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Opportunity lies at the intersection of data protection and healthy competition

September 12, 2019 | By Chris Pedigo, SVP Government Affairs – DCN @Pedigo_Chris

Over the course of the past year or so, states have significantly ramped up their efforts to hold big tech platforms accountable. In fact, more than a dozen states either have new data protection regulations on the books or in committee. Efforts like the California Consumer Privacy Act (CCPA) and DC Attorney General Karl Racine’s lawsuit against Facebook are examples of states’ attempts to regain some measure of control for consumers. And just this week, 50 Attorneys General from 48 states, Washington DC, and Puerto Rico announced an antitrust investigation into Google.

For those following tech policy, the escalation is not surprising. Google and Facebook have built massive, unrivaled data collection operations. According to research from Princeton, the top 10 domains that track consumers across the web belong to Google and Facebook. This tracking, along with careless data practices, has given rise to a growing tide of consumer distrust that affects the entire internet. At the same time, these activities are a major factor in the widespread adoption of ad blocking.

A broken supply chain

Platform intermediaries with black box algorithms redirect more and more value from the supply chain. As a result, buyers (advertisers) and sellers (publishers) suffer increasing harm.

According to the Association of National Advertisers (ANA), approximately 30% of advertiser dollars go to fraud. At the same time, advertisers have suffered reputational harm as platforms negligently and haphazardly run ads for trusted brands against abhorrent content such as terrorist propaganda and child pornography. Thus, brands and marketers are increasingly wary of these opaque and irresponsible practices.

On the other side of the supply chain, publishers’ share of the advertising pie is shrinking as it is gobbled up by data-fixated platforms. And, given ad blocker adoption, the amount of metaphorical pie being served is also dwindling.  

What’s worse, however, is that rules and expectations of the digital advertising marketplace are being written by and for the big tech platforms. With all of that turmoil, state legislators and state Attorneys General, which tend to be younger and more digitally savvy than their national counterparts, are attempting to rebalance the scales in an effort to empower consumers and revitalize competition.

State led, nationally significant

The history of the United States is littered with examples of states taking the lead on policy issues. This was partly by design as the federal government lacked strong tools for regulating the economy prior to Teddy Roosevelt’s trust-busting campaign and FDR’s New Deal.

However, even in the modern era, states often take the lead. For example, civil rights were won first at the state and local levels. States continue to push the envelope on environmental protections. And now, states are now stepping up to serve as incubators for innovative public policy regarding consumer privacy and competition.

While it is heartening to see states assume their role as early advocates for issues of national importance, it’s more important than ever for the federal government to assume a leadership role in this debate. There are some promising signs: The Department of Justice has launched an investigation into the dominance of tech platforms, which could lead to a levelling of the playing field. Meanwhile, Congress is actively looking at setting a national consumer privacy standard.

Clarifying standards and policy

With more states expected to pass their own privacy standards in 2020, we are likely to see a mismatched patchwork of state privacy laws by this time next year. As a nation (and a global marketplace), we need to mend this situation – and fast. Given that data and competition are not bound by state lines, Congress needs to enact a single privacy standard that would empower and protect all consumers while at the same time paving a clear pathway to compliance for businesses of all sizes. Giving consumers real tools to protect their privacy would improve consumer trust and engagement online. It would also reward good actors and give regulators stronger tools to prosecute bad behavior.

At the same time, we must also expose anticompetitive practices and remedy the impact of monopolies on the digital economy. As we’ve seen over the last decade, Facebook and Google simply bought out their competition with the acquisitions of Instagram and DoubleClick respectively. Those acquisitions solidified their dominant position in the marketplace. They have also squelched the competition that drives innovation. Withouta level playing field, smaller companies and the next wave of innovation will be stunted.

The federal government should look to the states to better understand the issues – and envision the opportunity – before us. Empowering consumers and ensuring a healthy competitive landscape will do far more than help cure what ails the internet. It could usher in a new age of innovation and economic growth.

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