Artificial intelligence (AI) is rapidly integrating into news and content, prompting a necessary reflection on its implications for democratic societies, which rely on trustworthy and diverse media sources. A new report, Artificial intelligence and media policy: Plurality from the meat grinder, from Professor Dr. Rupprecht Podszun, Heinrich Heine University, and Ruth Meyer, Director of the Saarland State Media Authority (LMS), delves into the potential risks AI poses as it is applied in the media industry as well as the need for regulation to govern its usage.
Guardrails for AI
Podszun and Meyer identify three areas needing guidelines and policies to uphold democracies:
Trust in information is about ensuring that the information people receive is accurate and reliable, whether it’s news or other content. Laws like the Saarland Media Act stress the importance of journalists being careful and accurate when reporting. However, when artificial intelligence involves creating content, it can be hard to know if the information is trustworthy because the processes behind AI are often hidden. This lack of transparency can make people doubt the reliability of AI-generated content.
Public discourse refers to the conversations and discussions in society, especially around important issues. With the rise of AI-powered recommendation systems, people often get information that aligns with their beliefs and interests. This can create “bubbles” where people only hear opinions like their own, leading to societal divisions. The idea of the public sphere, where people from different backgrounds come together to discuss and solve problems, is important for democracy. However, social media platforms, which play a big role in public discourse today, can make it harder for diverse opinions to be heard.
Plurality is under pressure despite the many different media sources available today. The reality is that companies like Alphabet (Google’s parent company) and Meta (formerly Facebook) have too much control over the information people see. This concentration of power can limit the variety of perspectives and ideas people are exposed to, especially when AI algorithms are used to personalize content delivery.
A regulatory approach for AI
Regulation will be needed to address concerns and provide guidance for the most constructive development of the AI industry and its applications. This could include laws to prevent monopolistic companies from having too much control over information. Further, there is a need for transparency about how AI is used in creating content. It’s also important to ensure that the data used to train AI systems is diverse and representative of different viewpoints.
The authors provide recommendations for regulatory approaches to ensure diverse and trustworthy access to information. They suggest that:
Preventing monopolistic concentration is crucial, given the dominance of big tech companies in both data-driven business models and AI control. Media concentration laws should counteract this trend, promoting diverse data pools and open technology.
Ensuring transparency and responsibility are fundamental. Trust in AI-driven media necessitates transparency regarding its usage, training data, and information sources.
Identifying prohibitions is necessary to enforce accountability. If AI crosses ethical boundaries, explicit bans with sanctions are imperative.
Addressing the training data problem is vital. Guaranteeing open and diverse data selection mitigates distortions in AI-generated content. Embracing adaptable AIs capable of correcting errors ensures ongoing development and integrity.
While AI offers unprecedented opportunities for media innovation, its unchecked proliferation poses significant risks to democratic principles. Effective regulation is imperative to harness the potential of AI in media while safeguarding pluralism, transparency, and trust in information dissemination. Only through collaborative efforts between policymakers, media stakeholders, and technologists can the transformative potential of AI be harnessed responsibly in the service of democratic societies.
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, 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.
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, 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, 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
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, 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
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.
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:
Digital taxation,
Competition policy (or antitrust), and
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.
The classics are so well-known they’ve become punchlines: acai berry treatments, one simple trick to get rid of belly fat, get rich working from home. Newer scam ad verticals like bitcoin and crypto schemes, home solar energy savings, and nutritional supplements for diabetes sufferers are slamming consumers on every corner of the Internet.
And yet scam and deceptive advertising is simply accepted as an ugly part of digital media and advertising. And it’s only getting uglier. Since the beginning of 2021, The Media Trust has detected a 50% increase in scam campaigns hitting publisher properties. Still, too many AdTech companies and publishers look the other way as the scams roll through the programmatic pipes, hoping their audiences have the good sense not to be bamboozled.
The Media Trust detected unique scam campaigns ramping upwards throughout 2021 with a major spike in July.
Unfortunately, there have been virtually no consequences for sites running scam ads. There’s the occasional massive fine, like when the Federal Trade Commission came down hard on Clickbooth for its acai berry barrage. However, for the most part, scammers advertise with impunity and AdTech and publishers become their accomplices.
However, consequences may be coming—and the fallout may be dire—judging by the developing online regulatory situation in the UK and increasing attention elsewhere.
The scope of online safety measures
British Prime Minister Boris Johnson has promised to present the Online Safety Billbefore Christmas. The bill would require publishers, social networks, and many communication/messaging apps to deter, remove, and mitigate the spread of Illegal and harmful content—particularly when aimed at children. The bill threatens fines as high as £18 million or 10% of global revenue, and possible criminal sanctions.
Beyond content that sexually exploits children (which must be reported to law enforcement), the harmful content in question includes malicious trolling and racist abuse—with the added goal of “protect[ing] democracy,” presumably through stemming online disinformation. The UK Office of Communications (Ofcom) will enforce the proposed law, which will also give the regulatory agency the ability to completely block access to a site or platform.
