Staff report rejects opt-in systems to keep ad revenues flowing
It's a Weigh-In
In a recently released staff report, the FTC offered its latest thoughts on online advertising – the first such insight following the arrival of new leaders this year. The report also serves to support the FTC's exploration of such issues in addition to events such as the FTC's Hearings on Competition and Consumer Protection in the 21st Century.
The report was written in response to the National Telecommunications and Information Administration's (NTIA) request for comment on online privacy issues. Back in September, the NTIA, on behalf of the Department of Commerce, sought comments on a proposed approach to consumer privacy that establishes "user-centric privacy outcomes" to underpin federal consumer privacy policies.
Why the call to action now? It may be that the federal government has often been caught flat-footed by the rising tide of privacy regulation from the states and foreign governments, which we've covered before (see here and here). The FTC acknowledges this in its report, asserting that perhaps the time has come to consider a new national approach that would benefit both consumers and competition.
The Takeaway
The FTC doesn't make any real waves with its recommendations, calling for "a balanced approach that protects both consumer privacy and innovation" as viewed through the areas of security, transparency, control and FTC enforcement. Notably, the FTC argues "privacy standards that give short shrift to the benefits of data-driven practices may negatively affect innovation and competition." The FTC also discusses its "unique" abilities to balance consumer interests in privacy, innovation and competition because of its history promulgating risk-based approaches, jurisdiction over both competition and consumer protection issues, rule-making authority, and institutional expertise on a number of topics related to data privacy and security.
These cautious pronouncements provide the tenor for the whole document; however, among its many calls for context-appropriate disclosures and balanced approaches, one of the few concrete recommendations is the argument that "if consumers were opted out of online advertisements by default ... the likely result would include the loss of advertising-funded online content." The better approach, according to the FTC, "takes consumer preference, context ... and form into account," with context requiring the most consideration.
Online advertisers can breathe easy; opt-in policies are not on the table, and the current online privacy regime won't be changing drastically anytime soon.
Nonetheless, the NTIA's request, and the FTC's response, may serve as an early warning: Federal authorities have taken notice of legislative unrest regarding online privacy, and they're likely to be preparing a response.
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