Italy: Artificial Intelligence Meets AdTech: Digital Disruption, Data Privacy And Future Perspectives

Last Updated: 6 December 2018
Article by Giangiacomo Olivi

Artificial Intelligence (AI) is reaching out with nearly every sector today: from retail to banking, from agriculture to healthcare, from finance to media and in other areas. In fact, it comes with no surprise that emerging Advertising Technologies (AdTech) are also joining forces with AI to keep up with the recent hype.

AdTech is a relatively new field, which developed as fast as the World Wide Web started spreading from the mid-nineties on, thanks to the growing demand for online marketing content. For instance, that period saw the first appearance of cookies, ad networks and targeted banner ads.

Actually, AdTech revolutionized the way brands connect with their audiences and the way advertisers (demand side) and publishers (supply side) interact with each other for the instant buy/sell of ad spaces and ad campaigns.

Ever since the nineties, advertisers, publishers and marketers started focusing more and more on the intersection between big data and customers' behavior. This in order to lay the foundations for the development of future online advertising techniques. Consequently, new technologies, analytics and data science became the three key components at the very center of any AdTech endeavor. 

Regulators also had to adapt to the rapid shift change brought by AdTech and placed at the crossroad between data privacy, consumer protection and IT law. Especially in the EU, this led to the rise of laws and regulations specifically addressing data privacy in the online world, such as the ePrivacy and eCommerce Directive, GDPR and the future ePrivacy Regulation.

AI will boost AdTech one-step further and introduce scenarios that will challenge current legal and industry standards, while requesting new and more dynamic approaches to online advertising. So, how is this going to happen and at what future perspectives should we expect?

According to recent reports, the use of AI in AdTech is set to increase exponentially in the coming years. This is mainly because of companies' appetite for ever-more precise predictive analytics, consumer-centric algorithms and effective online behavioral advertising campaigns. 

As of today, we already have practical examples of AI-powered tools applied to AdTech, such as ad network mediation, ads positioning and hyper-personalization of online contents, as well as automated programmatic. The amount of data currently available both online and offline makes all this possible and is going to be more and more crucial for the further evolution of AI in AdTech. 

Nonetheless, AI cannot be a key for change per se since it requires proper training, constant update, quality information patterns and, most importantly, a data processing ethics. GDPR contributed to mainstream privacy by design and by default principles, while introducing provisions aimed at protecting individuals' rights and freedoms in a machine-dominated and hyper-connected world. 

Despite the above, the rise of AI is already questioning GDPR's main pillars and principles. In particular, this is true for online processing activities centered on AdTech, such as automated analytics performed through behavioral advertising based on cookies, advanced device fingerprinting, metadata collection and much else. 

Are GDPR and the future ePrivacy Regulation fit enough to stand AI in AdTech? That is unclear. However, online advertising has always been tricky from a data protection perspective. In fact, as AI spreads and enters each corner of the advertising industry (from hyper-personalization to predictive analytics) it becomes more and more clear that artificial intelligence already is "the next big thing" in AdTech. 

Algorithms providing us with personal recommendations on films, music, products and books are already there, while the number of commercial chat bots and virtual online assistants is growing. In addition, real time bidding on ad networks based on AI will soon revamp the way re-targeting and re-marketing partnerships and agreements worked so far.

In fact, this raises a series of data protection issues currently discussed by regulators and industry players. For instance, which legal basis could better allow AdTech providers and publishers to provide tailored online experiences and customer journeys? Is the legitimacy of users' informed consent still realistic and up-to-date in the age of AI and the internet 4.0, or has it become a mere "pig-leaf"? Do existing (and future) laws and regulations really protect users' decisions concerning the ever-more sophisticated use of their personal data in the online environment? 

Those are all very urgent questions, yet answers are still a work in progress and not only in the AdTech sector. In any case, in a context of digital transformation producer and buyers of AI-powered commercial technologies should be able to guarantee privacy and data minimization, while being perceived as trustworthy from both consumers and regulators. 

As GDPR puts it, could we say that AI in AdTech allows an automated processing of personal data likely to affect the rights and freedoms of individuals in a significant way, so that it requires mandatory consent? On the contrary, could we consider AI-powered advertising technologies as a part of our everyday online experience? Both stances may well be true, although a case-by-case analysis is always necessary.

Privacy enhancing technologies, data ethics and sound legislative initiatives could provide some answers, although independent industry group initiatives and sector-specific standards are also on the rise. Among others, the emergence of Consent Management Platforms (CMPs) represents one of the newest trends in AdTech. 

CMPs are software designed to support ad network providers and publishers in the optimization of online consent collection practices aimed at serving online behavioral advertising and profiled ads to online users. Although they are not mandatory by law, CMPs are spreading fast in various sectors, with particular regard to media and entertainment, while becoming known to regulators as well.
This not only because of the presence of many AdTech vendors offering a wide variety of combinations and integrations between CMPs and existing web properties, but also in light of future changes that the upcoming ePrivacy Regulation will be introducing soon. 

CMPs may therefore represent a possible trait d'union between the existing AdTech ecosystem and its future developments under the sign of AI and the arrival of new European ePrivacy rules – which we already analyzed in a series of FAQ here.

As for the Italian landscape, AdTech is subject to both the former and the new Italian Data Protection Code, as well as to the Italian Data Protection Authority's (the Garante) guidance and past case law. Such legal and regulatory framework is currently under review from a GDPR perspective and expected to change soon, also in view of the final approval of the ePrivacy Regulation. 

As of today, the Garante's view on AdTech was most likely limited to cookies and other tracking technologies and it did not focus too much on new disruptive technologies such as AI or the Internet-Of-Things yet. In fact, AI is only under the spotlight of the national debate when it comes to investments and digital transformation, rather than to sector-specific guidelines and regulatory efforts.

However, it is only a matter of time until both the Italian Parliament and, as a consequence, the Garante will step-up and mark their stance on AI and AdTech, as well as on their most important privacy issues. 

For instance, the Garante may (or may not) follow the recent lead of a recent European Data Protection Board's statement on ePrivacy saying that legitimate interest will never be a legitimate legal basis for data processing through online tracking tools.

Ultimately, the intersection between AI and AdTech will become increasingly important in the future: not only because global digitalization is turning users and business towards an online only dimension, but also in light of the growing importance of the balance between data protection and the deep personalization of nowadays' internet browsing experience.

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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