UK’s antitrust watchdog takes a closer look at Facebook-Giphy

Potential threats to the free flow of GIFs continue to trouble the UK’s competition watchdog.

Facebook’s $400M purchase of Giphy, announced last year, is now facing an in-depth probe by the CMA after the regulator found the acquisition raises competition concerns related to digital advertising. It now has until September 15 to investigate and report.

The watchdog took a first look at the deal last summer. It kept on looking into 2021. And then last week the CMA laid out its concerns — saying the (already completed) Facebook-Giphy acquisition could further reduce competition in the digital advertising market where the former is already a kingpin player (with over 50% share of the display advertising market).

The regulator said it had found evidence that, prior to the acquisition, Giphy had planned to expand its own digital advertising partnerships to other countries, including the UK.

“If Giphy and Facebook remain merged, Giphy could have less incentive to expand its digital advertising, leading to a loss of potential competition in this market,” it wrote a week ago.

The CMA also said it was worried a Facebook-owned Giphy could harm social media rivals were the tech giant were to squeeze the supply of animated pixels to others — or require rivals to sign up to worse terms (such as forcing them to hand over user data which it might then use to further fuel its ad targeting engines, gaining yet more market power).

On March 25 the companies were given five days by the regulator to address its concerns — by offering legally binding proposals intended to allay concerns.

An in-depth ‘phase 2’ investigation could have been avoided if concessions were offered which were acceptable to the regulator but that is evidently not the case as the CMA has announced the phase 2 referral today. And given the announcement has come just five working days after the last notification it appears no concessions were offered.

We’ve reached out to Facebook and the CMA for comment.

A Facebook spokesperson said: “We will continue to fully cooperate with the CMA’s investigation. This merger is good for competition and in the interests of everyone in the UK who uses Giphy and our services — from developers to service providers to content creators.”

While Facebook has already completed its acquisition of Giphy, the CMA’s investigation continues to put a freeze on its ability to integrate Giphy more deeply into its wider business empire.

Albeit, given Facebook’s dominant position in the digital advertising space, its business need to move fast via product innovation is a lot less pressing than years past — when it was building its market dominance free from regulatory intervention.

In recent years, the CMA has been paying close mind to the digital ad market. Back in 2019 it reported report substantial concerns over the power of the adtech duopoly, Google and Facebook. Although in its final report it said it would wait for the government to legislate, rather than make an intervention to address market power imbalances itself.

The UK is now in the process of setting up a pro-competition regulator with a dedicated focus on big tech — in response to concerns about the ‘winner takes all’ dynamics seen in digital markets. This incoming Digital Market Unit will oversee a “pro-competition” regime for Internet platforms that will see fresh compliance requirements in the coming years.

In the meanwhile, the CMA continues to scrutinize tech deals and strategic changes — including recently opening a probe of Google’s plan to depreciate support for third party cookies in Chrome after complaints from other industry players.

In January it also announced it was taking a look at Uber’s plan to acquire Autocab. However on Monday it cleared that deal, finding only “limited indirect” competition between the pair, and not finding evidence to indicate Autocab was likely to become a significant and more direct competitor to Uber in the future.

The regulator also considered whether Autocab and Uber could seek to put Autocab’s taxi company customers that compete against Uber at a disadvantage by reducing the quality of the booking and dispatch software sold to them, or by forcing them to pass data to Uber. But its phase 1 probe found other credible software suppliers and referral networks that the CMA said these taxi companies could switch to if Uber were to act in such a way — leading to it to clear the deal.

#advertising-tech, #antitrust, #competition-and-markets-authority, #digital-advertising, #europe, #facebook, #giphy, #privacy, #social, #united-kingdom

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State lawmakers override veto, become first in nation to tax online ads

None of these companies are keen to hand over a slice of their revenue to Maryland.

Enlarge / None of these companies are keen to hand over a slice of their revenue to Maryland. (credit: Malik Evren | Getty Images)

Maryland today became the first state in the nation to impose a tax on digital advertising revenue, overriding an earlier veto from the governor and incurring the wrath of piles of Big Tech businesses that are all but guaranteed to sue.

