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Featured Post | Perspectives | Policy

Generative AI: threats and promise for a new world

At DCN, we’ve been diving deep into Generative AI – trying to understand what it is and what it isn’t and sort through the implications for professional content creators. We have met with hundreds of executives, tech specialists, journalists, artists, and creators who work within our member companies to create and monetize premium original content. We’ve heard first-hand what the content community is excited about and what gives them pause. Based on these conversations and our own research, we see several topics around Generative AI (GAI) that merit a closer look.

Protection for creators

Generative AI systems need to be designed in a way that respects professional content creators and the value of their IP. Perhaps the biggest concern is the loss of control over the content, in which they have heavily invested. GAI systems train by using digital content such as journalism and photos. However, they also scrape that content for reuse in a variety of ways and for a variety of purposes – some of which may undermine the business model of the content creator.

While the scraping of original content for training may seem relatively benign, Generative AI companies will clearly reap huge benefits. The use of premium trusted content helps these systems understand cultural nuances and avoid problems of misinformation and factual inaccuracies. If the old axiom of “garbage in, garbage out” applies, companies profiting from GAI should appropriately value premium trusted content.

That said, scraping of content for reuse seems highly problematic as the creator might lose the ability to distribute and monetize the content as they see fit. We’ve heard stories of Generative AI systems providing subscription content to non-subscribers and amalgamations of general news content without any attribution to the organizations which funded its creation. Stripping content creators of control over their work effectively deprives them of the ability and incentive to invest in new content. It seems like there should be a win-win here where GAI systems fairly compensate and credit professional content creators for their work.

Transparency

Companies that develop GAI systems should be transparent with the public so that we can fully assess the impacts on our society and address the consequences. If Generative AI fulfills its promise, then whole industries and sectors will be radically changed. In particular, consumer experiences with news and entertainment are likely to be upended.

With all that change, intentional and unintentional consequences are likely to occur. Generative AI systems have been shown to be flat out wrong, making up convincing sounding sources or generating “quotes” and articles to back up their responses which may be misattributed to individuals, institutions, or media brands.

There is an open question about the extent that these systems could be manipulated by bad actors looking to flood the public square with misinformation. As anyone can see, the world isn’t a perfect place. And, sadly, the internet is loaded with hateful, harmful speech. More subtly, however, there are conscious and unconscious biases baked into all kinds of reporting and opinion pieces. To the extent that Generative AI systems are training on content they scrape from the web, they may be recycling hate speech or perpetuating biases.

Therefore, allowing these systems to be developed and operate in a black box would invite all kinds of problems without an opportunity to correct mistakes before they run wild. Most of the early legislation around AI calls for transparency so that regulators and researchers can assess the potential impacts and offer solutions before actual harms are committed.

Competition

The tech industry currently has a competition problem – a lack of competition to be exact. While those dominant companies are currently under intense antitrust scrutiny, there is a concern that they may use the hype cycle of Generative AI to wrongly argue that competition exists and that regulators need to back off.

But the reality is that policymakers should be watchful to ensure that major tech companies don’t extend their dominance to the AI market. Generative AI systems are expensive to create and maintain. With such a high barrier to enter this marketplace, there is a danger that the biggest, most powerful tech companies will leverage their position and unrivaled resources to dominate the nascent GAI field.

This same playbook has been used before – Facebook leveraged its dominant position to buy out the competition. Google allocated its search dominance to acquire a monopoly position in the digital advertising infrastructure. And Amazon continues to leverage its position to drive competing ecommerce platforms into irrelevance. We should be careful to ensure that GAI systems aren’t used to maintain or increase dominance in markets and that these systems aren’t self-preferencing services from a handful of major companies to the exclusion of competitors. 

TL:DR

Undoubtedly, Generative AI is an exciting new tool that offers efficiencies for artists, journalists, and other creators along with the promise of a bright new future for industries and consumers alike. And these changes are coming fast. Undoubtedly, the speed and scale of the development and deployment of GAI systems will only accelerate.

In the right hands, these new tools could revolutionize the way we interact, create, problem solve and so much more. However, bad actors also have access to these powerful tools. Therefore, problems with competition, misinformation, election meddling, and sabotage are likely to worsen.

As an industry and society, we should encourage the development of ethical guardrails to minimize the harms and maximize the potential associated with Generative AI technologies. In doing so, we can strengthen our commitment to protect consumers and incentivize new and established voices.

AMERICA Act screencap placeholder
Policy | Press Release

Digital Content Next Endorses Bi-Partisan AMERICA Act to Protect Trust in Online Advertising

NEW YORK – March 30, 2023 – In an effort to provide clarity and transparency in the digital advertising marketplace, Digital Content Next (DCN), the trade association that exclusively represents more than 60 high quality digital media companies and thousands of trusted media brands, endorses the bi-partisan bill, the AMERICA Act.  

“The digital advertising marketplace operates like a financial marketplace with brokers representing buyers and sellers. But, unlike financial markets, there are no requirements for transparency and there are no rules to avoid conflicts of interest and insider trading.” said Jason Kint, CEO of Digital Content Next. “We support the AMERICA Act because it will reinforce the basic free market tenets of competition and transparency in digital advertising, which fuels the online content we all read and love and are a necessity for all sorts of businesses – small and large – to efficiently reach consumers.” 

As alleged by the Department of Justice and a bipartisan group of state attorneys general, the digital advertising marketplace is plagued by shady middlemen charging exorbitant fees and engaging in questionable business practices which ultimately translates into higher costs and reduced privacy for consumers. While dominant ad tech companies make huge profits, publishers and advertisers get squeezed. And high costs are passed on to American consumers. 

“This lack of competition in digital advertising means that monopoly rents are being imposed upon every website that is ad-supported and every company—small, medium, or large—that relies on internet advertising to grow its business,“ said U.S. Senator Mike Lee (R-UT). “It is essentially a tax on thousands of American businesses, and thus a tax on millions of American consumers.”  

If you’d like to watch or share a version without captions, click here.

Almar Latour, CEO, Dow Jones and Jason Kint, CEO of Digital Content Next in conversation at the 2023 DCN: Next Summit
Featured Post | Innovation | Perspectives | Policy | Video

Brand-true omnichannel strategy dominates the 2023 DCN: Next Summit

While evergreen issues around trust and a focus on the audience experience peppered the first in-person DCN Next: Summit since 2020, emerging opportunities – and concerns – around generative AI were also focal at the event. Held at the Fort Lauderdale beachfront Conrad Hotel, the 2023 summit hosted a wide range of speakers from inside and outside the DCN membership to discuss the business and future of media, brand mission, omnichannel strategy, consumer preferences, and the impact of the challenging economic and regulatory climate.

Surveying the regulatory landscape

DCN CEO Jason Kint kicked off the event with a focus on current key regulatory issues that impact digital media. He emphasized that the focus must remain on aligning content experiences, advertising behavior, and data usage with consumer expectations. He also looked at the current state of antitrust regulation.

As Kat Downs Mulder, SVP and GM of Yahoo News put it: media brands have a responsibility, in asking consumers for their information through sign-ons, “to be protective of our asks and thoughtful about what we request.”

