January 23, 2019
Google and Facebook had a rough 2018 regarding data privacy, but the advertisers haven’t abandoned the two tech giants and their profits continue to soar. This year may be even tougher as concern about privacy grows. In fact, French regulators levied a 50 million Euro (about $57 million) fine on Google, for not clearly disclosing how data collected across its sites are used to personalize ads. Experts believe the behavior of big tech companies will be a “major topic” at the upcoming World Economic Forum in Davos, Switzerland.
The Wall Street Journal reports that, at Davos last year, “tech companies were on the defensive … against complaints that ranged from fomenting political polarization to building artificial intelligence that will displace millions of workers.” Now, “tech-industry lobbyists say they are planning to support U.S. privacy legislation over the coming year, in part to avoid contending with a patchwork of laws like one passed last year in California.”
The impact of stricter privacy rules could “benefit big, incumbent companies that already have access to large amounts of user data and can spend more heavily on legal-compliance efforts,” whereas some argue that, “if strictly applied, [it] will force significant changes to how the biggest tech companies collect and analyze individuals’ personal information — undercutting their advertising businesses and weakening their advantage over existing or potential new competitors.”
Cliqz compared the share of websites that included Google’s advertising trackers two months before and after the General Data Protection Regulation (GDPR) took effect, finding Google enjoyed a 0.9 percent increase. But “Facebook’s share declined 6.7 percent,” and “the share for the other top 50 online-ad businesses fell more than 20 percent.” The “longer term impact” on the tech giants, says WSJ, is “harder to predict.”
The New York Times reports on the 50 million Euro fine the French data protection authority imposed on Google for its lack of transparency on how collected data is used to “present personalized advertisements” — the largest such penalty under the GDPR. This is the EU’s fourth penalty under the new regulations, and “Europe’s experience is being closely watched by policymakers in the United States, who are considering a new federal privacy law.”
European regulations also “set the bar with stricter enforcement of antitrust laws against Google and other tech behemoths,” fining Google “a record €4.3 billion last year for abusing its power in the mobile phone market.” The most recent GDPR fine “takes aim at Google’s business model, which turns data on users into narrowly targeted ads.” Google’s current fine could have been $4+ billion under the law, representing 4 percent of global revenue.
French authorities pointed out that, because Google has about 20 different services, its data collection is “particularly massive and intrusive.” Google said it is “studying the decision to determine our next steps.” Austrian lawyer Max Schrems, who founded NOYB, one of the groups that filed the original complaint against Google, noted the opacity of the company’s consent box, “No one who reads it understands… I don’t know what they do with my data, and I’m a lawyer.”
According to Paris law firm Frieh Associés partner Raphaël Dana, “Silicon Valley companies should expect more penalties across Europe as a result of the data protection law.”
Google, Facebook Spend Big on U.S. Lobbying Amid Policy Battles, Reuters, 1/22/19
Google Says Data Is More Like Sunlight Than Oil, One Day After Being Fined $57 Million Over Its Privacy and Consent Practices, Business Insider, 1/22/19