Ad Industry Prepares To Fight Potential FTC Privacy Rules

Almost one year ago, the watchdog Accountable Tech urged the Federal Trade Commission to issue rules that could outlaw “surveillance advertising,” loosely defined as serving ads to people based on their activities across websites and apps.

On Thursday, the Federal Trade Commission took concrete action toward curbing those ads. Specifically, the agency said it was exploring the possibility of crafting privacy rules, and sought public comment on a broad swath of topics, including online ad targeting.

All three Democratic commissioners voted to move forward with the initiative, while both of the agency's Republicans dissented.

The agency has not yet proposed any specific rules, but the tone of Thursday's advance notice of proposed rulemaking suggests that most commissioners are skeptical of current practices.



The FTC's notice lists a host of potential harms, including that “sophisticated digital advertising systems reportedly automate the targeting of fraudulent products and services to the most vulnerable consumers.”

That's not the only potential harm flagged by the agency, which also said ad targeting can result in illegal discrimination based on factors like race and sex.

The document also asks for input on what it describes as “commercial surveillance” -- a term the ad industry considers pejorative -- and defines the phrase as the “collection, aggregation, analysis, retention, transfer, or monetization of consumer data and the direct derivatives of that information.”

Thursday's move is only the beginning of a rulemaking process likely to take years. In fact, the FTC's rulemaking process typically takes so long that Congress conceivably could move forward with legislation -- such as the bipartisan American Data Privacy and Protection Act -- before the FTC enacts any regulations.

Privacy groups are cheering the FTC's new initiative, but the ad industry is already gearing up to oppose potential restrictions.

“It is imperative that the FTC act judiciously ... and preserve opportunities for essential, innovative data uses, particularly to enable data-driven advertising and marketing” David LeDuc, vice president for policy of the industry self-regulatory group Network Advertising Initiative stated Thursday.

“We take the commission at their word that they aren’t prejudging the outcomes of this rulemaking, although we are concerned about their repeated use of the loaded term ‘surveillance’ to describe even established business practices that benefit consumers, small businesses, and a competitive marketplace,” LeDuc added.

The umbrella group Privacy for America, which includes a coalition of ad industry organizations, said Thursday that Congress, not the FTC, should set privacy standards.

That group also suggested that it will challenge any FTC rules in court, by arguing that agencies lack the authority to issue regulations on “major questions” unless explicitly directed to do so by Congress.

“If ever there was an issue that implicated the ‘major questions doctrine,’ it is the role of data which has driven innovation, growth, and competition in the American economy,” Stu Ingis, counsel for the Privacy for America coalition, stated Thursday.

Ingis told MediaPost that the ad industry would also challenge restrictive privacy rules by arguing that they violate the First Amendment.

Ad industry groups, as well as the cable and broadband lobby, have contended that restrictions on ad targeting could violate the First Amendment by restricting companies' ability to receive and share truthful information.

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