However, advocates like famed British personal finance advisor Martin Lewis think the bill doesn’t go far enough. That’s because it’s laser-focused on user-generated content and doesn’t regulate online advertising—most notably scams. Lewis, whose likeness is often exploited in scam ads pushing bitcoin schemes, has been on a crusade against online scam ads for years, including forcing Facebook to settle for £3 million over a 2018 lawsuit regarding more than 1,000 scam ads featuring his appearance.
Drowning in scam ads
The data backs up Lewis’ claim that the “The UK is facing an epidemic of scam adverts.” In 2020, 410,000 cases of fraud reported to the UK police represented a 31% jump from the year prior, according to consumer group Which?, with £2.3 billion fleeced. Including anxiety and psychological damage, Which? puts the actual total suffered by UK consumers at £9 billion.
And the greatest frustration among consumers and public advocacy groups is the lack of recourse and sense that scammers act with impunity—aided by AdTech and digital media. In another Which? report, 34% of consumers said a scam they reported to Google was not taken down, while 26% said the same of Facebook.
In 2020, The National Cyber Security Centre removed more than 730,000 websites hosting scam advertising landing pages featuring the likenesses of Lewis, Richard Branson, and other celebrities. Despite that effort, The Media Trust has seen a 22% increase in these types of scam (aka “Fizzcore”) content throughout 2021 that use similar landing pages.
Fizzcore attacks, which typically feature celebrities and hawk bitcoin scams, have grown 22% over 2021 despite crackdowns.
Fizzcore is more nefarious than other scams because it employs cloaking to hide malicious creative and/or landing pages from creative audits and other detection techniques. The vast majority of these have been pushing bitcoin investment scams, often with the same Lewis and Branson content.
Personal finance advisor Martin Lewis and billionaire philanthropist Richard Branson are common faces in scam ads directed at UK citizens.
Even if online scam advertising fails to make the final Online Safety Bill, a reckoning for scam ads could come in other forms. The UK’s Department for Digital, Media, Culture and Sport (DMCS) is developing the Online Advertising Programme (OAP), a framework that enables regulators to address potential consumer harms from digital advertising, including scam ads.
And just to pile on, UK. Home Secretary Priti Patel announced a relaunched Joint Fraud Taskforce on Oct. 21. Addressing the significant rise in scams during the peak of the coronavirus pandemic, the taskforce will focus on addressing scams and fraud through private-public partnerships and refurbishing of government reporting tools.
Fallout beyond the British Isles
The ramifications of all this regulatory (buildup) ought to make the industry anxious. The Online Safety Bill would put heavy new burdens on publishers and social media in moderating user content in the UK, but the inclusion of scam ads might directly affect revenue. In the absolute worst-case scenario, publishers would need to vet all specific advertisers running on their sites as well as be familiar with all creative to avoid liability. That could mean many risk-averse publishers shut off programmatic advertising.
Scam advertisers are notoriously hard to pinpoint. They use any and every buying platform available, and then tools like cloaking in code to hide their malicious motives. When it comes to rooting out scam campaigns, the proof isn’t completely in the ad code. While creative and domain patterns can be identified and blocklisted, finding scammers also requires investigation into the elusive end-advertisers, their motives, and their histories. It’s not impossible, but it requires dedicated teams always on the pursuit.
Beyond stopping scammers cold at the source, the next best way to stem proliferation of scam ads is to bring culpability to publishers and their AdTech partners. However, publishers are the low-hanging fruit. The website was where the consumer was attacked, so they’ll always be the prime regulatory target.
Despite the intense pressure in the U,K., regulators in other countries are also most definitely paying attention and looking for a potential roadmap. In the U.S., reform of Section 230 of the Communications Decency Act—which shields online media companies from legal liability regarding user-generated content—appeals to both major political parties. Really, what politician would say no to the easy win of protecting consumers from online scams? According to the Federal Trade Commission, consumers lost $3.3 billion to fraud in 2020, up from $1.8 billion in 2019—and that’s only the 2.2 million reports filed.
Self-regulation to the rescue?
The IAB UK is conversing with the DMCS on the OAP, but ultimately the trade group believes industry self-regulation is the answer. While self-regulation on the data privacy front became a mockery of itself, self-regulation of scam ads doesn’t need to meet the same fate. First off, trade groups like the IAB need to establish stronger ad quality guidelines that offer standards for handling malvertising, scam, and other harmful ads.
In addition—or short of that—publishers need to take control of their own destinies regarding scam ads. Every ad quality provider should be identifying scam ads and enabling publishers to block them. Slapping down redirects simply isn’t enough for a bad-ad-blocker—a publisher serving scam ads is violating the trust of its audience and leaving consumers vulnerable.
Not only is blocking the scam ads the right thing for publishers to do, it is a way to get ahead of—or perhaps helping avoid—a regulatory onslaught that will have catastrophic revenue consequences. Failing to mitigate will come back to haunt the industry.