The bill (PDF) levies a state tax of up to 10 percent on the annual gross revenues of all digital advertising aimed at users inside Maryland state. Proceeds from the new tax are explicitly earmarked to go into an education fund dedicated to improving Maryland public schools.

“Right now, they don’t contribute,” the bill’s primary sponsor, Sen. Bill Ferguson (D) said of the bill. “These platforms that have grown fast, and so enormously, should also have to contribute to the civic infrastructure that helped them become so successful.”

Read 12 remaining paragraphs | Comments

#advertising, #amazon, #digital-advertising, #digital-advertising-gross-revenues-tax, #facebook, #google, #maryland, #policy, #taxation, #taxes

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Cannabis marketing startup Fyllo acquires DataOwl

Fyllo has acquired DataOwl, a company offering marketing and loyalty tools for cannabis retailers.

Fyllo said it already works with 320 cannabis retailers across 25 states (plus Puerto Rico and Jamaica). According to Chief Marketing Officer Conrad Lisco, this acquisition allows the company to offer the industry’s “first end-to-end marketing solution,” combining consumer data, digital advertising, regulatory compliance (thanks to Fyllo’s acquisition of CannaRegs last year) and, through DataOwl, CRM and loyalty tied into a business’ point-of-sale system.

As an example, founder and CEO Chad Bronstein (previously the chief revenue officer at digital marketing company Amobee) said that retailers will be able to use the Fyllo platform to send promotional texts to regular customers while, crucially, ensuring that those campaigns are fully in compliance with state and local regulations. He added that eventually, the platform could be used beyond cannabis, in other regulated industries.

“Beauty, gambling, etc. — the same things need to happen in every regulated industry, they would all benefit from loyalty and compliance automation,” Bronstein said.

In addition, he argued that mainstream brands are increasingly interested in using data around cannabis and CBD consumers, as borne out in a Forrester study commissioned by Fyllo.

Lisco said this acquisition comes at a crucial time for the cannabis industry, with dispensaries classified as essential businesses in many states, as well as continuing momentum behind marijuana legalization.

“In 2020, cannabis came of age,” he said. “We would say it went form illicit to essential in 10 months … 2021 is really about watching endemic [marijuana] brands try to scale, so that they can capitalize on the explosive growth. They’ve historically been excluded from the kinds of integrated marketing capabilities that other non-endemic [mainstream] brands get to use when go to market.”

Bronstein said Fyllo aims to bring those capabilities to marijuana brands, first by bringing the its compliance capabilities into the DataOwl product. The company also aims to create a national cannabis loyalty platform, allowing a marijuana retailer in one state to easily expand its marketing capabilities into other states in a compliant fashion.

The financial terms of the acquisition were not disclosed. DataOwl co-founders Dan Hirsch and Vartan Arabyan are joining Fyllo, as is the rest of their team, bringing the company’s total headcount to 110.

“By integrating with Fyllo, DataOwl’s solutions will reach the widest possible audience via the industry’s most innovative marketing platform,” Hirsch said in a statement.

#advertising-tech, #cannaregs, #crm, #dataowl, #digital-advertising, #fundings-exits, #fyllo, #startups

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‘Brand tech’ company You & Mr. Jones adds $60M to its Series B

You & Mr. Jones announced today that it has added $60 million in new funding from Merian Chrysalis, bringing the Series B round announced in December to a total of $260 million.

The round values the company at $1.36 billion, post-money.

You & Mr. Jones takes its name from CEO David Jones, who founded the company in 2015. After having served as the CEO of ad giant Havas, Jones told me that his goal in starting what he called “a brand tech group” was to provide marketers with something that neither traditional agencies nor technology companies could give them.

“At that moment, the choices were to go work with an agency group, which is great at brand and marketing, but they don’t understand tech, or with a tech company, which will only ever recommend their platform and don’t have the same [brand and marketing] expertise,” he said.

So You & Mr. Jones has built its own technology platform to help marketers with their digital, mobile and e-commerce needs, while also investing in companies like Pinterest and Niantic. And it makes acquisitions — last year, for example, it bought influencer marketing company Collectively.

