• by Ray Schultz , Columnist, March 29, 2017

The headline for Thom Wheeler’s op-ed piece in The New York Times today says it bluntly: “The G.O.P. Just Sold Your Privacy.” Wheeler is referring to the House vote on Tuesday, blocking FCC privacy rules passed during the Obama administration.

This rollback would allow cable firms and wireless providers to exploit your “browsing history, shopping habits, your location and other information gleaned from your online activity” any way they want, writes Wheeler, the former chairman of the Federal Communications Commission.

We’re sure he’s right. But consumers won’t be the only victims of this foolish piece of deregulation: The real losers will be brands that market online. They have just lost control of their own data.

Nobody has analyzed this yet, but here’s one possible scenario, based on historical precedent. There was a roaring controversy years ago about American Express using data from the transactions it processed to send catalogs and other product offerings to cardholders.

The argument took place behind closed doors, and memory has faded on some points. But American Express was competing with its own clients -- direct marketing companies that accepted the AmEx card.

If  L.L. Bean was selling jogging shorts, American Express could see that and offer jogging shorts (a hypothetical case). Obviously, it didn’t go over well: Catalogers argued that these consumers were their customers.

The program went away. But fast-forward to the digital age. The ISPs and telecoms will now be in a position to do the same thing. They can take the behavior prompted by your seven- or eight-figure marketing budget and use it to peddle data.

In short, they’ll be getting a free ride on your marketing spend — on SEO, email, mobile and display. It will end up in court, and there will be no easy political formula for judging it. And even if the broadband providers cut deals with you, it will be an attribution mess.

What’s next? Will credit card processors also have the right to sell your sales data?

The next problem is even bigger. The privacy theory in Europe (and much of the rest of the world) is based on affirmative opt-in, not a dubious opt-out. As Jess Nelson reported in MediaPost on Tuesday, Flybe and Honda and were hit with fines in the UK for sending “spam.” But if we’re reading it correctly, those emails would scarcely cause a ripple in the U.S.

Martin Abrams, executive director of the Information Accountability Foundation, told MediaPost last fall that “you can think with data and draw insights in the U.S. That’s a competitive advantage because thinking with data is an unregulated activity. Outside the U.S., you have to have a justification even to process data.”

Clearly, we’re going against the European rules. Is this U.S. marketer’s version of Brexit? 

So just what rights will U.S. consumers have under this scheme? Sen. Jeff Flake (R-AZ) asserted on TV last night that people can opt out. (He didn’t seem too sure of it). But another article in today’s Times states that broadband providers “today let you 'opt out' of using their data, although figuring out how to do that can be difficult.”

The article adds that the “digital rights group Electronic Frontier Foundation suggests you might pay to use a virtual private network, which funnels your internet traffic through a secure connection that your provider can't see into. But good VPNs aren't free, you have to figure out which ones you can trust,” he concluded.

Meanwhile, you the consumer can forget about the line between anonymous digital data and personally identifiable data. As Abrams has said, “it’s inevitable that the shadow you and the real you will come together.”

But let’s be fair. The Obama-era FCC rules had not yet taken effect, so Republicans are arguing that nothing has changed. They’re right — it’s a wash. What has been altered is the bipartisan accord that existed on the privacy issue. It wasn’t always good for marketers — even the pro-business GOP took a strong privacy stance. But it was consistent. Well, no more.