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House Subcommittee Takes Up Targeted Digital Advertising

The House Digital Commerce Subcommittee drilled down on targeted digital advertising in a hearing Thursday (June 14) the degree to which it was praised by committee leadership as the model upon which the net's free info rests or panned as a threat to privacy depending mostly on which side of the aisle you were sitting. 

The chairman of that committee emphasized the value of consumer data collection and targeted marketing to the GDP-boosting online ad marketplace, while the ranking member talked of scandals and inescapable tracking and potential privacy violations.

Subcommittee chairman Bob Latta (R-Ohio) said the idea behind the hearing was to look at the benefits as well as the "emerging, high-profile challenges," arguably the highest-profile being the Russian election influence ads that have drawn calls, and some action, for better identifying who is placing those digital ads.

The use of "challenges" was telling. Other legislators have labeled them "scandals" or "problems" in need of government fixes.

That importance of the internet ad ecosystem was established early on, with Latta citing Interactive Advertising Bureau statistics that the "ad-supported internet ecosystem generated over $1 trillion to the U.S. economy in 2016," and was responsible for over 10 million ads.

That contribution was driven by data collection and ad targeting, he pointed out, which are among the hot-button issues in the digital ad space given incidents like the Facebook's sharing of user information with Cambridge Analytica, which in turn built profiles for targeted digital political ads.

But Latta was not ready to hammer edge players over their data-collection business models for supporting their free online services. He said the growth of online advertising's contribution to GDP can be tied to "online data collection and subsequent ad targeting." 

He pointed out that many of the largest companies like Facebook and Google are supported by that user data for targeted ads. He said that while some of those companies clearly have dominance in the space, he also said the benefits of that data collection "trickle down" to small businesses, say a local greenhouse geotargeting nearby customers or placing ads on gardening web sites targeting gardeners. 

He conceded that to some consumers such targeting can feel like an invasion of privacy, as well as the risks of data collection. Then there was the issue of ad fraud and bots posing as actual customers, which undermine the trust of the digital ad models.

But ultimately, he pointed out, those ad-based platforms support the internet as a means of communications, connections, and was where Americans were increasingly shopping and working.

Ranking member Jan Schakowsky (D-Ill.) was less sanguine about the online ad experience, talking about ads being annoyed and being tracked online. She said most Americans don't like to be tracked and want more control over their information.

She talked about consumers being tracked wherever they go online, which would only increase in an internet of things (IoT) world. She talked about Russian election ad meddling, ads for junk financial products targeted to communities of color, and said the potential for discrimination was an ongoing issue that Congress had not sufficiently addressed. 

She also suggested the Federal Trade Commission does not have sufficient enforcement authority to protect consumers information and how it is used and shared. She referred to the Facebook "scandal" in making her point.

She said she was glad the subcommittee was having the hearing, but asked what was next, saying it should be data privacy legislation. "People are fed up with big corporations tracking their every move online and controlling what they see," she said. "They are demanding action and it is time for Congress, for this committee, to deliver.

Rep. Frank Pallone (D-N.J.) echoed Schakowsky's concern about the data collection of targeted advertising, citing numerous middlemen and agencies "lurking in the background" tracking web sites visited and even mouse movements. He talked of the detailed profiles that can be built from that info and include not only facts but inferences, leading to algorithmic discrimination by age or race.

He said moves by Facebook and Bing to block predatory payday loans was not enough.