Shoshana Zuboff, Harvard Business School professor and author of the book The Age of Surveillance Capitalism at the DCN: Next Summit 2023
Shoshana Zuboff, author of the book The Age of Surveillance Capitalism

Kint’s points were hammered home by Shoshana Zuboff, Harvard Business School professor and author of the book The Age of Surveillance Capitalism. Zuboff delineated the history of privacy erosion leading to tech companies’ engagement in a “secret massive scale extraction of human data” and how regulation is a driving factor in reining it in.

The current drive towards antitrust and reining in the dominance a few players have over the ad market was a focal point for Utah Republican Senator Mike Lee, who addressed attendees via Zoom. He discussed a bill he is reintroducing “in a few weeks with bipartisan support,” which is designed to restore and protect competition in digital advertising and improve advertising transparency.

“Unfortunately, big tech behemoths like Google have inserted themselves as middlemen into this relationship, extracting monopoly rents not just on their own properties, but from every corner of the entire internet ecosystem.”

How brand focus empowers growth

The impact of emerging regulation is far from the only challenge media executives currently face. Speakers touched on inflation, supply chain disruption, European conflict, U.S.-China tensions, the ongoing impact of Covid, climate concerns, labor challenges, the erosion of trust in institutions, and the fight for free speech.

However, Almar Latour, CEO, Dow Jones and The Wall Street Journal publisher (pictured at top) said that challenges like these actually drive brands closer to their mission. For his brands, that mission is to go deep with products to provide truth relevant to different aspects of the business world, he added. This strategy is one he believes will lead to subscription growth.

Producing great products consumers love and return to over and over is indeed a driving factor in subscription strategy, as illustrated in a discussion between Julia Beizer, Bloomberg Media CEO and chief digital officer and Mulder. She noted that consumers value connecting with authoritative voices in brand podcasts and newsletters.

Bloomberg Media CEO and chief digital officer Julia Beizer, & SVP and GM of Yahoo News Kat Downs Mulder in conversation with Axios' media reporter Sara Fischer at the 2023 DCN Next:Summit
Bloomberg Media CEO and chief digital officer Julia Beizer, & SVP and GM of Yahoo News Kat Downs Mulder in conversation with Axios’ media reporter Sara Fischer.

Indeed, building an infrastructure on the foundation of staying true to one’s brand is key to success, according to Bonin Bough, Group Black co-founder and chief strategy officer.

Brand, however, is not some vague marketing tool. Scott Mills, BET president and CEO said that maximizing brand requires a comprehensive data-driven ecosystem encompassing linear, streaming, and digital platforms.

Advocating for truth and accuracy

Maximizing brand value requires providing consumers with a source of much-needed, trustworthy information – particularly when others seek to tamp it down and create a void that is often filled with dis- or misinformation.

Scott Mills, BET president at the 2023 DCN: Next Summit
Scott Mills, president of BET

Addressing Florida’s Department of Education rejection of the AP African American History course, Mills noted that such actions will “drive us to allocate more of our resources or more of our attention to ensuring that our community—and people who value and respect our community—have access to accurate information.”

Clearly, the need for accurate information is a global one, though journalistic approaches and press freedoms vary widely. In his work as the manager for East and Southern Africa at the organization Journalists for Human Rights, Dr. Siyabulela Mandela has found that offering training to local journalists not only empowers them, but helps their work better serve local communities. He said that improving journalism’s role of providing checks to those in power is critical at a time when “there seems to be a shift from more democratic ways of doing things towards more totalitarian ways.”

Dr. Siyabulela Mandela, manager for East and Southern Africa at the organization Journalists for Human Rights, speaking at the 2023 DCN: Next Summit
Dr. Siyabulela Mandela, Journalists for Human Rights

Mandela advocates for an approach that enables Western journalists to reframe stories in East and Southern Africa and the Middle East with a more contextual focus on human rights by leveraging his organization’s local knowledge base. He favors the idea of a collaborative exchange program for mutual training with journalists from East and Southern Africa. Each, he pointed out, has much to learn from each other.

Evolving with the times

In addition to providing content that continues to address the needs of audiences, speakers discussed how innovation in storytelling provides creative and impactful ways to engage and inform audiences.

For Emblematic founder and CEO Nonny de la Pena, that means finding new ways to use virtual reality. Nicknamed “the godmother of VR” de la Pena illustrated techniques and showed behind the scenes insights into how some of the most powerful VR stories have been created. However, despite her enthusiasm, she said that given the fact that creators of misinformation often leverage powerful tech, it is essential to establish immutable provenance for footage to make it difficult to manipulate.

Alice McKown, publisher and CRO of The Atlantic speaking at the 2023 DCN: Next Summit
Alice McKown, publisher and CRO of The Atlantic

Encompassing non-traditional strategies to engage new audiences requires portfolio diversification, noted Alice McKown, publisher and CRO of The Atlantic. While the company has digitized its entire archive of 30,000 articles from its 165 years, it also has expanded efforts into creating new ways to leverage its IP, including immersive art exhibits, video, podcasts, book publishing, and events.

Hannah Yang, Chief Growth Officer of The New York Times Speaking at the 2023 DCN: Next Summit
Hannah Yang, Chief Growth Officer, New York Times

The National Geographic also has instituted strategies to evolve with the times while staying true to the brand’s core attributes. The magazine still attracts a relatively small, but incredibly loyal following, according to editor-in-chief Nathan Lump. These days, however, National Geographic brand reaches millions of people via social media, the National Geographic Channel on Disney Plus, virtual reality, live events, a travel business, consumer products, books.

Given the many ways that the brand now reaches audiences, Lump pointed out that National Geographic is the biggest it’s ever been in its 135 years. National Geographic boasts 714 million global followers across the major social platforms alone.

For The New York Times, Chief Growth Officer, Hannah Yang told the audience that its impressive subscription growth is achieved through three well-defined missions: a subscription growth mission to meet financial goals; consumer-facing mission offering desired options such as games and cooking; and platform mission to ensure that all parts of the business have the technology and data perspective they need to thrive.

What’s next

“There’s never been a better time to monetize audiences,” noted Alex Michael, managing director of LionTree Group. He stressed the value of omnichannel strategy and bundling while discussing the investment opportunities his company is leaning into this year.

Richard Plepler, founder, EDEN Productions and former HBO chairman and CEO speaking at the 2023 DCN: Next Summit
Richard Plepler, founder, EDEN Productions

The power of omnichannel was echoed by a number of speakers, including board member Robin Thurston, Outside Interactive founder and CEO.  He said, “The concept of single sign-on omnichannel helps connect the dots and create value.”

Richard Plepler, founder, EDEN Productions and former HBO chairman and CEO, reminded attendees of something he’s advocated for many years: quality over quantity. “More is not better; only better is better. I am not of the belief that tonnage gets you more subscribers – what gets you more subscribers is when brands deliver on their promise.”

As DCN members map out strategies for 2023, innovation and audience focus remain constant. However, to win amidst contemporary challenges developing a seamless omnichannel strategy, while staying to brand mission, will be key to attracting new consumers and retaining existing ones.

Featured Post | Policy

Content production policy captures the global spotlight

Discoverability, funding, IP ownership, and cultural sovereignty are topics at the forefront of how and to what degree streaming companies should be put under government regulations. As today’s over-the-top streaming platforms continue to navigate emerging domestic rules and regulations, jurisdictions outside the U.S. have started to introduce new content and funding obligations for these services.

