Online advertising is booming. Digital-ad revenue in America in the first half of the year reached a record $32.7 billion, according to the latest figures from the Interactive Advertising Bureau, a trade group. For marketing folk, digital ads have great appeal because consumers’ online data can be used to direct what they think are the right advertisements to the right shoppers. But tracking has become increasingly contentious in both America and Europe.
On Oct. 27, America’s Federal Communications Commission (FCC) announced a new rule to protect personal privacy online. Internet-service providers, such as AT&T and Comcast, must now ask consumers for permission if they want to gather and share data deemed to be sensitive, including financial information and users’ browsing history.
However, the FCC’s rule is notable not for settling a debate but stirring it. Marketers and digital-ad firms insist that they already police themselves well. They consider data on browsing and apps, in particular, to be essential for targeted advertising. Under the FCC’s rule consumers can “opt in” to share this information, but firms fear that many will not.
There is a limit to the FCC’s order, which perversely makes it only more controversial. It will restrict data collection by internet providers but have little impact on broader online tracking. Notably, it does not affect so-called “edge-providers” such as Google and Facebook, which have operated under a separate privacy framework from another agency, the Federal Trade Commission (FTC).
For advertisers, the result is an increasingly lopsided industry. Any new restrictions on companies such as Verizon, which are vying to expand their digital ad businesses, will bestow more power to the already mighty Google and Facebook, points out Brian Wieser of Pivotal Research Group. For consumers, the result is a muddle: limits for gathering data depend on the identity of the gatherer. “Nothing in these rules will stop edge-providers from harvesting and monetizing your data, whether it’s the websites you visit or the YouTube videos you watch or the e-mails you send,” declares Ajit Pai, an FCC commissioner who voted against the order.
The question now is whether regulators will look at this mishmash and apply stricter limits on Google and Facebook, too. The matter may well be decided in court. Even before the new order was issued, broadband firms were challenging the FCC’s authority to regulate them as utilities.