White House’s Big Tech reforms are a warning shot to the ad industry

The news: The Biden administration has announced six principles for Big Tech reform, backing up bipartisan support for antitrust legislation targeting technology giants like Meta and Amazon.

Titled “Enhancing Competition and Tech Platform Accountability,” the reforms go beyond tech’s market power and focus on the use of data for advertising purposes, implicating the digital advertising industry in regulators’ renewed focus on data privacy.

The reforms: The suggested reforms seek to limit Big Tech’s hold on key markets and restrain behavior like the promotion of a company’s own products in search results, as well as to repeal parts of legislation that give tech platforms special protections for hosting harmful content.

  • The reforms also tackle data standards in the digital advertising industry, foreshadowing potential changes for the sector should they be included in legislation.
  • One reform titled “Provide robust federal protections for Americans’ privacy” calls for “clear limits on the ability to collect, use, transfer, and maintain our personal data, including limits on targeted advertising.” It calls for especially strict rules in regards to sensitive data like geolocation and health information, particularly reproductive health.
  • The new principles come days after the Federal Trade Commission (FTC) sued ad tech firm Kochava for selling advertising data that could be used to determine individuals’ location, shopping practices, and health decisions.

Impact on the ad industry: The FTC’s suit against Kochava is part of a larger campaign reigning in what it's calling “commercial surveillance,” suggesting that widely accepted digital advertising practices such as purchasing from data brokerages overstep their bounds.

  • Those practices came under extra scrutiny following the Supreme Court’s decision in Dobbs v. Jackson Women’s Health Organization, which put the power to decide the legality of abortion back in the hands of state governments. Since then, data from brokerages and communications on Meta’s social media platforms have been used in high-profile incidents to pursue legal action against women seeking abortions.
  • The FTC’s singling out of Kochava was something of a shot across the bow at the ad industry, foreshadowing regulatory scrutiny that could force changes. Kochava called the suit a “fundamental misunderstanding of Kochava’s data marketplace business and other data businesses,” arguing that it is no different from other firms in the industry.
  • The wary eyes of regulators come during a period of industry transition. The removal of Apple’s Identifier for Advertisers and introduction of its AppTrackingTransparency policy have sent shockwaves throughout the sector, affecting ad spending and Big Tech revenues.
  • More changes are on the horizon with the phasing out of third-party cookies on Google Chrome, and no agreed-upon replacement for old standards has emerged.

Looking forward: Until a bill is revealed to the public, it’s unclear how data privacy regulation will affect the advertising industry.

  • Digital advertising is a $602 billion industry, and it’s only going to grow more dramatically over the next several years. Its sheer size and money-making potential may give the White House and Congress pause to shake things up too dramatically, especially given concerns about a potential recession.

This article originally appeared in Insider Intelligence's Marketing & Advertising Briefing—a daily recap of top stories reshaping the advertising industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.

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