The ability to transcend borders has long been a defining characteristic of video streaming platforms: Anyone with an internet connection could view all the content. Initially, incumbent broadcasters and traditional distribution channels faced massive disruption as consumer preference shifted away from linear channels to the choice of what to watch and listen to from hundreds of options. With the wide adoption of digital distribution technology, streaming services became content creators themselves, while traditional content producers launched non-linear platforms to compete.

As is often the case with rapid technological advancements, legislation and regulation are now playing catch up. Local players in global markets have long made the case that the playing field must be leveled against the size of U.S.-based streaming companies, and officials have started to listen. Regulations are evolving to include localized content mandates and participation in domestic industry. Here’s how it’s playing out.

Europeans make early moves

In 2018, the European Union passed the Audiovisual Media Services (AVMS) Directive which included stipulations that the streaming platforms must offer a 30% quota of European content to European consumers. It also built a framework that allowed individual countries to mandate the streamers allocate revenues back into domestic production.

Right now, France is one of the countries with strongest local content rules. Streaming platforms must reinvest 20 to 25% of the domestic revenues back into French production. In France and elsewhere in Europe, since the regulations have been in place, Netflix has reached or exceeded the 30% local content requirements. 

English language markets feel the squeeze

Because of the cultural juggernaut that is the U.S., other English-language regions have long felt compelled to shore up local production with support from their respective governments. This trend continues to be a flash point in debates about government overreach.

At the end of January, the Canadian senate passed Bill C-11 or the “Online Streaming Act,” an updated version of the country’s Broadcasting Act, which will allow the federal regulator to include international streaming services in its powers to levy fees and control how content is displayed. It’s expected to become law within a few weeks. Canadian governments have long sought to counter the influence of the cultural output south of its border, and the legislation attempts to extend those rules into the online space. 

Similarly, Australia announced its own new “National Cultural Policy” around the same time. While it doesn’t outline the exact plans to regulate online streaming services, the Australian government laid out its goals to address the decline in local broadcasting revenues and bolster the creation of domestic productions.

While the report acknowledged the level of quality and popularity of the current slate of Australian content on the platforms, “these services have no requirements to make Australian content available on their platforms. The ready availability of mass content produced in other countries, particularly the United States, risks drowning out the voices of Australian storytellers,” read the Australian government’s cultural policy plan “Revive.”

While no longer part of the AVMS, the UK’s government continues to investigate the creation of rules so that the Office of Communication (Ofcom) will have jurisdiction over overseas streaming services. This recently came to a head when complaints about the Netflix docuseries featuring Prince Harry and Meghan Markle had no official avenues to be heard.

Canada’s new legislation stands out 

The proposed legislation north of the border has faced headwinds from entities both large and small because of the unique nature of the proposed laws. “C-11 is a bit of an outlier. In that it extends to user generated content on platforms like YouTube or Tik Tok. The European example does not,” said the University of Ottawa’s Canada Research Chair in internet and E-commerce law, Michael Geist. 

Major pushback has resulted in the inclusion of user generated content and subsequent amendments have been put forward to avoid some of the issues with attempting to put all online content under the Canadian regulatory umbrella.

In September, Disney and Spotify asked the federal government to be more flexible about what it considered “Canadian content.” The streaming services warned that certain material, while ostensibly produced in Canada with a Canadian cast, wouldn’t count under the current rules, which include Canadian ownership of intellectual properties.

However, it’s worth noting that trade agreements such as the North American Free Trade Agreement (NAFTA) and the Canada-United States-Mexico Agreement (CUSMA) include provisions that protect the ability of companies to trade in audiovisual services across the Canada-U.S. border. Already, the U.S. embassy has expressed reservations about the proposed laws violating non-discrimination terms of the free trade agreements signed by the two countries.

While the bill is slated to pass the legislature, much of the specifics will need to be determined by the arms length content regulator the Canadian Radio-Television and Telecommunication Commission (CRTC). So the final rules and the structure of the regulatory framework remains unclear and will be subject to a public consultation process.

Despite the efforts in international English-language markets to avoid being drowned out, English language markets still generally benefit from the sympatico of shared language with the largest content producing sector in the world. 

“Those English markets have had significant success, attracting investment from large streaming services and large production companies,” said Geist. “To Canada’s case, it’s a thriving sector that’s based in part on tax, [and] part on proximity to the U.S. market. So I don’t know that that necessarily suggests that what you need is more protection.”

Industry-Research | Policy

A state-by-state evaluation of internet privacy laws

Laws governing online privacy in the U.S. vary widely from state to state. To find out how each U.S. state ranks from least to most private, Comparitech evaluated each and every one of them based on 25 key criteria. The results reveal a wide range of varying privacy protections, that are visualized in the map below. Scores are displayed as percentages, with a score of 25 out of 25 being 100%.

The criteria range from laws that govern how companies can use and disclose customer data to those that protect journalists, children, and employees. The results of our research are compiled into the table below, with a simple “yes” or “no” answer as to whether an applicable law exists in each state. In some cases, where laws partially cover an area (e.g. genetic data protection is only offered for insurance purposes), states may score half a point. This is depicted by an orange square in the chart below.

2023 key updates and trends

During our 2023 edition of this evaluation, several key updates provided insight into privacy law trends within the U.S.:

  • Connecticut enacted a law to protect personal data and to regulate online monitoring (it’s effective from July 1, 2023)
  • Utah enacted its Consumer Privacy Act (it’s effective from December 31, 2023)
  • California strengthened its data privacy laws to protect employee data and children’s data
  • New York added a section to its Civil Rights Code to create safeguards for electronic monitoring in the workplace
  • Hawaii created social media privacy laws for employers and educational institutions
  • Hawaii, Kentucky, Minnesota, Tennessee, Vermont, and Wisconsin added insurance data security laws, taking the number of states that have implemented the Data Security Model Law, which was created by the National Association of Insurance Commissioners (NAIC), to 22
  • Colorado introduced a statute to govern artificial intelligence (AI) use, particularly surrounding the use of facial recognition technology. It becomes one of only a handful of states (6) that govern the use of AI within the state
  • Only 23 states offer specific safeguards for genetic data–and ten of these only provide some protections (e.g. for insurance purposes)
  • Only five states have laws to protect the collection and sale of geolocation data by organizations
  • Only four states stipulate that consumers have the right to request inaccurate personal data be amended by companies

Since last year’s evaluation, we added sections to cover specific laws on:

  • Employee data privacy
  • Genetic data
  • Geolocation data
  • Companies allowing customers to correct inaccurate data

We also combined:

  • Shield laws and court-recognized privileges for journalists into one category with the former scoring a full point and the latter scoring half a point (if no shield law is in place)

The states in the U.S. that most rigorously govern online privacy

California

Score: 80%

Our top scorer for the fourth update running, California, has enacted many laws for specific privacy issues that other states ignore. Not only did the state create what the ACLU called the most comprehensive digital privacy law in the nation, but it continues to add to and strengthen this law. As mentioned above, California has strengthened its privacy protections by ensuring employees’ data is governed by the law, making it the only state to have this provision in place at the time of writing. It’s also one of just two states to enact a law that specifically protects data gathered from the internet-of-things (Oregon is the other) and to protect privacy rights and enforce marketing restrictions for minors (Delaware is the other). It’s also one of a handful of states to protect the collection and sale of geolocation data.

