Why U.S. Regulators Should Heed the Lessons Learned From the Muddled GDPR Rollout

Lawmakers should consider the needs of smaller ad-tech outfits and consumers

Let's hope U.S. lawmakers draft regulations that consider the needs of smaller companies.
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Last week the Los Angeles Attorney General filed a lawsuit alleging that IBM-owned The Weather Channel app deceptively ‘collected, shared and profited’ from the data of millions of unwitting Americans via the location tracking capabilities of its mobile service.

In their filing, prosecutors allege the business was not transparent in its communications over how it uses data collected via the app, i.e., shared with location-based outfits for advertising among other pursuits.

Per Los Angeles Attorney General Michael N. Feuer, users of the app need to be fully informed over how their data–or movements–will be monetized and alleged that such incomplete communications violate California’s Unfair Competition Law. An IBM spokesman defended the company and told The New York Times it has been fully compliant in its communication with consumers via the app, the case continues.

As noted in a previous contributed piece, such regulations try to usher in consent, or rather informed consent, as a core mechanism between online service providers and the public. And such a philosophy is an ethically sound basis for interactions between private enterprises and the public.

Similarities with GDPR

The sentiments expressed in Feuer’s assertions are reminiscent of the tenets of the European Union’s General Data Privacy Protection Regulations (GDPR), which were enforceable since May 25, 2018. This was much to the chagrin of the digital media sector there, as many globally recognized names in the online media industry pulled out of the EU ahead of the law going live.

I draw this analogy not least because of the impending consumer privacy laws in California set for enforcement in 2020, but also as a nod to the (anticipated) equivalent U.S. federal privacy laws that are expected to follow in the near-to-mid future.

However, just as lawmakers expect private companies to speak openly with a coherent message to the public, those in charge of drafting and enforcing such legislation need to do likewise and ultimately this is where the powers behind GDPR have fallen far short of their original intentions.

There is a widely held perception in the industry that GDPR was initially conceptualized and implemented by EU politicians as part of their ongoing efforts to rein in the power of Silicon Valley’s most significant names–as well as promote consumer privacy–and better promote market diversity.

However, while Facebook and Google have already faced legal complaints under these regulations, it appears that GDPR has somewhat inadvertently led to a scenario whereby the titans of Silicon Valley have benefited from its enforcement while smaller companies in the space have lost market share.

‘Regressive effects on competition’?

Anecdotal testimony of the downturn experienced by ‘independent ad tech’ in EU markets since May 25 is easy to come by when speaking to sources there. One source I spoke to in the immediate aftermath of the enactment of GDPR noted how media agencies were adopting an ultra-cautious approach. “At the end of the day, if you’re not Google or Facebook, you’re unlikely to be on our plans in a big way during the second half of 2018,” he said, recounting several prior conversations he’d had with major network agencies.

Additionally, a comparison study by Cliqz on the number of active trackers on EU websites (let’s consider this a proxy for market share) pre- and post-GDPR enforcement demonstrates the disparity of fortunes in the market (see chart below).

Cliqz

The same report notes that there has been an overall reduction in the number of trackers on EU websites (a win in the consumer privacy crusade), but the divergent fortunes of ad-tech players in the market is undoubtedly an unintended consequence.

According to the study, dubbed Who Tracks Me?, since April 2018 the average number of trackers per page in the EU has dropped by almost 4 percent–this is in addition to outfits such as Drawbridge, Kargo and Verve pulling out of the EU members states in the first half of 2018.

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