The ad industry lashes out at new FCC privacy rules

Last week, the Federal Communications Commission (FCC) announced sweeping new privacy rules that restrict how internet service providers (ISPs) can use and share the data they collect from their customers.

The rules require that ISPs obtain customer consent before they are permitted to use and share their “sensitive” data for purposes such as ad targeting. The FCC’s definition of “sensitive” data includes web browsing and app history.

The FCC’s new rules were controversial since they were proposed, and passed by a narrow 3-2 vote. The Chairman of the FCC, Tom Wheeler, has been a staunch advocate for stricter rules. “It is the consumer’s information. It is not the information of the network the consumer hires to deliver that information. What this item does is to say that the consumer has the right to make a decision about how her or his information is used,” he said.

A fight for the future

The ad industry, however, sees things different. In particular, advertisers are especially upset with the fact that the browsing and app history data cannot be used without consumer opt-in. This kind of data is generally not considered “sensitive” by industry standards, and is used by major ad companies like Google and Facebook.

“The FCC’s new sweeping privacy rules decision is unprecedented, misguided, counterproductive, and potentially extremely harmful,” the Association of National Advertisers (ANA) said in a statement. “ANA is committed to seeing these rules undone, either by court challenges or action on Capitol Hill to reverse this extreme overreach by the agency.”

In a letter to its members, the ANA raised the possibility that the FCC’s new rules will not only hurt advertisers, but consumers. It explained:

This overreach by the FCC would result in consumers having to opt out repeatedly throughout the day as they browse the web or be overloaded with a constant drumbeat of opt-in choices. In either case, this will have severe negative impacts for the on-line and mobile experience, resulting in harm to consumers and threatening the financial underpinnings of the Internet ecosystem.

It’s not clear that the dire picture the ANA paints is realistic or will actually come to pass, but the ability of the ad industry to fight the FCC’s rules could be critical to the future of digital advertising. That’s because while the FCC doesn’t have broad power to regulate the entire industry, the rules that will be applied to ISPs could pave the way and increase calls for similar rules from other regulatory bodies that do have oversight over other parts of the industry.