The Electronic Communications Privacy Act prevents any law enforcement or investigative entity from forcing a company to give up electronic data or communications without a warrant. This includes cloud data, metadata, emails, text messages, location data, and device searches. Although other states have similar laws protecting some of these forms of data, California has so far been the only state to protect it all.

On June 26, 2018, California passed one of the toughest privacy laws in the United States, the Consumer Privacy Act of 2018. Effective in 2020, this bill empowers consumers with the right to know what information any company has collected about them and with whom that information is shared. Furthermore, consumers can demand that a company delete their personal data and have any inaccurate data amended.

Utah

Score: 52%

Utah’s recent enactment of the Consumer Privacy Act sees it rising through the rankings this year to take second place (alongside Virginia). This act, which comes into power on December 31, 2023, ensures consumers are aware of the data companies are collecting on them, can opt out of third-party data sharing, and can request that their data is deleted. The act also protects geolocation data, making Utah one of just five states to have this specific provision within its data protection laws.

Other key areas for Utah include data disposal laws for governments and companies, social media privacy laws for employers and educational institutions, and laws to govern the use of artificial intelligence and genetic data.

Virginia

Score: 52%

While there aren’t any new laws within Virginia for this update, its Consumer Data Protection Act ensures companies must delete personal data on demand, must enable customers to opt out of third-party data sharing, must disclose what data they’re collecting from customers, and must correct any inaccurate data. This law also provides protection for consumers’ geolocation data.

Virginia’s DMV doesn’t use facial recognition technologies and doesn’t share its photo database with federal agencies.

Honorable mentions

Delaware

Score: 46%

Delaware remains within the top five this year. Laws that require the government to dispose of customer data after a set period of time, protect genetic data, protect the privacy of e-reader and library data, and protect minors help the state stand out.

There were no updates for Delaware this year. However, it is one of the states that require consent from both parties before call recording can be carried out.

Illinois

Score: 40%

Illinois paved the way for legislation that specifically protects biometric data like fingerprints, face recognition scans, and retina scans, being the first state to enact this way back in 2008. It is only in recent years that several other states (California, Texas, and Washington) have followed suit. It is also one of 18 states to have a comprehensive genetic data protection law.

Both companies and the government must dispose of personal data after a set period of time. Employers and schools cannot force employees and students to hand over social media account login information. The state also enforces strict regulations regarding the use of artificial intelligence for video interviews and requires consent from both parties when recording calls.

States lagging in enacting privacy laws

None of the below states have comprehensive data privacy laws. None protect IoT data, biometric data, geolocation data, employee data, minors’ data, e-reader privacy, or the use of AI. Only South Dakota offers some protection to genetic data when it comes to the use for insurance purposes. ISPs are able to share customer data without explicit consent and law enforcement has unwarranted access to service provider data on users.

All of them have failed to introduce laws on data disposal, electronic monitoring by employers, social media monitoring by employers and educational institutions, and to govern data brokers.

Idaho

Score: 6%

Idaho scores one point for its law to protect K-12 student information and half a point for its court-recognized privilege for journalists.

Pennsylvania

Score: 8%

Pennsylvania has a shield law to protect journalists and requires two parties to consent to their calls being recorded.

Mississippi

Score: 8%

Mississippi also scores 8% or 2/25. Like Pennsylvania it also has a shield law to protect journalists but only one party is required to consent to call recording. Mississippi’s second point comes from its insurance data security law.

South Dakota

Score: 10%

In addition to a law to protect K-12 student information and a shield law to protect journalists, SD scores an additional 0.5 points thanks to some of the safeguards offered when it comes to genetic data. South Dakotan law specifies that the use of genetic tests in offer, sale, or renewal of insurance is prohibited, as is the sharing of genetic information with health carriers or life/long-term care insurers.

Iowa

Score: 10%

Iowa has a law to protect K-12 student information and an insurance data security law. It also scores 0.5 points for its court-recognized privilege for journalists.

Federal privacy laws

Some aspects of online privacy are governed by the federal U.S. government rather than state governments. Partial regulations exist, but there is no all-encompassing law regulating the collection, storage, or use of personal data in the U.S.

The U,S. Constitution never mentions privacy specifically and only protects against state actors, not individuals. However, the First, Fourth, Ninth, and Fourteenth Amendments limit government intrusion on individuals’ right to privacy.

In 2018, the Supreme Court ruled in Carpenter vs. United States that the Fourth Amendment protects cell phone location information. This means police now have to seek a warrant to obtain this data. While a success for privacy, there are still numerous questions over the government’s and law enforcement’s geolocation tracking abilities. Recently, it was found that law enforcement is purchasing commercially-available geolocation data so as to circumnavigate the warrant requirements.

The Privacy Act of 1974 governs the collection, maintenance, use, and dissemination of personally identifiable info about individuals stored by federal agencies. Again, this restricts how the government can access and use records and does not apply to individuals or businesses.

HIPAA was enacted in 1996 to protect medical records.

The Fair Credit Reporting Act (FCRA) allows individuals to opt out of unwanted credit offers and obtain one free credit report from each of the major credit reporting agencies every year.

The Electronic Communications Privacy Act can be used to impose criminal sanctions on anyone who intercepts electronic communications without consent, but a number of loopholes have rendered the law mostly useless, experts say.

The 1998 Children’s Online Privacy Protection Act requires that websites directed at children under the age of 13 must get parental consent among other compliance standards. The law has widely been discredited as ineffective and even counterproductive when it comes to protecting kids online.

Other federal laws relating to computer security and privacy law include (source: Wikipedia):

  • 1970 U.S. Fair Credit Reporting Act
  • 1970 U.S. Racketeer Influenced and Corrupt Organization (RICO) Act
  • 1974 U.S. Privacy Act
  • 1980 Organization for Economic Cooperation and Development (OECD) Guidelines
  • 1984 U.S. Medical Computer Crime Act
  • 1984 U.S. Federal Computer Crime Act (strengthened in 1986 and 1994)
  • 1986 U.S. Computer Fraud and Abuse Act (amended in 1986, 1994, 1996 and 2001)
  • 1986 U.S. Electronic Communications Privacy Act (ECPA)
  • 1987 U.S. Computer Security Act (Repealed by the Federal Information Security Management Act of 2002)
  • 1988 U.S. Video Privacy Protection Act
  • 1990 United Kingdom Computer Misuse Act
  • 1991 U.S. Federal Sentencing Guidelines
  • 1992 OECD Guidelines to Serve as a Total Security Framework
  • 1994 Communications Assistance for Law Enforcement Act
  • 1995 Council Directive on Data Protection for the European Union (EU)
  • 1996 U.S. Economic and Protection of Proprietary Information Act
  • 1996 Health Insurance Portability and Accountability Act (HIPAA) (requirement added in December 2000)
  • 1998 U.S. Digital Millennium Copyright Act (DMCA)
  • 1999 U.S. Uniform Computer Information Transactions Act (UCITA)
  • 2000 U.S. Congress Electronic Signatures in Global National Commerce Act (“ESIGN”)
  • 2001 U.S. Provide Appropriate Tools Required to Intercept and Obstruct Terrorism (PATRIOT) Act
  • 2002 Homeland Security Act (HSA)
  • 2002 Federal Information Security Management Act of 2002

Prospects for future privacy legislation

Federal privacy legislation has been proposed a few times since 2019 but until recently such proposals didn’t have much bipartisan support. 2022 saw the first bipartisan bill, the American Data Privacy and Protection Act. That could result in some federal privacy law being passed in 2023, but it’s no guarantee.