In case you haven’t heard, there is an election coming up in a couple of weeks. Regardless of which party wins, the public policy landscape for digital media is likely to undergo some major shifts in the next couple of years. Let’s take a look at three big changes on the horizon:
Google and Facebook will pay for premium content
In 2019, the European Union approved the Copyright Directive and underlying publishers’ right, which gave news publishers legal leverage to demand better terms from platforms. Now, all eyes are on France where a court ruled earlier this year that Google must negotiate in good faith with publishers. Of course, Google will avail itself of all the legal channels to slow down any effort to force them to pay for content. However, it’s likely just a matter of when, not if.
On the other side of the globe, in 2019, the Australian Competition and Consumer Commission (ACCC) to develop a voluntary code to rebalance the relationship between news organizations and big tech platforms. As the latter predictably dragged their feet, the ACCC switched gears earlier this year and moved to the development of a mandatory code, which appears likely to be easily approved by the Australian parliament in 2021.
In response, Google and Facebook have threatened to drop news from their services and/or pull out of these markets altogether. However, we know these are empty threats. For one, there’s common sense. If Facebook’s news feed and Google’s search results were devoid of trusted news organizations, what kind of miserable consumer experience would that be?
Really, given the massive profit margins of these tech companies, and the political scrutiny they are facing on multiple fronts, it makes sense for them to simply buy their way out of this problem. Case in point: Earlier this month, Google launched Google News Showcase, which will pay out approximately $1 billion in licensing fees to a select group of news publishers. As News Corp’s CEO, Robert Thomson, noted, “…the principle and the precedent are now established.” My take: Google sees the writing on the wall and is trying to get ahead of regulators in an effort to set the market.
Also, earlier this month, the House Judiciary Committee issued a lengthy report that summarized their investigation into big tech platforms and laid out a host of legislative solutions. One of those proposals would allow news publishers to collectively negotiate terms with platforms like Google and Facebook. It’s pretty clear which way the wind is blowing. Platforms will pay for premium content in the not-to-distant future.
Consumer privacy laws will impact data collection and profiling, especially programmatic advertising
The EU’s General Data Protection Regulation (GDPR), which went on the books in 2018, was meant to give citizens new rights and protections over their data. Since then, the common narrative from big tech’s apologists has been that GDPR didn’t work. It only resulted in annoying pop-up notices while Google and Facebook cemented their dominance in digital advertising.
I dispute the narrative that GDPR didn’t work. It hasn’t been enforced…yet. The most significant enforcement action to date has been a French court ruling (currently under appeal) that Google improperly gained consent from consumers, which resulted in a $50 million fine. The resolution of that case could have huge implications for the entire industry, not just Google.
Meanwhile, Google, Facebook, Apple, and other companies claim Ireland as their European headquarters, which gives primary jurisdiction to Helen Dixon, Ireland’s Data Protection Commissioner (DPC). Last month, in response to a European court ruling, she announced that Facebook and other companies could not transfer data about European citizens back to the U.S. because the U.S. does not have equivalent privacy safeguards. In response, Facebook sued the DPC and declared that they might pull out of the European market if this ruling stands. (Sound familiar?)
At the same time, there are hundreds of cases pending before the Irish DPC, any one of which could have wide-ranging ripple effects. Adding to the pressure for her to act, the Belgian data protection authority issued an initial finding just last week that the IAB Europe’s Transparency and Consent Framework (TCF) is not compliant with GDPR. While the IAB Europe is expected to push back on these findings, the ruling could have massive implications worldwide for programmatic advertising, in particular the real-time bidding systems for open exchanges.
According to the United Nations, 132 out of 194 countries have enacted some kind of data privacy law – many of which are modeled after GDPR. This November, California voters are likely to approve a ballot initiative called the California Privacy Rights Act (CPRA), which will align California’s privacy law much more closely with the GDPR.
Of course, Google and Facebook have enormous legal and lobbying budgets that they will leverage to forestall regulation and enforcement for a time. But, eventually, the same public pressure that led to the enactment of GDPR and other data privacy laws will lead to the enforcement of these laws, which are primarily targeted at limiting the ability of big tech platforms to collect data about consumers.
Platforms will soon face new responsibilities and liabilities
Policymakers on both sides of the Atlantic seem to be hell-bent to make platforms more accountable for what’s happening across their services. This morning, the U.S .Department of Justice, along with 11 state attorneys general, filed suit alleging anticompetitive practices by Google with regard to the search marketplace.
The suit does not lay out specific remedies but could include breaking up pieces of Google into separate companies and/or imposing new obligations on the company. While the suit is likely to take years to play out in the courts, it dramatically ramps up the pressure on Google while also ensuring the conversation will remain top of mind for policymakers. It’s also widely expected there will be additional suits filed by the bipartisan state attorneys general who have been investigating Google on a range of practices including digital advertising.
