How Government Action Has Helped Keep the Adtech Industry in Check

The public sector has played a critical role in strengthening privacy protections and limiting the excesses of the adtech industry. What's next?

Last week we laid out our 5 predictions for 2024, including the belief that a company will face a major fine over their data policies as U.S. and E.U. In an era when Big Tech’s strength and resources are at their peak, government action is critical for holding the industry accountable. 

The Rise of Surveillance Capitalism

While we are now accustomed to a world where companies have endless troves of information about us, this was not always the case. Imagine time-traveling back to 1998, just 25 years ago. Bill Clinton was president, Michael Jordan was winning championships, and most people had not heard of Google because it had just been founded. 

1998 - a different world in terms of data privacy and acceptable length of shorts

Explaining the modern adtech industry and ecosystem of bulk data collection would be completely foreign in a world where most people were not online. Even the concept of online advertising was a novelty, as the first online banner ad (shown below) ran in 1994 by Wired.com had to instruct viewers to click. Future events like the Facebook-Cambridge Analytica scandal, when up to 87 million people’s data were used to manipulate election outcomes, would be absurd.

The world’s first banner ad - literal clickbait!

It’s remarkable to think of just how quickly we entered “The Age of Surveillance Capitalism,” as termed by Harvard professor Shoshana Zuboff. From the launch of search engines to the birth of adwords to the explosion of social media, in just two decades, we went from the internet being questioned as a fad to a world where every consumer’s data was being collected, processed, and sold as a commodity to increase advertisers’ profits. This was not a plan hatched by an evil mastermind. Rather, it was driven by market forces where the incentives rewarded companies that grew their audience, collected data and kept consumers in the dark about what was happening. 

We are now entering the Age of AI with even greater speed, which is why it is so critical to be thoughtful about how to ethically shape our technology.

Government Action

Unsurprisingly, consumers eventually learned what was happening and got fed up. After years of building privacy-focused political coalitions, laws like the EU’s GDPR (2016) and California’s CCPA (2018) were passed and introduced serious consequences for misusing people’s data. 

For example, between 2017 and 2019, Google was fined over €8 billion by the EU for antitrust behavior related to Android devices, unfairly dominating the search business, and abusive practices in online advertising. The Cambridge Analytica scandal led to a record fine in the U.S., as the FTC fined Meta $5 billion for privacy violations in 2018. Other tech giants like Amazon and Twitter have also been hit with fines for abusing user data. 

Regulatory actions extend to more than just fines. Just a month ago, the FTC banned Rite-Aid for using facial recognition surveillance technology for five years after it was shown their software disproportionately flagged women and people of color as shoplifting risks. The agency also banned a data broker from selling location data after allegations they sold sensitive location data and failed to obtain informed user consent. 

These types of fines and regulatory actions represent a tidal shift in the fact that companies and advertisers, for the first time, are facing restrictions on abusing user data. There is now a cost for violating user’s data dignity, and an entire industry has emerged to manage compliance and correct behavior across firms to ensure they properly manage the data they collect and use. Increased enforcement action, paired with growing consumer demand for privacy protections, means companies are now prioritizing privacy features for the first time since the rise of the modern internet. That’s real progress. 

What’s Next for Adtech?

As we enter the Age of AI and undergo another generational shift in the adtech industry, our hope is that future technology promotes human flourishing and takes privacy into consideration from the beginning. A few of the many questions we are asking as we watch this next year include:

• Will large AI models become key players in the adtech industry? AI-powered competitors to Google are being created and hyped up. If they manage to successfully scale, will they remain content with a subscription revenue model or will they look to run advertisements? 

• How will publishers treat consumer data going forward? In the face of structural headwinds, it is possible that publishers will be fed up with giving away consumer data. Will this be a reason publishers and adtech companies restructure their underlying relationship?

• How will AI tools shape the advertising industry? Everything from the creation of marketing materials, the targeting of consumers, and the training of marketing models can be improved with AI. Will existing privacy laws be sufficient to protect consumers from harm with these new tools?

Government and public leaders may have waited too long to take on adtech in the last few decades, but history does not have to repeat itself. Privacy should not be an afterthought in AI-powered advertising like it has been in the past. 

Tell us your thoughts! What policies would you like to see put in place to protect privacy in the Age of AI? What are you most concerned about?

What We’re Reading On Ethical (and Non-Ethical) Tech This Week:

• Is A.I. the Death of I.P.? - The New Yorker

• It’s Time for the Government to Regulate AI. Here’s How. - Politico

• The Sad Truth of the FTC’s ‘Historic’ Privacy Win - Wired

• UK privacy watchdog to examine practice of web scraping to get training data for AI - The Record

• Mark Zuckerberg’s new goal is creating artificial general intelligence - The Verge