My concern is that a federal law would preempt state laws like California’s CCPA, and the federal law might do less to protect people’s privacy. Influence from anti-privacy lobbyists could neuter the federal law by the time the president signs it, leaving individual states with little recourse.

A global federal privacy law is still a long way off. As the home of the world’s biggest tech companies, I think the U.S. needs to set a precedent first.

About the author

Paul Bischoff is editor of Comparitech and a regular commentator on cyber security and privacy topics in national and international media including New York Times, BBC, Forbes, The Guardian and many others. He’s been writing about the tech industry since 2012 for publications like Tech in Asia, Mashable, and various startup blogs.

Featured Post | Policy

Beneath conservatives’ big tech concerns, liberals may find a common cause

Liberals and conservatives have different flashpoints when it comes to big tech. But they all trace back to the same problem.

Conservatives believe their viewpoints are being suppressed by big tech platforms and are taking steps to highlight the problem in this new Congress. Representative Jim Jordan (R-OH), the new Chairman of the House Judiciary Committee, recently wrote to five tech companies demanding information about whether they colluded with the Biden Administration to “suppress freedom of speech online,” in particular conservative viewpoints. Senator Ted Cruz (R-TX), the new Ranking Republican on the Senate Commerce Committee, filed an amicus brief with the Supreme Court as part of the landmark Gonzalez vs Google case to be heard next month. He claims that “platforms have not been shy about restricting access and removing content based on the politics of the speaker, an issue that has persistently arisen as Big Tech companies censor and remove content espousing conservative political views.”

In response, some have argued that tech platforms are simply trying to suppress offensive speech and disinformation. In fact, Twitter’s research showed that its algorithm actually favors conservative views. Google and Facebook and their proxies have made similar assertions that no such discrimination is happening. However, without any independent evidence, we’re left in a position where the platforms are grading their own homework and we’re all asked to simply trust them. Unlike the mass media, which thrives in the clear light of public scrutiny, it is impossible to understand the full impact of what goes on in the platforms’ black boxes.

Competitive viewpoints

Whether you agree with Rep. Jordan and Senator Cruz or not, conservatives’ concerns clearly underscore a related problem in our current marketplace: a lack of competition. Big tech controls untold data and influence. To date, they pretty much write their own rules with copious support from cooperative industry groups. The IAB has taken on a heavy load by carrying Google and Facebook’s water in its efforts to defend “commercial surveillance.”  CEO David Cohen uses inflammatory and polarizing rhetoric intended to protect the interests of big tech under the guise of defending the interests of “entrepreneurs and small businesses.” In fact, the one thing guaranteed to protect the needs of smaller players is an end to monopolistic practices.

And, while he defends the practices of IAB members Google and Facebook, Cohen selectively calls out Apple for its ” cynicism and hypocrisy.” It seems more than coincidental that Apple is not a member of the IAB. Apple is, in fact, an organization with a clear track record of participating deeply at open multi-stakeholder groups like the W3C to develop privacy solutions.

Dominant industry platforms preference their own products and services to the detriment of any nascent competitors. We’ve already seen clear evidence of collusion emerge in the government lawsuits against Google and Facebook in which these two companies shut out their competitors in the advertising market. Undoubtedly, we’re likely to see more revelations of this nature are as the Department of Justice filed suit against Google this week alleging the company unfairly manipulated the advertising marketplace for its own advantage.

Apple has been accused of leveraging its dominant App Store to develop and promote its own apps to the detriment of competitors. Amazon is under the spotlight for developing its own products to compete with those in its ecommerce marketplace – by employing analytics derived from that same industry-dominating marketplace. The list of anticompetitive complaints against a handful of powerful players grows longer by the day.

Healthy competition

While revelations continue to emerge as these cases make their way through the system, we can’t help but wonder what other harmful activities are still hidden? Without competition, these companies can – and do – operate as monopolies with all the trademark bullying and unchecked arrogant, anticompetitive, even illegal behavior. Who’s to say these companies haven’t also used their dominant market position to suppress (or otherwise influence the proliferation of) political viewpoints? 

Cultivating healthy competition in the digital marketplace would go a long way toward building transparency and accountability for the big tech platforms. If Instagram were still a separate company, imagine how differently it would have reacted after the endless scandals for Facebook starting with Cambridge Analytica? Imagine how the market would have reacted to news of Jedi Blue if there was a viable alternative to Google’s ad serving tools? What would pricing and user experience look like if the places we purchased goods weren’t tilting the scale hard in their own favor?

Instead, in today’s world of monopolies, we see a blizzard of PR and legal subterfuge followed by self-serving half-measures. 

Policy lags but has legs

Europe passed the Digital Markets Act last year with enforcement expected to begin later this year. If past is prologue, true results will take a few years. Just look at the most recent groundbreaking cases from GDPR. Facebook was deemed to be illegally processing data at the end of 2022, though GDPR became law in 2018. Congress tried to pass bills last year to address the competition problem but frustratingly came up short. Now, Republicans enjoy the majority in the House. Yes, they are worried about the behavior of the big platforms but have voiced concerns about overly empowering federal regulators.

There are legitimate debates to be had about how best to inject transparency and restore healthy competition. But make no mistake, the marketplace for tech is broken and policymakers need to act. Without a policy solution, monopolists will continue to spin PR and make small performative adjustments while they shape the marketplace in their favor and to the detriment of everyone else: small and medium sized companies – and, yes, maybe even divergent political views. 

Photo credit: Gage Skidmore
Featured Post | Policy | Video

Policy issues on the streaming video horizon

The streaming video marketplace is expanding and evolving at a breakneck pace. While the market was growing long before Covid, the pandemic lockdown spiked demand and cemented new habits for consumers across demographics. Consumers have devloped a ravenous appetite for streaming, which content providers are happy to satisfy.

Not surprisingly, the number of policy issues surrounding streaming video has grown at a similar pace. Some of these issues have been around for a while, while others emerged just this year. As with all expanding markets, it is critical to monitor regulatory and policy activities to ensure that the market is positioned for healthy growth. To that end, let’s review the current slate of legal, regulatory and legislative issues poised to impact streaming video companies.

New taxes and fees

A host of states and municipalities are attempting to extend franchise fees, which are typically levied on cable and internet service providers, to streaming video companies. Similarly, the Federal Communications Commission (FCC) is considering requiring edge providers (aka companies with apps and websites) to pay into the Universal Service Fund (USF).

The rationale is that the companies that provide high quality, high bandwidth content to consumers should pay for the infrastructure that enables consumers to access this content. Of course, this position fails to recognize the fact that franchise fees and the USF were initially established as a way for cable companies and ISPs to return the benefit they gained from public investment in their infrastructure.

Streaming video companies, however, did not receive any federal or local funding. While actions like these would be detrimental to the entire streaming market, they would disproportionately impact small and diverse content creators because they don’t typically have diversified revenue streams. Instead of levying new taxes on an emerging set of services, it would be better for Congress to continue funding broadband deployment initiatives, which helps level the playing field for equitable access.