Meanwhile, members of both political parties in the U.S. have expressed grave concerns about the anti-competitive practices and dominance of the big tech platforms. Democrats have expressed additional concerns about the impact on democracy, news organizations and vulnerable segments of society. Republicans have lambasted the platforms for allegedly suppressing conservative speech.
Importantly, both parties agree that platforms’ algorithms should be transparent. They think regulators should have greater authority to oversee their actions and mergers. And both sides believe that that Section 230 protections should be significantly narrowed. The CEOs of Google, Facebook and Twitter will likely be walking into a political minefield next week as they testify to Senate Commerce on this sensitive topic under threat of subpoena.
In Europe this month, European Commission Vice President Margrethe Vestager announced plans to move forward by the end of this year with two major legislative initiatives designed to impose a whole new set of obligations on big tech platforms. These big tech companies used to be the darlings of innovation. Now they are nearly uniformly seen as impediments to economic growth and democracy.
What does all this mean for publishers?
Taken together, these three unfolding and inevitable changes should provide a unique opportunity for premium publishers. Obviously, public policy debates are messy. And lawmakers and regulators don’t have the best track record in terms of truly understanding tech.
But, as we’ve seen with enforcement action in Europe, investigations by various competition authorities and hearings before the US Congress, policymakers have gotten a lot savvier and are poised to act in bold, new ways. Going forward, companies that enjoy trusted, direct relationships with consumers and advertisers are likely best positioned to flourish in a world where premium content and contexts will have greater value.
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.
While the California Consumer Privacy Act (CCPA) is poised to present peace-of-mind for many, it could be crippling for any publisher that relies on their GDPR compliance framework. In light of recent updates to CCPA, it’s clear that publishers must get on board or face some seriously damaging consequences in the form of not only revenue loss but also severe financial penalties.
The
CCPA ripple effect
When CCPA first passed in June 2018, just one month after GDPR’s enforcement, people were quick to refer to it as “GDPR light.” This was an indication that the landmark law will have significant ramifications on how companies that meet the thresholds and do business with Californians will have to change how they operate. At its core, CCPA signals a shift in business models, in particular where data is a revenue stream. What “GDPR light” downplays, however, is how significant that shift truly is.
The very fact that such regulations
were passed in the world’s 5th largest economy was a bold statement
in itself. With California at the helm, it’s only a matter of time before the
rest of the nation follows suit. Other states are not just going to sit back
and have privacy issues impact their citizens after California has made the
first move.
North Dakota: A proposed bill would require companies to provide to consumers (upon request) with information about the types of personal data that companies collect and possess.
New York: Two bills are on the docket: one addressing biometric privacy and another that would govern businesses’ collection and disclosure of personal information. Utah: A bill would require law enforcement to get a warrant from a judge to access electronic information.
Washington: Legislation would allow consumers to ask companies for a copy of their personal data and to delete or correct inaccurate data. It would also regulate facial recognition technology.
Texas: Two bills have been proposed that take more than a page, entire chapters in fact, from CCPA: TCPA and TPPA.
The results are clear: CCPA is
about to shake the very foundation of how companies conduct business nationwide.
Because of this, several federal regulations have also been proposed. And while
it’s unlikely any of them will pass before CCPA is enforced on January 1, 2020,
it’s vital to note that these things are currently being worked on behind the
scenes. More importantly, since CCPA passed sooner than anyone expected,
publishers should begin taking immediate action to align with the upcoming
regulations. The groundswell of consumer privacy ballot initiatives is only
growing stronger as consumers become more outraged with their lack of privacy
rights in the digital landscape.
Proposed amendments
Every publisher, whether operating
in California or not, needs to be fully vetted on the new law because it
affects anyone who conducts business with California residents. It provides those
residents with new rights to their information such as knowing what personal
information is being collected, shared, and sold, and with whom.
Furthermore, it also allows them to
access and delete, or decline the sale of their information while still
receiving equal service and price from businesses. Meanwhile, publishers must
inform their digital readers of what information is being collected and why.
Publishers must also work to ensure that each vendor in their supply chain is
operating within their contracted policies. Additionally, toll-free numbers,
email, or websites must be provided to consumers so that they can easily
request their information.
The
latest on CCPA
Recent changes to CCPA include several notable items, but there are two amendments in particular that could affect businesses for years to come—SB-561 and AB-25. The first dramatically increases the legal risks of businesses that collect and keep information by allowing consumers to file suit for any alleged violation of their CCPA rights without any evidence of harm—even before the Attorney General publishes guidance. What’s more, if the amendment passes, businesses will no longer have the right to consult with the AG on such matters.
The second amendment deals with how
the law defines “consumer information.” If passed, this amendment would exclude
information collected by a business from a job applicant, employee, contractor,
or agent. That’s a good thing, because without this change, consumer
information will include business contact information and employee information,
resulting in unintended consequences. Former employees will be able to request items
from previous employer records, such as emails
and other corporate documents that mention their name, including those that
contain confidential corporate information and performance evaluations. They
can also request emails to and from former contacts, enabling them to reach out
to company clients and prospects.