You & Mr. Jones has grown to 3,000 employees, and its clients include Unilever, Accenture, Google, Adidas, Marriott and Microsoft. In fact, Jones said that as of the third quarter of 2020, its net revenue had grown 27% year over year.

That’s particularly impressive given the impact of the pandemic on ad spending, but Jones said that’s one of the key distinctions between digital advertising and the broader brand tech category, which he said has grown steadily, even during the pandemic, and which also sets the company apart from agencies that are “digital and tech in press release only.”

“We’re not an ad agency, we’ll never acquire agencies,” he said. “We have the technology platform, process and people to deliver all of your end-to-end, always-on content — social, digital, e-commerce and community management.”

In addition to the funding, the company is announcing that it has hired Paulette Forte, who was previously senior director of human services at the NBA, as its first chief people officer.

“The brand tech category didn’t even exist before You & Mr Jones was established,” Forte said in a statement. “The company became a true industry disruptor in short order, and growth has been swift. In order to keep up with the momentum, it’s critical to have systems in place that help talent develop their skills, encourage diversity and creativity, and find pathways to improving workflow. I am excited to join the leadership team to drive this crucial work forward.”

#advertising-tech, #chrysalis, #collectively, #david-jones, #digital-advertising, #enterprise, #funding, #fundings-exits, #merian-chrysalis, #nba, #startups

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You’ll never believe what this email thread says about the ad-funded ‘open’ web

Among a number of claims on U.K. adtech lobby group MOW’s website is the canonical biggie that “Advertising funds the open web.”

This coalition of “marketers,” whose members are not being made public despite its sweeping claims to love web openness — lest, MOW says, Google rain down punishment upon its ranks of “top companies from across the globe” — recently complained to the U.K.’s competition regulator about the tech giant’s plan to end support for tracking cookies.

If you didn’t already guess it the “OW” in MOW’s acronym stands for “Open Web.” Aka (unknown) Marketers for an Open Web.

And today the CMA duly announced it is investigating Mountain View’s “Privacy Sandbox.” Though, as yet, no conclusions have been reached on whether Google’s plan threatens competition.

In truth, a variety of business models support open access to information on the internet.

Wikipedia, for example — surely the canonical example of the open web — relies upon reader donations to keep the lights on as a not-for-profit.

While — on the “exclusive access” side — crowdfunding sites like Patreon and the subscription platform Substack offer tools for creators to solicit regular monetary subscriptions from fans and backers to unlock gated content.

But it’s instructive to note how many online publishers have shifted, year over year, from free (ad-supported) access to content to selling subscriptions for (paywalled) content, often in addition to running ads.

Whether it’s the Financial Times, the New York Times, the Telegraph or Business Insider, the list of pay-to-access news sites keeps getting longer. Much like the consent flows that (also) pop up asking to process visitors’ information in order to target them with ads.

TechCrunch joined the ranks of subscription publications almost two years ago when we launched Extra Crunch. The main TC site continues to be free to access supported by ads and our events business. (NB: In 2021 our events are going fully virtual — which means, as a brief, bonus aside, they’ve never been so open and accessible!)

So how come all these paywalls are being thrown up if advertising funds the open web, as MOW claims?

The concise answer is that digital advertising pays publishers so poorly it can’t support producing quality content at the required scale on its own — thanks to myriad adtech intermediaries, click fraud and the big two: Google and Facebook; aka, the adtech duopoly, who take the lion’s share of revenue generated by digital advertising. 

“We have found that intermediaries (the largest of which is Google) capture at least 35% of the value of advertising bought from newspapers and other content providers in the U.K.,” the CMA reported last summer, in a major market study.

Consumers turning to ad blockers to escape creepy ads and prevent privacy-hostile trackers from keeping real-time tabs on their digital activity and systematically passing this intel to scores of unknowns in an ad auction process that the U.K.’s own data protection regulator has said isn’t very lawful, is another relevant factor here.

Online advertising certainly funds something. But is that something the open web? That looks rather debatable at this point.