Emergency alerts

In 2021, the FCC asked for comments on whether streaming companies should be required to broadcast emergency alerts in the same way that traditional television and cable providers are required to. DCN weighed in with big concerns about the technical and financial burdens of that proposal. We also noted that the costs would likely significantly outweigh the benefits when you consider the fact that consumers already receive these alerts on their phones. The agency prepared a report for Congress and appears to have shelved the proposal for now, but it’s worth monitoring.

Caught up in the techlash

Policymakers at the state and federal level have grown increasingly antagonistic toward big tech platforms. With each new scandal, we typically see a rash of bills introduced in an effort to right the wrongs. Unfortunately, sometimes those bills are overly broad, and they inadvertently affect streaming video companies.

One recent example is the Kids Online Safety Act (KOSA), which was introduced by a group of bipartisan well-meaning Senators after whistleblower Frances Haugen testified before Congress about Meta’s predatory practices with regard to kids on their platforms. The bill purports to address the role that “social media platforms play… in the mental health crisis for children and teens.” However, the bill would also cover streaming video companies which offer professionally-curated content in a safe environment – pretty much the polar opposite of social media services teeming with user generated content.

Data rights and consumer privacy

In the absence of a federal privacy law, five states have now passed their own privacy laws. Of course, these laws apply to a wide range of businesses, impacting far more than streaming companies. However, the new laws will certainly have an impact on how the sector develops, particularly on how consumer data is collected and used.

For example, the California Privacy Rights Act (CPRA) builds on existing California privacy law to provide consumers with robust rights to delete, correct and port data that companies hold about them. Starting next year, consumers will also enjoy easy ways to opt out of the sale or transfer of their data.

Meanwhile, big tech companies like Amazon and Google are battling with newer platforms like Roku, and a raft of advertising-supported video providers, to carve out space in the streaming business with an eye toward harnessing valuable flows of consumer data. If this plays out like the broader web, then whoever controls the data will corner the revenue.

As the streaming video market matures, more policy issues will surface. It’s the hallmark of every evolving sector. The question is whether the streaming video market can continue to grow with healthy competition or whether punitive fees and the collateral effects of dealing with the bad behavior of tech platforms will gum up the works.

To ensure that new entrants and innovation have the opportunity to flourish, DCN will continue to advocate for sound legislation that addresses the specified harms and that unnecessary hurdles are removed. Consumers have high expectations, so should we. 

Featured Post | Policy

How Consumer Reports is fighting to save democracy 

Publishers and consumers are on the same side in a fight against gatekeepers wielding market power through inscrutable algorithms, says Marta Tellado, president and CEO of Consumer Reports. Her new book, Buyer Aware, explores the promise of today’s connected products and the many predatory practices and commonplace data harvesting and unacceptable risk.

“The marketplace is changing so dramatically, and so rapidly, but the balance of power has shifted away from consumers. I really wanted to kind of reveal to consumers: what does this new marketplace look like? What protections and rights do you have?” said Tellado in a phone interview. 

Consumer respect

That’s where her new book Buyer Aware comes in. Tellado weaves together a history of previous consumer advocacy success stories with the challenges people face today while trying to navigate a world where the gatekeepers of the digital media prefer profit over privacy and attention over accuracy. 

“Consumer Reports has been around for 86 years. We’re incredibly proud of the consumer rights and protections that we’ve been able to forge with and for consumers. But the reality is, that many of those things do not translate into the digital space. Technology has raced so far ahead of us,” said Tellado.

All of these threads speak to the premise of the book: that the right of consumers to fair marketplaces be deemed equivalent to people’s civil rights – instead of being an afterthought, as it often feels. Tellado says we’ve reached a critical moment on the frontier of consumer protection, one where Consumer Reports is in a position to be highly instrumental. Throughout the brand’s history, the ongoing efforts of its team has led to accountability in the market. And today’s market is in need of increased accountability. 

Publishers implicated in today’s issues

While Buyer Aware includes an overview of the state of financial scams (it’s bad), a status report of today’s latest safety issues and industry responses (also not great), a large portion of the book is dedicated to the threat of big tech’s market power and the misinformation in the media ecosystem. These are two issues in which the publishing industry is directly intertwined – Consumer Reports included.

“What many [media companies] are struggling with, is that we’re in an age where we have monopoly platforms that are essentially gatekeepers,” said Tellado. “They stand between us and the consumers we’re trying to reach.”

Tellado says the digital market doesn’t have the standards, the rules, and the guidelines to sufficiently protect consumers from exploitation. And she points out that publishers are at the mercy of search engine optimization and algorithms which ingrain society’s biases. Certainly, consumer rights are important for society. But she says that even beyond this, fundamental American values are at stake. 

“Writing the book was also a way to tell a larger story about our democracy, that it can only really thrive if you have a fair and just marketplace. Those two things are incredibly connected.” However, the main thing that Tellado wants readers to take away is that there are constructive paths forward.

She points to the emergence and vilification of “hipster anti-trust” as the force which shouldn’t be underestimated through patronizing nicknames. With Lina Khan’s ascension at the Federal Trade Commission, the potential of real action taken against the big tech giants is palpable. Tellado also endorses the Journalism Competition and Preservation Act helmed by Minnesota Democratic senator Amy Klobuchar as a legislative solution. 

Equipping consumers with tools

In a very on-brand “consumer-empowerment” move at the end of each chapter, Tellado suggests ways an average person could shield themselves from perils found in the previous pages. To combat big tech’s extensive reach over people’s private data, Tellado recommends people reduce the amount they hand over. More innovative options for people to leverage are found after following a QR-coded weblink. Consumer Reports has developed online tools people can use to protect themselves. For example, they offer an app that reveals the information companies collect from individuals.

Perhaps this seems ironic considering how much the book pins on other digital systems. But that’s the point: these new marketplaces are a reflection of how our digital tools are used, not that they’re inherently bad. Despite the risks, the work by Consumer Reports and its peers in the media space show us there is a flag to rally around in defense of the rights of the consumer. 

Featured Post | Policy

The cracks in Google’s adtech façade are starting to show

Behind the scenes, Google is flailing – despite its predictably tight control over industry narratives. 

The underlying shockwaves stem from an increasingly widespread understanding of Google’s dominant role over the entire adtech supply chain. Those who have sought to unpack and explain the complexities of the company’s hold on the industry can thank a senior Google employee for providing this apt analogy in discovery: They described Google’s role in adtech as “if Goldman or Citibank owned the New York Stock Exchange.” Now that’s something a jurist can understand. 

The escalation of enforcement 

In the last sixty days, Google has floated three different test balloons in an attempt to head off the intensifying scrutiny: 

  1. The Wall Street Journal reported Google has offered to split off part of its adtech business in an effort to head off the Department of Justice’s filing of a landmark lawsuit – expected this month according to a Bloomberg report. The only problem: Google’s offer was to split the adtech business and put it under a different part of parent Alphabet. To extend the previous analogy, placing the NYSE in a different division of Goldman Sachs would not solve the inherent issue. Hard pass.  
     