Preparing
for CCPA
At the end of the day, there’s no definitive answer on how CCPA evolves by the time it is enforced on January 1, 2020. Still, with less than a year to go, businesses need to take a risk management approach. They need to find out what information is collected and from whom, what information is shared and with whom, and how to secure that data. Operations, security, IT, and compliance teams will need to keep abreast of the regulations and their consequences for the organization. And in order to operationalize security and privacy, these teams will need to work together.
Those taking a wait-and-see
approach should look no further than the average cost of GDPR compliance. It’s
been noted that, after factoring in legal and other fees, the cost sits
anywhere between $1M‐$10M. That number could quickly grow if a violation
occurs, and the likelihood is high, given the increased right to personal
information. To put it bluntly, waiting to see what happens next is not an
option. Businesses of all sizes must act now to protect their bottom line or
face the impending consequences.
About the Author
Steve Stup is
responsible for developing and overseeing the revenue strategy at The Media
Trust. He has experience developing high growth sales teams through the course
of his career spanning around 30 years at The Washington Post, Lexis Nexis, and
other recognized brands. During his tenure at The Washington Post, Steve built
the company’s digital business and spearheaded successful sales and revenue
operations teams. He is an alum of Virginia Tech and The George Washington
University.
The
best things in life aren’t free, they’re loved.
In the table-setting remarks opening the 2019 DCN: Next
Summit, I shared a publisher challenge that I strongly believe our industry is
well on its way to overcoming: “Fighting the pervasive mentality that content must
be free.”
Truth be told: We don’t know if direct revenues from the audience will suffice to sustain the industry in the broadest sense. However,
there are positive trends on all dimensions. We’re certainly seeing more
evidence across the DCN membership that people are willing to pay for premium
publisher services. It’s no longer simply the financial or national news
outlets that can garner subscription and membership revenues. Local news outlets, entertainment channels, and new bundles
are attracting consumer revenue. We’ve started to capture these learnings in DCN
research, as well as through our events on direct audience revenues.
We see three positive subscription trends happening:
If you want to differentiate a news or
entertainment service, you need to compare it to the rest of your category on
YouTube or the Facebook news feed. Your offering, your brand, needs to clearly stand out as compared to the next best user-generated
offering in the ways more and more users are discovering
it.
Every new subscription to a publisher’s product drives
more intelligence and more investment back into the product so that the next
subscription is easier to convert. In a world of more stable and dependable
payments from your audience, it’s also easier to drive a percent of the revenue
back into constantly improving the product (see trend 1) whether it be hiring
more journalists or adapting the experience to the needs of the audience.
The population that has grown up with digital devices
shops for news and entertainment with the tap of their fingerprint on a mobile
device. Subscribing to Spotify, Netflix, Hulu, Apple Music, and more is a way
of life for them. They will not hesitate to invest in news and entertainment
that they trust and value. Each successful experience drives their behavior
going forward and is more likely to bring their friends into the market of
paying subscribers.
Importance of free to Google and Facebook
Whenever the sentiment is shared that people simply won’t
pay for content in the digital age of abundance, it’s likely that Facebook or
Google is lurking around a corner. They’re a crafty pair. Often, they prop up
this notion with a truly worrying concern: that a shift to paid content will only
serve to further divide the public based on ability to pay. However, their
intention is to protect their free fortresses. An industry-wide effort and
belief that audiences will pay for content is bad business for them. Hence the
veiled efforts over the years to spin the narrative and control the outcome.
DCN has long established that the free digital content
market has mainly benefited these two companies. The math is simple, and it’s
been cited far and wide. However, it’s important to recognize how critical the
free content ecosystem is to their unbalanced equation. And you don’t have to
take our word for it. On Monday night, the UK government released the
long-anticipated Cairncross
Review, which contains over 150 pages of analysis of the
digital news marketplace.
The Cairncross Review highlights two clear problems with the
disturbing dominance of the Google and Facebook business models:
1. The first problem (that forms the foundation of the duopoly’s dominance) is Google’s control over the buying, selling, transacting, and measuring of the digital ad marketplace. As Cairncross so eloquently puts it:
“Google has ad inventory in the form of Google Search and YouTube videos, and it owns ‘demand side technologies’ (used by advertisers to bid and buy inventory online), such as Display & Video 360 and Google Ads, and supply side intermediaries (that publishers will use to sell their ad space to advertisers), such as Ad Manager and AdSense. It also owns supplementary technologies such as Chrome browsers, Google Analytics (a ‘freemium’ web analytics service that tracks and reports website traffic as a basic free service, with more advanced features that can be paid for), and the Android mobile operating system.”
It’s clear what’s wrong with this: Antitrust much?
