small and form the backbone of the economy. Sensitive personal data should be protected, and the Maine State Chamber of Commerce supports commonsense reforms enacted in other states. Any legislation Maine adopts, however, needs to protect businesses’ ability to compete and attract global customers through targeted marketing and e-commerce. We can do both, but unfortunately the Legislature’s effort on privacy may detach Maine businesses from the global online marketplace.

Last year, two bills aimed at addressing data privacy were introduced in the Maine Legislature: L.D. 1973, sponsored by Sen. Lisa Keim, and L.D. 1977, sponsored by Rep. Maggie O’Neil. The Legislature’s Joint Standing Committee on Judiciary has worked through the intricacies of these policy proposals over the last several months with bill sponsors to find areas of commonality.

Without a federal policy in place, 14 states have enacted consumer data privacy laws and 13 of them share what is referred to as the “Connecticut framework.” Like those states, Maine now finds itself at a crossroads regarding data privacy legislation.

Small businesses drive our local economies, create jobs and are the catalysts behind Maine innovation and entrepreneurship; any policy that affects them should be approached with caution and deliberation. According to a report of the U.S. Chamber of Commerce’s Technology Engagement Center titled “Empowering Small Business: The Impact of Technology on U.S. Small Business,” 87% of small businesses acknowledge that technology platforms have enhanced their operational efficiency. From online storefronts to targeted digital advertising, technology has enabled small businesses to compete in the global marketplace. Without question, technology has revolutionized the way small businesses operate; it served as a critical lifeline for many businesses during the COVID-19 pandemic.

While large technology companies are at the core of the data privacy conversation, we cannot forget that small businesses rely on data as a critical tool to reach their target audience and grow their customer base. The local bicycle repair shop, wine bar, outdoor retailer or quintessential Maine bed-and-breakfast will all be impacted if they cannot market and promote their business using larger technology companies’ services.

L.D. 1977 would directly impact businesses’ ability to engage in targeted marketing. For small businesses, targeted marketing ensures that a product gets in front of the appropriate sets of eyes, rather than a broad audience whose interests may differ from the product or service being promoted.

Not only could a restrictive data privacy law severely impede businesses’ ability to effectively market their products and services online, it could also hamper small businesses’ ability to recruit employees at a time when labor shortages are impacting all employers.

Although data privacy is important in today’s interconnected world, policymakers must tread carefully to avoid unintended consequences for Maine’s small businesses. As drafted, L.D. 1977 would hinder e-commerce growth. By advocating for policies that strike a balance between consumer privacy and business needs, Maine can continue to foster a thriving entrepreneurial ecosystem while safeguarding consumers’ sensitive information.

The scope of the Maine Data Privacy and Protection Act that is being considered under the L.D. 1977 majority report, by cutting off targeted advertising, would have far-reaching consequences for small businesses. Rather than replicating sensible protections that exist in other states, Maine is proposing to shut off our businesses from a valuable method of reaching customers. The Maine State Chamber of Commerce urges alignment with other states to ensure the greatest level of compliance, feasibility and to keep Maine businesses competitive.

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