IAB Says FTC Digital Ad Inquiry May End Up Costing Billions

The advertising industry is pushing back against the Federal Trade Commission’s exploration of rulemaking as relates to collecting personal data to serve ads, which the FTC is calling a crackdown on “commercial surveillance.” The Interactive Advertising Bureau (IAB) says the FTC’s definition of that loaded term is “so broad” that any resultant rulemaking “could criminalize the Internet itself” as well as potentially reduce digital ad spending by billions of dollars. FTC chair Lina Khan says “potentially unlawful practices may be prevalent” in the “endless hoovering up of sensitive user data” that has become common practice in ad targeting.

“Firms now collect personal data on individuals at a massive scale and in a stunning array of contexts,” Khan said in the FTC’s Advanced Notice of Proposed Rulemaking (ANPR), issued in August.

In a response issued this week, the IAB says the agency is “flouting Congress and its own rules” while “claiming broad regulatory authority, which bipartisan lawmakers have repeatedly denied.”

“The Internet is built on the continuous exchange of data between devices and servers — without these data exchanges, the Internet and its social, cultural, economic, and personal benefits would not exist,” writes IAB executive VP for public policy Lartease Tiffith, emphasizing how digital advertising supports “free and low-cost online content and services.”

Eight of the top 10 U.S. websites “are mostly free due to digital advertising,” IAB says.

The FTC’s move “could have an important impact on targeted and digital advertising, which would seem to fit into the agency’s definition of ‘commercial surveillance’ as the business of collecting, analyzing, and profiting from information about people,” writes TV Technology.

Based on the language in its ANPR, the FTC could “use its authority over unfair and deceptive practices to declare ‘essentially all’ consumer data use off limits,” reports Multichannel News, going on to report that “if the end result was effectively that bad, IAB said, ‘it is likely that between $32 billion and $39 billion of advertising and ecosystem revenue would move away from the open web by 2025.’”

The FTC’s contemplated regulations could have “devastating consequences on the over 17 million American jobs that are supported by data-driven advertising,” IAB writes, noting that “most of those jobs were created by small firms and self-employed individuals in all 50 states and across many sectors. In fact, self-employed individuals and people working in small teams of five or fewer people made up 19 percent of the Internet job total.”

Khan says the FTC’s goal “is to begin building a robust public record to inform whether the FTC should issue rules to address commercial surveillance and data security practices and what those rules should potentially look like.”