VC Says U.S. Ad Industry Could Lose If BT Moves Offshore
No one wants to argue against protecting consumer privacy. Those who fight for privacy just want companies that use BT advertising to give consumers a way to protect their information. But Liew agrees with me when I say that people lost their privacy with the dawn of the Internet.
He takes it one step further, however, and says consumers lost their privacy long before the Web. There is far more targeting going on with direct mail and other forms of traditional marketing than online, he says, adding it's not quite clear why the online industry can't just regulate itself. "That's what I believe, but I don't get to make the decision," he says.
Liew points to proposed legislation in the United Kingdom that leans toward an opt-in approach to protect consumer privacy -- not just for BT, but across many forms of online ad targeting. He says this will affect a lot of companies, in particular ad networks and companies that deploy BT through third parties.
These ad networks are driving significant amounts of revenue for a host of online media companies, especially the small ones that have to scale to build their own sales force. Take the six-person companies trying to get an engineering startup going that can't afford to build a sales force, relying instead on ad networks. If their ability to do BT is limited or eliminated, those startups will earn a lot less revenue.
Although government officials continue to discuss privacy, the issue should remain the viability of many of these Internet startups that support BT, Liew says. Don't misunderstand, advertisers will still have access to BT technology, but those that support the targeting will move offshore, he says.
The discussion brings me back to early 2000 when the electronic industry began to move manufacturing faculties offshore. U.S. manufacturing plants closed. Then U.S. companies offshored information technology (IT) support, transcription services, and customer service.
BT will start to move offshore just as online gambling did. And it will stay there if the government restricts online targeting. "You'll see the job creation start happening outside the U.S. rather than inside the U.S., and that to me is the more pertinent issue," Liew says. Unfortunately, non-BT supporters have framed the issues around protecting people's privacy and not saving or creating jobs for American workers and American entrepreneurs, he adds. That's still a difficult battle to fight.
When it comes to offshore online gambling, U.S. legislators are starting to sing a different tune. "Now you have [House Financial Services Committee Chairman] Barney Frank proposing deregulation of online gambling because he's realized the jobs and value created outside the U.S," he says. "The U.S. is missing out on tax dollars. This is an area of concern that we should all be sweating."
Liew says legislation only needs to pass in one jurisdiction for it to become adopted worldwide because the Internet has no boundaries.