Congress Introduces New Bill to End Targeted Digital Advertising by Big Tech

Minting money from targeted advertising by Big Tech giants may become a thing of the past now that three members of the U.S. Congress are seeking to ban the use of personal information for digital advertising. Representatives Anna Eshoo (CA), Jan Schakowsky (IL) and Cory Booker (NJ), all democrats, introduced the Banning Surveillance Advertising Act in both the House as well as the Senate this week.

The Banning Surveillance Advertising Act reflects growing concerns over the effect of surveillance-based personalization of ads that largely relies on protected class information such as race, gender, religion and personal data purchased from data brokers.

To say this act would dent the cash flows of Google and Meta would be an understatement considering targeted ads are the bread and butter of the two tech giants. Digital advertising has been a subject of debate over the years as lawmakers have sought to bring the business model under stringent regulations, citing privacy concerns and misinformation.

“The ‘surveillance advertising’ business model is premised on the unseemly collection and hoarding of personal data to enable ad targeting,” said Rep. Eshoo. “This pernicious practice allows online platforms to chase user engagement at great cost to our society, and it fuels disinformation, discrimination, voter suppression, privacy abuses, and so many other harms. The surveillance advertising business model is broken.”

If the bill is passed and enacted as law by the U.S. Congress, as the name suggests, surveillance and behaviorally-targeted ads would be outlawed. They will attract fines of up to $5,000 per incident and other violation charges enforced by the Federal Trade Commission (FTC).

User segmentation based on devices, contact information, unique identifiers, and browsing history would be prohibited. It would also entail a ban on the use of protected classes such as race, color, ethnicity, national origin, gender, gender identity and expression, religion, disabilities, sexual orientation, etc. (actual or perceived), or third-party data for targeted ads.

See More: 5 New Antitrust Bills Seek to Rein in Big Tech’s Anticompetitive Conduct

However, contextual advertising, i.e., ads based on the content the user is interacting with and the use of non-personal information or first-party data, will still be allowed. Location-based ads, provided they are defined by broad areas such as city municipality or states (but not zip codes), are also allowed.

Targeted ads, also called programmatic advertising, have emerged as a cheap way of expanding the reach to potential customers through search engines and social networks. However, they are made possible by collecting and storing user preferences, location, characteristics, and other private information, by large companies such as Google, Facebook, and data brokers.

Existing privacy laws make it difficult for advertisers to collect data by mandating user consent, but none have banned it altogether. This signals an ever-growing dissatisfaction over companies that service the space.

The summary of the bill proposal features strong language and scathing criticism of the “exploitative” business model that “exacerbates manipulation, discrimination, misinformation, extremism.” It is criticized for “major societal harms, including voter suppression, racist housing discrimination, sexist employment exclusions, political manipulation, and threats to national security.”

Moreover, the security of the data is also a pertinent question. Cyberthreats from malicious threat actors looking to make a buck, or state-sponsored cybercriminals aiming to erode the security fabric to influence public opinion is on the rise, especially over the last couple of years.

The bill is supported by public interest organizations such as Accountable Tech, Ranking Digital Rights, Anti-Defamation League (ADL), Electronic Privacy Information Center (EPIC), Demand Progress, and privacy-focused search engine providers DuckDuckGo, Neeva, email service Proton, and messaging service Beeper.

DuckDuckGo founder and CEO Gabriel Weinberg cited his own company’s example. “DuckDuckGo is proof you can run a successful and profitable ad-based business without building profiles on people,” he said.

“Behaviorally targeted ads aren’t just creepy or annoying, they’re also incredibly dangerous to society. Companies say they’re building profiles on people and monitoring their behavior to give them better services, but in reality, these profiles are used to manipulate and discriminate against them for profit. We support this bill and urge the House Energy and Commerce Committee to consider the Banning Surveillance Advertising Act in their next consumer protection hearing,” Weinberg addedOpens a new window .

Sean Vitka, Senior Policy Counsel at Demand Progress painted a rather grim picture of the situation. “Surveillance advertising is eroding Americans’ rights with horrifying speed. It has led to some of the shadiest companies in the world compiling detailed dossiers on countless people that are ripe for exploitation by any parties willing to pay for it, from malicious hackers to foreignintelligence services,” he said. “Congress must tackle these issues head-on and ban this dangerous practice before it’s too late.”

See More: Big Tech vs GDPR: How to Align Compliance with Revenue Generation

And as expected, at the opposing end of the spectrum is Google, which relied on advertising for $53.13 billion or 81.59% of its total $65.118 billion Q3 2021 revenue. The search behemoth said, “There’s a better way. Congress shouldn’t rush to judgment, and should instead take more time to consider the unintended consequences of these bills.”

Google is referring to several issues it says will rise with the passing of the Banning Surveillance Advertising Act, and other bills such as the recently passedOpens a new window (16-6) American Innovation and Choice Online Act by the Senate Judiciary Committee, Platform Competition and Opportunity Act, Ending Platform Monopolies Act, etc.

Google said this will be a boost for competitors, “eliminate helpful features, expose people to new privacy and security risks, weaken America’s technological leadership, and will be detrimental to the American competitiveness since it gives “a free pass to foreign companies.”

Apple also responded to these bills and penned a letter to the Senate Judiciary Committee obtained by Bloomberg. “After a tumultuous year that witnessed multiple controversies regarding social media, whistle-blower allegations of long-ignored risks to children, and ransomware attacks that hobbled critical infrastructure, it would be ironic if Congress responds by making it much harder to protect the privacy and security of Americans’ personal devices,” wrote Tim Powderly, senior director of government affairs at Apple. “Unfortunately, that is what these bills would do.”

For Apple, the bills touch multiple nerves. They would enable sideloading on Apple devices, reduce or eliminate App Store commissions (popular as Apple Tax), and other hotly contested issues for the company.

Meta, the parent company of Facebook, WhatsApp, and Instagram, which are the largestOpens a new window (2.895 billion MAUs), third-largest (2 billion MAUs) and fourth-largest (1.393 billion MAUs) social media platforms, respectively, is also expected to be impacted.

Before it pivoted to its metaverse ambitions, Facebook was already dealing with a hit to its ad revenue, thanks to Apple’s App Tracking Transparency in iOS 14.5 onwards. This declined the company’s Q3 2021 revenue by 0.23% quarter over quarter. Facebook or Meta’s ad revenue stands at $28.276 billion, 97.46% of $29.01 billion in Q3 2021.

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