Internet Ad Biz Troubled Over FTC’s View of Data Brokers

Commission proposal could have unintended consequences

Just about everything in the Federal Trade Commission's final privacy report went down as expected for the Internet advertising industry except for one, a new recommendation to give regulators more control over data brokers, companies that compile and sell information about consumer activity on the Web.

The troubling proposal in the FTC's report, "Protecting Consumer Privacy in an Era of Rapid Change," was made alongside accolades for the Digital Advertising Alliance's self-regulation program that uses an in-ad icon giving consumers the choice to opt out of behaviorally targeted ads. By the end of the year, the DAA's program will extend to do not track browser features providing consumers with a more consistent opt-out choice.

In the report, the FTC called out data brokers specifically as information collectors and trackers consumers may not be aware of. The agency recommended Congress pass legislation that would give individuals more control over the information held by brokers so that they could erase it or modify it.

Data brokers, the report said, "buy, compile and sell a wealth of highly personal information about consumers but never interact directly with them."

The Internet advertising industry is already beginning to raise questions about the recommendation, starting with the definition of "data broker," a term that is better known in the offline data market.

"There is no such thing as a data broker," said Stu Ingis, a partner with Venable who represents the DAA. "The FTC created a term that sounds nefarious. It's fear-mongering. I'm not sure what they're talking about. Data is the engine of the economy; it's not a secret the online world is replicating [in] the offline data world."

As the FTC seems to be defining data brokers, the term applies to virtually everyone who does business on the Internet including Web publishers, advertising agencies, ad networks and analytics firms.

"We've got to sit down with the FTC and define what data brokers mean," said John Montgomery, COO of GroupM Interaction. "We don't collect personally identifiable information and we don't resell the data. Most data brokers are OK, as they give consumers choice."

The FTC's recommendation, as it stands now, could harm the whole business of the Internet, Mike Zaneis, svp and general counsel for the Interactive Advertising Bureau, said on Thursday before a Senate subcommittee. "Data legislation based on such an expansive definition could harm the most fundamental operations of the Internet," he said. "Providing individual access and correction rights for such data, for most companies operating today, would be prohibitively costly."

Recommended articles