  2. Google announced a new feature with the innocuous title of “Confirming Gross Revenue.” They’ve pitched it to advertisers and publishers – and little doubt to enforcers, too – as providing transparency in a “privacy-safe way” as to the money flow in the advertising supply chain. The problem with it is that Google will avoid having to provide insights into auctions, transactional flow, or any real detail as to how Google’s decisions determine revenues across the market. Google’s press announcement crows that “Display & Video 360 is onboard as an early tester.” That sort of says it all, since Google owns DV360.  
     
  3. Google once again delayed its deprecation of third-party cookies, something that they’ve been dragging their feet on for nearly three years. From the very beginning, Google has used misleading Google-authored research of the Google-dominated supply and data system to suggest their delays are only due to their interests in not harming publishers. What is true is that a wrong move by Google (hello Floc, hello Topics) can very well continue the ongoing harm to premium publishers by treating every website as an interchangeable commodity. If there’s any chance that a move will hurt Google’s ad business, it won’t happen. 

Litigation, legislation, and learning 

So why all the flailing? To illuminate what’s going on underneath the surface, let’s take a roll call. Fifteen U.S. states, the U.S. Department of Justice, the E.U. Competition Commission, the U.K. Competition and Markets Authority … Netherlands … France … well, suffice it to say that the list is long (and growing) for investigations, lawsuits, and enforcement action underway – all of which are probing Google’s advertising tech business(es).  

The E.U. has been particularly active by fining Google more than $8 billion across three decisions. It also recently passed its new landmark gatekeeper law, the Digital Markets Act, and is ramping up enforcement of its landmark privacy law, the GDPR, by pressing Google-friendly Irish regulators. 

Importantly, enforcers and litigators are studying and learning from each other across issues of competition and data privacy worldwide. And they’re keeping especially close eyes on the Texas-led lawsuit which now counts 15 bipartisan state attorneys general as plaintiffs along with countless private plaintiffs. They certainly won’t have overlooked Google losing much of its arguments last week in attempting to dismiss this case. This blow came at the hands of a SDNY Court which very much seems to understand Google’s business. And that’s a huge problem for Google. 

Full court press 

Although “Jedi Blue” received the most press attention, due to the allegations of Google colluding with Facebook, there are a range of other very serious allegations which the Court has now given the green light for further discovery and trial. And, significantly, they are readily explainable to a jury. Two foremost allegations are the tying of Google’s adtech services and the manipulation of its auctions.  

What if I told you Google required the use of its ad server in order to receive the benefits of Google’s market-leading ad exchange and the fast-growing advertising demand dollars flowing through it?  Some might call this “tying,” which – if proven – is illegal.  Note that Google had about 50% of the ad server market when it acquired DoubleClick (DFP). It has since steadily increased that stake to claim nearly 99% of large publishers. Please allow me to quote the Court:  

 “The States plausibly allege that Google used its monopoly power in AdX to actually coerce publishers into licensing a separate and distinct product, Google’s DFP ad server, and that Google’s actions had anticompetitive effects in both markets, affecting a substantial amount of interstate commerce.” 

Or what if I told you Google had paid its publisher clients based on the third-highest price in an auction while collecting on the second-highest price with the determination it would re-route the variance into more advertising demand for its own services?  Some might call this, “market manipulation,” which – if proven – may well have been an illegal way to protect its monopoly. As the Court again summarized Google’s project “Bell”:  

“In other words, Bell penalized publishers who did not grant AdX preferential access by paying them based upon the third-place bid rather than a second-place bid, while using the difference to increase the bids made to publishers who allowed preferential access.” 

In fact, the only count which was dismissed in the lawsuit is the infamous “Jedi Blue” allegation. Despite Google anchoring its press spin on this win, it’s this single dismissal – one that befuddled many legal experts watching the case. I wager this one will resurface again as the E.U. and U.K. have already announced their own investigations. Also, the “Jedi Blue” allegations are included in a private lawsuit against Facebook that has already been given the green light in the northern district of California. Each of these efforts builds on the others and the subsequent learnings can only aid the U.S. Department of Justice in its work.  

Antitrust is in the air 

It was rightly said nearly three years ago that antitrust enforcement will take significant time. The wheels of justice do indeed turn slowly. Attempting to propose solutions before the investigations and allegations landed would be premature, but Google’s efforts to settle these cases shows they are nervous. And Google’s efforts to manipulate the outcome may be the most transparent thing about its business.  

The reality is many of the charges against Google have now been found plausible and will proceed into deeper discovery just as many other regulators and legislatures attempt to curb its power. Make no mistake, Google is stumbling in a way we’ve never seen in its two decades. Of course, the company will look to proactively lay out solutions for all of us. But we all see through this. No one should settle for anything less than a return to competition and the rebalancing of bargaining power that comes with it. 

Advertising | Featured Post | Policy

What the landmark GDPR fine of the IAB signals for the ad industry

In February of this year, the Belgian Data Protection Authority (DPA) dropped a bombshell on the ad industry when they ruled that the Interactive Advertising Bureau’s (IAB) Transparency and Consent Framework (TCF) violated the General Data Protection Regulation (GDPR) in several critical ways. Admittedly, that alphabet soup doesn’t exactly sound like a bombshell.

So, let’s go beyond the acronyms and break down what this means for publishers going forward.

The ruling

First, the basics. The GDPR requires companies to have a valid legal basis tied to a specific purpose before processing any personal data from consumers. The two most popular bases are consent (affirmative and freely given) and legitimate interest (essentially, the benefit to the consumer from the use of their data outweighs the risk). Although it should be noted that Facebook decided to take its own direction by using a contract as its basis, a strategy that is quickly unraveling.

To maintain the free flow of data that currently fuels a wide swath of digital advertising, the IAB created the TCF which allows companies to transfer their legal basis for the data used in the buying and selling of advertising inventory in a real-time bidding format. Under the TCF, a publisher can note whether or not they have a legal basis to process a consumer’s personal data. Then, advertisers and ad tech companies can decide whether to bid on the ability to show an ad to that person.

The Belgian DPA received several complaints, including one from Johnny Ryan at the Irish Council for Civil Liberties, that the IAB’s TCF violated the GDPR. In short, the TCF was criticized for facilitating the widespread dissemination of personal data to the entire industry without any real controls on the access, use or auditing of that data. Specifically, the DPA found that:

1. The TCF and the ad tech companies using the TCF were processing a ton of personal data without any legal basis and certainly beyond any legal basis claimed by the publisher.

2. The IAB failed to properly educate consumers given the complexity of the data processing.

3. The IAB deployed no technical measures to limit unauthorized access to personal data.

4. The IAB was operating as a controller of data and, thus, should have kept a register of activities, appointed a data protection officer and conducted a data protection impact assessment.

The DPA ruled the TCF invalid and fined the IAB 250,000 Euro per day. The IAB is currently appealing in the hopes of making small changes to satisfy regulators. However, many insiders are skeptical that the IAB’s proposals will suffice. The fundamental problem is that the current ad industry is built on the ability to collect and share consumer data at will and at scale. And GDPR enforcers want meaningful change with meaningful protections for consumers. This approach to maintain status quo simply does not satisfy that requirement.

Impact on data-centric ad businesses

Let’s assume that the Belgian and other European regulators win on appeal and the TCF is required to undergo major changes. What does that mean for the ad marketplace, for real time bidding and for publishers?

For starters, ad marketplaces will be required to handle consumer data more carefully. Allowing free-for-all access to consumer personal data by any company that agrees to the terms of service just won’t fly. They may need to deploy technical measures to mask personal data and/or limit access to only those companies with a sound legal basis.