I bring all this up merely to provide context for a chance detail in the MOW story that I want to share — as it illustrates some of the issues in this high stakes tug-of-war between publishers, digital marketing and adtech players and a handful of big (ad)tech versus the poor, frustrated eyeballs of the average internet user.

It’s an important power struggle.

One which threatens to keep steamrollering internet users’ right to protect their personal information from exploitation (and wider security-related risks) by, in the latest twist, co-opting competition regulators to erect barriers to pro-privacy reform. Assuming, that is, the CMA ends up naively swallowing dubious claims about what advertising does for the “open” internet — when evidence of what it actually does is but a click and a paywall/tortuously long consent to “share” your private data with hundreds of unknown firms away.

The regulator’s announcement today suggests it’s alive to the dysfunction surrounding internet users’ privacy and will take more than a superficial look at that issue — though if the ICO is the main rep in the room batting for users’ interests here that’s suboptimal, to say the least, given the latter’s storied reluctance to enforce the actual law against adtech.

But here’s the tidbit — which comes by way of a PR agency working for MOW. Earlier today it CC’d me into an email thread in which several staffers had been discussing monitoring the CMA news on behalf of its client.

I’m not naming the agency or any of the individuals involved to spare their blushes but in the thread — which begins with “FYI — The CMA are just about to announce a formal investigation into Google. We’ve drafted a comment which we will be circulating shortly” — staff can be seen asking to share logins to a number of newspaper websites and/or start a free trial in order to access newspaper copy for free, i.e., without having to pay for new subscriptions. 

“Do we have an FT login? If so, could you get hte [sic] story they’ve just written on MOW off for me?” asks one staffer.

Shortly afterward there’s a discussion about starting a free trial on the Telegraph’s website as they talk about collating relevant coverage into a single document to be able to monitor developments for MOW.

One staffer chips in to warn “you need to put credit card details in to start a trial” — before suggesting the other has a go “to see if you find a way around it.”

This person follows up by saying they’ll “let you know if I manage to find a way around it.”

So, mmm, irony much?

Redacted screengrab showing part of an email thread in which MOW’s PR agency discusses how to access newspaper sites to access copy to collate coverage on behalf of their client. Image Credits: TechCrunch.

In light of MOW’s advocacy for a “vibrant” ad-supported open web — which its website implies is aligned with the interests of publishers, marketers and adtech providers alike, i.e., not just with opaque adtech interests — it seems pretty relevant that an agency working for the industry group is uninterested, to put it politely, in paying for relevant newspaper content while being paid to lobby on adtech’s behalf.

On its website MOW argues that letting Google switch off third-party tracking cookies will be bad news for publishers because it says it will cut off marketers’ ability to measure ad campaign performance across different sites — claiming that will result in less effective ads that yield a lower return and thus less cash remitted by marketers to publishers.

However the CMA’s recent deep dive study of the digital marketing sector found an industry so opaque and riddled with black box algorithms that the regulator listed “lack of transparency” itself as a competition concern.

“Platforms with market power have the incentive and ability to increase prices, for example, or to overstate the quality and effectiveness of their advertising inventory,” it warned in the report. “They can take steps to reduce the degree of transparency in digital advertising markets, reducing other publishers’ ability to demonstrate the effectiveness of their advertising and forcing advertisers to rely on information and metrics provided by those platforms. And the lack of transparency undermines the ability of market participants to make the informed decisions necessary to drive competition. The upshot of all of these issues is that competition is weakened and trust in the market is eroded.”

Given that overarching assessment, who would take an opaque coalition of marketers’ word for it that current-gen cookie tracking of the entire internet yields irreplaceably valuable performance metrics?

Or that such privacy-hostile tracking is the only viable way to support a “vibrant open web”?

“The lack of transparency is particularly severe in the open display market where publishers and advertisers rely on intermediaries to manage the process of real-time bidding and ad serving but cannot observe directly what the intermediaries are doing or, in some cases, how much they are being charged,” the CMA goes on, sharpening its concerns about the extent of the obfuscation that cloaks the practices of adtech middlemen. “Market participants such as newspapers and advertisers typically do not have visibility of the fees charged along the entire supply chain and this limits their ability to make optimal choices on how to buy or to sell inventory, reducing competition among intermediaries.”