2. The second problem that bolsters the foundation of these platforms’ superiority is Google and Facebook’s unmatched ability to collect voluminous amounts
of personal data on peoples’ everyday interests and behaviors in both the digital and physical
worlds. Again, Cairncross astutely captures:
“Publishers gather user data from their own sites, including login data for their subscribers, but this pales in comparison to the power of online platforms, which have a rich set of user data giving them significant advantage over others in the market. Whether it is search data (Google), the social networks of users (Facebook) or generally the devices, locations, interests and behaviours of users online (both), these players have an unimaginable wealth of information – valuable to advertisers and publishers – about who is coming to which news sites, and who is seeing which adverts.”
Google and Facebook are fueled by the amount of personal
data available to their heavily-controlled advertising systems. Subscriptions
inevitably create more user friction and restrict the flow of data. This means
that movement towards subscriptions also forces these companies to step outside their carefully
constructed profit guardrails. For risk-taking Silicon Valley start-ups,
they’re terrible at stepping outside their shareholder comforts. Cairncross hits the nail on the head in calling for regulatory
scrutiny (without
mincing words) of these businesses — in how they deal with
publishers, their position in the advertising market, and how their algorithms
make decisions in promoting journalism.
So, who is the knight in shining armor?
To be clear, there are also positive moves by industry and government to encourage
these developments. Interestingly, the Cairncross Review takes a similar position to the Canadian
government by recommending a tax incentive for subscribers to
news, local news, or investigative content. Again, we agree with this
recommendation and expect it would help support publishers.
To their credit, Google and Facebook have made donations to innovation, journalism
institutes and, in the case of Facebook, run seminars to share best practices
on subscriptions. Again, their profit guardrails make it impossible for real moonshots. So, while these are good efforts, they are not enough.
And then there is Apple. A company with the leadership,
the payment systems, the brand architecture, and lack of dependence on
everything in between Facebook and Google’s profit guardrails (data collection,
advertising). And, as news starts to trickle out on Apple’s plans for a
subscription news service, there is a lot to like in it. However, as I
shared with Ad Age, the reported 50% revenue share is offensive especially
if it also comes with the risk of another intermediary controlling the customer
relationship. I’m frankly surprised they would roll out with anything close to
these terms and hopeful it’s merely a head fake.
I don’t have any proprietary information, but my
back-of-the-envelope numbers on Apple’s offering means that the 100 million
monthly users of Apple News translate to approximate 10-20 million daily users.
Even if 10 million of these users moved into a subscription tier, this
is a mere $120 million in revenue. And according to what’s being reported, a
paltry $60 million would get divided between all of the participating news companies. That math doesn’t add up. If Apple has higher
confidence in their model and ability to expand the market, then they’re going
to need to put some revenue share behind it.
It’s just business. Oh, and the future of
journalism.
One of the main
drivers behind programmatic’s meteoric growth (at least on the demand side) has
been the ability to leverage data to find and buy specific users, out of
seemingly infinite opportunities, wherever they might be online.
After all, this enabling of “audience-based buying” brought marketers closer to their long-held notion of advertising utopia: reaching the right person, with the right message, at the right time, in the right context.
Data Dilemma
It also, theoretically, went a long way to minimizing wasted ad spend and enabled significant performance gains. The ad dollars flowed. But this shift took its toll on the sell-side.
To secure programmatic
budgets (which were growing steadily and taking dollars away from their direct
IO business), publishers had to relinquish control over their hard-won audiences
by allowing cookie access to DSP partners in real time via cookie syncing. In
doing so, they allowed the buy-side to build up and store those valuable
audiences in their own platforms, reducing the need to work with publishers
directly to gain access to or insights about their users.
Regulation Matters
The rapid proliferation of user-based targeting has understandably been followed by recent increased focus on consumer privacy. The GDPR went into effect across EU member states in May of last year, limiting unfettered access to user information and the ability to share that information with multiple parties across the ecosystem.
With passage of the California Consumer Privacy Act (which really means all of the US, given California’s outsized influence) and the likely imminent passage of the ePrivacy Regulation in the EU in the second half of 2019, the push for greater consumer privacy legislation seems unstoppable. France’s recent lawsuit against Google also indicates that common industry solutions and frameworks for satisfying new consumer data collection, usage, and privacy regulations aren’t always holding up to legal scrutiny, making the prospect of sharing data widely across partners and vendors increasingly difficult in the future.
While the enactment of
these measures on such a global scale erodes the value (and calls into question
the long-term viability) of cookie-based buying, it may also open a door for
publishers to regain over their data and audiences and re-assert their position
in the advertising value chain.
Data Diligence
Here are three tips for publishers looking to capitalize on the moment:
Limit access to your
pages
A quick Ghostery check
across a number of premium sites shows just how easy it is for 3rd-parties to
build pools of data on a given publisher’s audiences. Publishers should be
constantly evaluating who has access to their users, and what they’re doing
with the data they’re collecting. Partners who add value, either by enhancing
audience segments with additional data, or providing analytics and attribution
services, should be prioritized. Others, who may be packaging up and reselling
data, should be de-prioritized or even culled. An added benefit to this pruning
process: faster page loading for users.