Of course, this could be a problem for some of the IAB’s biggest members and hundreds of ad tech intermediaries, which are dependent upon the ability to profile consumers silently across the web. However, should a more consumer-friendly, less data-invasive approach win out, advertisers will need to learn to rely far less third party data. The certainly won’t want to open themselves up to liability for using illegally-sourced personal data.

Marketplaces and the shifting data market

The second major impact will be on the organizations that run marketplaces. The IAB attempted to craft a framework which would save the status quo of third-party, behaviorally targeted advertising because that is the moneymaker for its biggest members and the sea of intermediaries who mine and resell access to user profile data as a core business model. However, a fine of 250,000 Euro per day is likely too rich even for the dominant platforms.

Going forward, organizations that want to offer automated ad marketplaces will have to institute more controls and assume greater liability. There is a real question as to whether any organization will want to take on that role certainly for the entire industry. It’s far more likely (at least in the short term) that smaller organizations will stand up marketplaces with segments of industry.

CPRA follows suit

Third, the issues at play on the European landscape are likely to play out similarly on the California coastline. California regulators have just recently proposed a set of draft regulations for compliance with the California Privacy Rights Act (CPRA). Starting next year, the collection and use of Californians’ personal data will be regulated in ways that are very similar to European law. Whatever solutions emerge to satisfy European regulators will have a very good chance of satisfying California regulators.

Future focused

Undoubtedly, the IAB faces significant pressure from its most powerful members such as Google and Facebook and the long-tail of adtech solution companies. Given that their businesses have been built on the ability to collect data (even off-platform, when consumers do not expect it), they are deeply invested in finding a way to comply with emerging regulations in a way that ultimately allows them to continue their business more or less as usual. In Europe, their strategy has been to put off any major interruption to their massive data-collection-and-use model for as long as possible.

But these businesses that have dominated the digital advertising market do not represent the only way of doing business. While regulation certainly changes the market, it does not inherently change things for the worse.

In fact, I’ll leave you with a feel-good fact: A revamped and GDPR/CPRA compliant ad marketplace could elevate premium publishers. They enjoy trusted, direct relationships with consumers. Instead of a wild west marketplace where all kinds of actors stake dubious claims of proper legal bases, the premium publishers, which are on far more solid legal ground, would be in a strong position of controlling access to a limited supply of consumers.

Industry-Research | Policy

Research explores the best way to balance big tech and journalism

The Australia 2021 News Media Bargaining Code and the European Union (EU) 2021 Digital Copyright Directive are two examples of policies that establish a more equitable financial arrangement between big tech platforms and digital news organizations. They center around the understanding that platforms derive a benefit from news content and that publishers are not compensated for the way in which these platforms profit from their content. Courtney C. Radsch examines the different policies in her report, Making Big Tech Pay for the News They Use to offer insight into the legislation and its implementation.

With the exception of non-profits, most news organizations employ a commercial model. In the simplest terms, advertising is used to drive revenue to support the news organization. However, intermediaries – notably Google and Facebook – now stand between the publisher and the advertiser. Since search and social media are key ways in which people discover and consume news online, these platforms benefit from the user traffic derived from publishers’ content. They collect personal data on users and group people into demographic and special-interest categories to target advertising to them on their platforms.

Radsch’s research examines how policymakers are working to redirect revenue to compensate news outlets more equitably.

Her report classifies the different policies into three distinct groups:

  1. Digital taxation,
  2. Competition policy (or antitrust), and
  3. Intellectual property.

Taxation

In recent years, taxing digital advertising has gained interest. In 2019, the U.S.-based Free Press proposes a small tax on revenues generated from targeted advertising. This policy was established with Google and Facebook in mind. The taxed revenue would be used to fund public interest media systems.

Radsch notes it’s problematic that the policy does not identify who will monitor and implement a payment distribution system for the news media companies. 

While not covered in this report, in 2021, Connecticut, Indiana, New York, Oregon, and Washington introduced state proposals for a new tax on revenues from digital advertising or to expand the state sales tax to digital advertising sales. Interestingly, none of these proposals allocate the tax revenue to news organizations. Connecticut plan suggested the revenue from the tax be dedicated, in part, to funding online bullying prevention efforts and training for social isolation and suicide prevention.

Maryland became the first state to enact such a tax in February 2021. However, these state tax laws face court battles since they likely run afoul of the Constitution’s Commerce clause. This clause restricts the ability of states to regulate commercial activity across state lines, and the Internet Tax Freedom Act prohibits states from levying taxes solely on digital goods or services.

Bargaining power

Other policies are exploring making platforms pay for the news they use, headlines, photos, and snippets. This type of policy forces the platforms to negotiate directly with publishers rather than the government. Australia made headlines in 2021 when it passed this type of legislation requiring Facebook and Google to share algorithmic information with and pay licensing fees to news organizations. The code states that news media companies can bargain individually or collectively for payment from platforms to use their content.

As a result, Google and Facebook threatened to pull their services from the Australian market. Facebook did shut down its service for one week. Both companies ultimately acquiesced and signed deals with Australian publishers.

Intellectual property rights

Many question whether the “fair use” exception in copyright law, the use of a small amount of copyrighted material without prior permission, applies to Google and Facebook.

The 2021 EU Digital Copyright Directive created a right for press publishers, not just authors, to claim copyright, including for snippets of news. In addition to individual publishers being able to strike deals with the various platforms, the Directive allows collective management organizations to negotiate licensing fees and distribute them back to publishers. 

In 2021, members of the U.S. Congress proposed a new version of the Journalism Competition and Preservation Act of 2021. This bill would create a four-year safe harbor from antitrust laws for print, broadcast, or digital news companies to collectively negotiate with platforms regarding the use of the news companies’ content. In other words, media news companies could collaborate to discuss bargaining with Google and Facebook without fear of antitrust violation. Despite bipartisan support, the bill appears to have stalled.

Profits and progress

Google and Facebook claim that news content generates little revenue. However, their earning calls suggest otherwise. These companies benefit tremendously from the trusted content and audiences that news publishers deliver. 

Radsch’s report calls for platform transparency, including sharing traffic reports and the number of ads served around each news item. This would be a good first step to revealing the amount of revenue the news content generates on the platforms. Once this amount is determined and platforms equitably paid for news content, the relationship between the two can reset. Given the importance of advertising revenue to journalism, it’s important to get this right. Radsch’s report offers guidance and insights that will help policymakers move forward meaningfully.

Policy

Digital outlaws: How Facebook extorted Australia

As the world learns from Australia’s news media bargaining code that has reportedly driven $200 million of funding to news organizations, a whistleblower revealed the tactics to try to stop other nations from importing and building on it. This panel featured the CEO of the whisteblower’s law firm, an advocate for the digital future of news organizations, and a member of Parliament working on new laws to create a more competitive market.

Held June 23, 10:45-11:05am ET at The 2022 Collision Conference in Toronto Canada

Jason Kint, CEO, Digital Content Next
Libby Liu, CEO, Whistleblower Aid
Nathaniel Erskine-Smith, Member of Parliament for Beaches – East York, House of Commons of Canada
Alex Kantrowitz, Founder & Editor-in-chief, Big Technology

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