Concerns over proposed regulations by the California Privacy Protection Agency (CPPA) dominated the public comment hearing on January 14, 2025, as stakeholders voiced apprehensions about the potential economic impact and implications for innovation.

Net Choice, a trade association, highlighted that the proposed regulations could severely hinder California's artificial intelligence (AI) development by broadly categorizing all automated decision-making technology as "high risk." They argued that this classification lacks statutory backing and could impose a staggering $343 million burden on small businesses already grappling with economic challenges.

The American Civil Liberties Union (ACLU) emphasized the need for robust protections against behavioral advertising, advocating for a categorical opt-out right. They argued that current practices allow major platforms to continue invasive advertising even when users express a desire to opt out, which could lead to discriminatory targeting and other negative consequences.

Industry representatives, including the Computer and Communications Industry Association and the Digital Advertising Alliance, expressed concerns that the CPPA's proposed rules exceed the scope of the California Consumer Privacy Act (CCPA). They warned that the regulations could create unnecessary compliance costs, estimated to reach $3.5 billion, and could disproportionately affect small and minority-owned businesses that rely on targeted advertising to compete.

The BizFed Institute and other business leaders urged the CPPA to reconsider the draft regulations, arguing that they could stifle innovation and economic growth. They called for a more collaborative approach that balances consumer privacy with the needs of businesses, particularly startups that are crucial to California's economy.

As the hearing concluded, stakeholders urged the CPPA to pause the advancement of these regulations to allow for further stakeholder engagement and a comprehensive economic impact analysis. The overarching sentiment was clear: while privacy protections are essential, the proposed regulations must not come at the expense of California's vibrant business landscape and technological innovation.