Use your data to
enhance deals with buyers
Creating greater
audience scarcity (enabled through the culling process mentioned above) opens a
door for publishers to work more closely with advertisers looking to gain
access to their users (and maximize the yield they see from those users).
Striking guaranteed and non-guaranteed deals directly with advertisers based on
1st-party audience segments gives publishers the ability to more closely link
the cost of media to the value of audiences, and thereby extract greater
revenue from their inventory, while also benefiting parties up and down the
supply chain. Advertisers enjoy the confidence of targeting audiences using the
most recent and accurate data pools. And DSPs and SSPs executing the deals
incur less waste (and listening costs), because the inventory is pre-filtered
to match only the audience the buyer wants.
Let advertisers bring
their own data
More than just
building and monetizing their own audiences, publishers should start allowing
advertisers to bring their first-party data to the table. One of the main
benefits to this strategy is that buyers are able to trust the veracity of the
audiences they’re buying. From a publisher’s perspective, it opens up new
options for inventory segmentation that may not have existed within their
proprietary audience pools. Overlaying additional data will always limit scale,
by matching cookies at the source of origin rather than through DSP and SSP
intermediaries. And publishers and advertisers can at least maximize match
rates, minimize data loss, and decrease the risk of inefficient decisioning
down the line – thereby offsetting scale issues to the greatest extent possible
(while also commanding very premium CPMs).
Audience First
Consumer privacy legislation is pushing us to the point where the party closest to the consumer – typically the publisher – will increasingly enjoy exclusive access to those audiences as well. When we add the unique ability to know who that user is and what their interests are, the value soars. Couple this with the decline in quality and scale in the open exchange and what you have is publisher data that hasn’t been this valuable since programmatic began to take off.
Following these three steps will help publishers maximize that value. It will also deliver greater efficiencies and performance to advertising partners as well as privacy consideration to valued users.
About the Author
Mike Pugh is a Senior Solution Consultant at IPONWEB where he acts as the intermediary between clients and IPONWEB’s design, delivery, and engineering teams to create custom ad tech projects. He is responsible for bringing client-specific solutions to market and ensuring a successful execution of the solution, strategy, and opportunity. Mike is currently the team lead on the TrustX SSP as well as other strategic business accounts. Prior to joining IPONWEB, he led a team of 14 programmatic traders at Accuen, Omnicom’s trading desk. Mike has experience managing programmatic buying campaigns across the Autos, Retail, CPG, Financial, and Pharma verticals on most major DSPs. Mike graduated from the University of Iowa with a Bachelor’s Degree in Economics and DePaul University with a Master’s Degree in Economics & Policy Analysis.
Armed with consent decrees, new laws and new hooks into old laws, regulators around the world appear to be fed up with Google and Facebook. With good reason. The Google Facebook duopoly continues to maintain an unhealthy dominance of the digital marketplace. Nearly all of the growth in digital advertising continues to go to these two companies.
The impact is significant. Revenue that might otherwise flow
into a healthy marketplace of known and emerging competitors instead is flowing
directly to only two uber-dominant companies. As a result, a well-known
strategy for startups was to simply position themselves for acquisition by the duopoly
but over time and big tech scrutiny those opportunities have even evaporated
resulting now in a “kill zone” where no venture capital will even invest. For
more mature businesses, the counteracting strategy has been to merge and,
thereby, try to achieve competing scale. So, it’s either get big or get bought—if
you can.
Meanwhile, devoid of any real competition, Facebook and
Google find themselves increasingly at odds with consumers. A new unappealing revelation
seems to hit every few weeks. This is not a healthy environment that fosters
growth and stability, much less any sort of ethical data framework that matches
consumer expectations.
Here come the
Regulators
Recently, the French data protection authority fined Google
$50 million euro for violations of the General Data Protection Authority. In
its ruling, they took issue with the unlawful way in which Google asked
consumers for consent. Essentially, Google appears to offer a take-it-or-leave
consent to consumers with pre-checked boxes and little transparency. Particularly
from such a dominant company, the regulators said this approach is a no no.
Google’s tech lobbyists will say this ruling is bad for all of industry. But really…it’s just bad for Google. The French specifically noted that Google’s dominant market position played a big part in the ruling. The reality is that there are not very many companies whose business model (or at least the anti-competitive dominance of it) is so utterly dependent on tracking and targeting consumers everywhere they go. Not all of industry wants to be lumped in with the toxic duopoly. Nor should they. Many companies offer a value proposition to consumers (and advertisers) that doesn’t hinge on web-wide tracking.
Then, there is news that the Federal Trade Commission (FTC) is close to issuing a record-setting fine on Facebook for violating a consent decree. The FTC’s previous record fine for a consumer privacy case was in 2012 levied at (you guessed it!) Google for $22.5 million.
At this point, even the state regulators are getting involved. The DC Attorney General recently sued Facebook for failing to protect consumers’ data in their Cambridge Analytica scandal. It’s a simple approach that many other attorneys general may follow.
