The conventional wisdom is that neither federal oversight nor fragmentation can save data privacy any more. I argue that in fact federalism promotes privacy protections in the long run. Three arguments support my claim. First, in the data privacy domain, frontrunner states in federated systems promote races to the top but not to the bottom. Second, decentralization provides regulatory backstops that the federal lawmaker can capitalize on. Finally, some of the higher standards adopted in some of the states can, and in certain cases already do, convince major interstate industry players to embed data privacy regulation in their business models.