State-level data privacy laws, proposed in Virginia, Washington, and others, may cause headaches for companies like online stores operating in multiple states
Data protection bills in Washington and Virginia come as the pandemic pushes life further online
Context & Ripple Effects
The WSJ story lands mid-arc in a fight over who writes America's privacy rules. Back in 2018, tech companies were lobbying for a federal law that would overrule California's statute and leave them wide leeway over personal data, while a separate proposal backed by 200 retailers, banks, and tech firms sought universal national collection rules. Neither materialized.
What changed: Virginia's governor signed the Consumer Data Protection Act in March 2021, making it the second comprehensive state privacy law, and Washington kept advancing its own bill — so multistate online sellers now face the exact patchwork the federal push was meant to prevent.
First-order effects
- Multistate online retailers must build state-by-state compliance — distinct consumer rights, opt-out mechanics, and effective dates per jurisdiction — instead of one national rulebook, raising fixed costs most heavily for smaller sellers.
- Virginia and Washington become template-setters: their statutory designs will be copied or amended by other legislatures, so the terms these two states settle on propagate beyond their borders.
Second-order effects
- With Congress deadlocked, tech industry groups pivot from seeking federal preemption to lobbying states like Utah for laws weaker than California's — an active campaign to shape the patchwork rather than end it — while Microsoft exports its own blueprint via privacy bills modeled on the twice-failed Washington Privacy Act in Arizona, Hawaii, Illinois, and Minnesota.
- Compliance vendors, consent-management tools, and legal services gain a durable market as every new state statute forces retailers to re-audit data flows and update disclosures.
Third-order effects
- If the pattern holds, the US settles into a durable state-led regime: each legislative session adds statutes with different scopes, and the burden of reconciling them falls on operators — tilting e-commerce economics toward large platforms that can absorb multi-jurisdiction compliance.
- States also fill gaps Congress won't touch, as when Washington adopted the first sweeping consumer health-data safeguards covering location records — signaling an expanding definition of 'sensitive data' that multistate businesses must track continuously.
The trend: US data privacy regulation is fragmenting into a state-by-state patchwork as federal preemption efforts stall, leaving multistate businesses to reconcile divergent statutes.