More than Money is at
Stake
All that said, the headlines seem to focus on the amount of
the fines. However, what I’m watching most closely are the behavioral or
structural changes that come as a result. For instance, will the FTC require
tighter oversight by Facebook of their third party partners? Will the FTC
recommend that Facebook divest itself of Instagram and WhatsApp, thereby
creating instant competition in the social media space? And, how will the EU’s
enforcement of GDPR impact Google’s ability to track consumers’ every move?
As the French ruling seems to insist, Google may have to
unbundle its requests for consent which would surely lead to fewer consumers
agreeing to be tracked by Google. It’s subtler – but if EU regulators are
successful in ensuring that companies are plainly and transparently asking for
consent for secondary uses of data, will that improve the prospects of
companies which have trusted relationships with consumers?
At the end of the day, a $50 million euro fine probably
feels like an annoying mosquito bite for a company with over $100 billion in
annual revenue. The biggest benefits for consumers and the marketplace will
only come if there are changes in how the duopoly operates.
For the last two years, Congress has increasingly focused on big tech platforms. Lawmakers have summoned executives, consumer advocates, and academics for hearings on consumer privacy, market dominance, data breach scandals and perceived political bias. However, with the exception of a bill to amend Section 230 of the Communications Decency Act to clarify companies’ liability for facilitating sex trafficking on their sites, Congress has not yet moved significant legislation to regulate the tech industry.
Some are wondering whether a new Democratic majority in the House means Congress will start legislating, particularly with the President saying that he is interested in discussing with Democrats whether or how to regulate the technology industry. Let’s take a look at how the 2018 midterm election results might impact a few high-profile tech issues.
Market Dominance of Big Platforms
Even before the elections, Democrats and Republicans raised concerns about the outsized influence of Google, Facebook, and Amazon – albeit for different reasons. Many Democrats are concerned about the data surveillance business models of big tech companies. Republicans, on the other hand, distrust social media algorithms, which they believe favor liberal points of view over conservative voices.
I expect both parties’ concerns will only grow, especially as we get closer to the 2020 Presidential election. And those concerns might fuel action on other issues. Congress is not likely to do anything to directly address the dominance of the big technology platforms. The expectation is that the Department of Justice and the Federal Trade Commission will work with Congress to provide guidance on what, if anything, lawmakers should do. Thus far, discussions have focused on how various digital business models function and what remedies or regulations would be needed to enhance consumer experiences.
Net Neutrality
Over the past decade, Congress and the Federal Communications Commission (FCC) have been bickering about net neutrality without final resolution. Most recently, the Republican-controlled FCC rolled back net neutrality regulations promulgated by President Obama’s FCC.
With Democrats set to take the reins in the House, they are more likely to move a bill to reinstate those Obama-era net neutrality rules. But the Republican-controlled Senate is likely to completely ignore any bill sent over by the House. That dynamic could change if the courts rule on the pending challenges to the FCC’s rollback. Until the incessant shouting stops, this is likely an insular technology discussion and fodder for future campaigns.
Consumer Privacy
Congress has held dozens of hearings on consumer privacy over the years. This year was no different. However, the tone of the conversation has changed dramatically just in the past few months. As mentioned before, many Democrats have long advocated for a consumer privacy bill of rights, saying that Congress needs to step in to protect consumers. Now, a few key Republicans agree. Many in the industry are calling for the same as the California Consumer Privacy Act and the EU’s General Data Protection Regulation go into effect.
Just last month, Senate Commerce Committee Chairman John Thune (R-SD) stated, “It is increasingly clear that industry self regulation in this area is not sufficient.” Clearly momentum was building on this issue before the midterm elections and there is reason to believe it will continue. Senator Thune is likely to move into a leadership position in the Senate, thus relinquishing his position as Chairman of the Senate Commerce Committee.
However, the next likely chairman is Senator Roger Wicker (R-MS), who signed a bipartisan letter with three other key senators in September saying they want to work with the Administration to “provide consumers with more transparency and control over the collection and use of (consumers’) personal data while preserving the innovation at the heart of the internet.” The House Energy and Commerce Committee is likely to be chaired by Representative Frank Pallone (D-NJ), who included consumer privacy legislation on his agenda for 2019. On top of that, a host of other policymakers, including Senators Wyden (D-OR), Blumenthal (D-CT), and Markey (D-MA), have recently introduced their own legislative proposals. Comprehensive consumer privacy legislation appears to have early bipartisan and bicameral support.
All that said, our nations’ founders intentionally made it difficult to pass legislation. And, 2019 will be no different. For any meaningful legislation to advance through both chambers of Congress, Democrats and Republicans will have to put aside partisan differences long enough to find middle ground. That will be hard for elected officials to do in the current highly polarized political environment. Odds-makers would say the chances are slim that Congress can enact comprehensive consumer privacy legislation, but it’s got a better chance than most.
