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FCC clamps down on tracking user data — but who really benefits?

November 3, 2016 | By Mark Glaser, Founder and Publisher – MediaShift @mediatwit

The Federal Communication Commission (FCC) passed new limits recently that require ISPs and broadband carriers to ensure opt-in consent from customers before tracking their data. Civil liberties and privacy advocates herald the decision as an important step for U.S. privacy, as it gives consumers more leverage over their personal information on the Internet.

Among the new rules for ISPs: They must notify customers on the kinds of information they’re collecting from customers from their web browsing, location, app use and financial information; they must specify how and why it’s being used; and they must specify which entities are receiving the information. The current protocol is that ISPs can track this data unless customers specifically tell them to stop. Now, broadband providers have up to a year to make the changes to follow these new regulations.

“What we don’t want to see is the Internet network itself violating your privacy…It’s a very, very important thing because the amount of privacy, harm, and the amount of intrusion that they can do, because they see everything that crosses your internet wires, is much much greater,” Jay Stanley, a senior policy analyst and editor with the American Civil Liberties Union, told a local CBS news affiliate of the decision.

Facebook and Google are off the hook
Companies like AT&T, Verizon and Comcast will feel the fallout of these limits. As the New York Times’ Cecilia Kang wrote, they “rely on such user data to serve sophisticated targeted advertising.” Part of the premise behind AT&T’s recent $85.4 billion dollar bid for Time Warner was to pursue more effective targeted advertising with their combined resources, for example. Verizon also “spent more than $4 billion on AOL last year and is prepared to spend billions more for its pending acquisition of Yahoo,” as Times reporters Kang and Sapna Maheshwari wrote.

That being said, the backlash from these reforms raises the question of who ultimately benefits from these policies going forward. Part of the reason these companies are merging their interests and resources is so they can take on Silicon Valley firms like Facebook and Google. The tech giants have an enormous amount of information on users, but they won’t be directly affected by these new regulations, because the Federal Trade Commission (FTC) has authority over their regulatory practices, not the FCC. However, the tech giants still follow self-regulatory principles, and might be more willing to follow the FCC rules to keep consumers’ trust.

“It’s clear that online companies now have greater access to consumer data than ever before — and that the success of their business models depends on their ability to use it,” Ajit Pai, a Republican FCC commissioner who opposed the ruling, wrote, as the New York Times’ Maheshwari and Kang reported. “Ironically, selectively burdening ISPs, their nascent competitors in online advertising, confers a windfall to those who are already winning.”

So what about consumers?
Unsurprisingly, many marketing groups such as the IAB and Digital Marketing Association came out strongly against the new rules, claiming they would [raise prices on the internet] and “slam the door on startups who often depend on data collection and ad sales to get off the ground.”

Of course, consumer groups didn’t see it that way, and were exulting that the FCC was finally listening to their concerns about opt-in privacy for online users. “The FCC’s decision on privacy isn’t perfect, but it takes tremendous strides forward, said Free Press Policy Counsel Gaurav Laroia. “It gives internet users far more control over how their personal information may be used by AT&T, Comcast and other carriers. That’s because under any sensible interpretation of the communications laws that govern the FCC, the companies that carry all of our speech online have no business profiting from all the information they gather without our consent.”

One worry was that the carriers might still bury the new data permissions in a mountain of legalese. ComputerWorld’s Evan Schuman thought that most people will probably be unable to find these new permissions in a 29-page document that pretty much conceals this information. “With the FCC’s blessing to bury opt-out inside lengthy T&C documents and hide them behind a checkmark, many ISPs are going to be emboldened to push the privacy limit even further,” he wrote. “Yes, this incremental move could end up making much worse the problem the FCC ostensibly was trying to solve.”

But as Marketing Land’s Greg Sterling pointed out, subsequent FCC rulings or litigation will “determine how clearly explained the disclosures must be and just how explicit the consent must be.”

Despite the angst caused by unusually strong rules from the usually slow-moving FCC, the action overall will be a win for consumers. At the very least, they will get the choice – up front – whether they want to share their data with carriers. If the carriers can make the case for better, more relevant ads, then users will jump in. If not, then more people will have a better experience online, and that’s a win for everyone.

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