One thing is clear: The adtech industry needs a whole lot of disinfecting sunlight to be shone in. And that clarification process will surely demand substantial reform.

Refusing to change how things are done by claiming there’s simply no other way to preserve the web “as we know it” is as ridiculous an idea as it is anti-innovation in sentiment.

Returning to the misfired email thread, we contacted MOW’s PR agency to ask whether or not the account includes expenses for relevant newspaper subscriptions. It told us these would come out of a central agency fund. Additionally — having checked back on it — the agency said it did in fact have subscriptions to the newspaper sites in question.

The spokesperson explained that the staffers involved just hadn’t realized at the time — in the heat of the “day-to-day PR” moment (and whilst wrangling remote-working-impacted comms). And, presumably, as all those subscription login screens threw up barriers to accessing the content they needed in the heat of the moment.

This (senior) spokesperson blamed themselves for what they described as a “cock up” — including the soliciting of a “paywall workaround” — going on to take full mea culpa responsibility and emphasizing it had nothing to do with MOW or with the MOW account.

But, well, if an agency working for an adtech lobby group whose key claim is that “ads support the open internet” is unable to access the online content they need to do their job without a subscription, what does that tell us about how much of an open internet the advertising industry is actually funding right now?

#adtech, #advertising-tech, #competition, #digital-advertising, #europe, #google, #media, #paywalls

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Is the internet advertising economy about to implode?

Advertising drives the modern digital economy. Whether it’s reading news sites like this one or perusing your social media feeds, advertising is the single most important industry that came out of the development of the web. Yet, for all the tens of billions of dollars poured into online advertising just in the United States alone, how much does that money actually do its job of changing the minds of consumers?

Tim Hwang has a contrarian stance: it doesn’t. In his new book published as a collaboration between Logic Magazine and the famed publisher Farrar, Straus and Giroux, he argues in “Subprime Attention Crisis” that the entire web is staring into an abyss of its own making. Advertising is overvalued due to the opaqueness of the market, and few actors are willing to point out that the advertising emperor has no clothes. Much like the subprime mortgage crisis, once people come to realize the true value of digital ads, the market could crater. I found the book provocative, and I wanted to chat further with Hwang about his thoughts on the market.

Hwang formerly worked at Google on policy and has developed many, many projects across a whole swath of tech-oriented policy issues. He’s currently a research fellow at Georgetown’s Center for Security and Emerging Technology.

This interview has been condensed and edited for clarity.

TechCrunch: Let’s dive straight into the book. How did you get started on this topic of the “subprime attention economy”?

Tim Hwang: There were two incidents where I was like, something is going on here. I was having conversations with a couple of friends who are product managers at Facebook, and I remember making the argument that that there’s a lot of evidence to suggest that this whole adtech thing is maybe just mostly garbage. The most interesting thing that they said was, “Oh, like, advertising works but we can’t really tell you how.” That’s like talking to someone from the national security establishment and they’re like, “Oh yeah, we can stop terrorists but, like, we can’t tell you exactly how that goes down.”

I think one thing that got me really interested in it was how opaque a lot of these things are. The companies make claims that data-driven programmatic advertising really is as effective as it is but then they’re kind of strangely hesitant to show evidence of that.

Second, I was doing research with a lot of people who I think you’d rightly call sort of tech critics — strong critics of the power that these platforms have. I think one of the most interesting things is that even among the strongest critics of tech, I think a lot of them have just bought this claim that advertising and particularly data-driven advertising is as powerful as industry says it is.

It’s a kind of strange situation. Tech optimists and tech pessimists don’t agree on a whole lot, but they do seem to agree on the idea that this sort of advertising works. That was what I wanted to explore in the book.

Why don’t we talk a bit about the thesis?

The thesis of the book is really quite simple, which is you look around and basically our modern experience of the web is almost entirely shaped by advertising. The way social media is constructed, for example, is largely as a platform for delivering ads. Engagement with content is really good for creating profiles and it’s really good for delivering ads. It really has been the thing that has powered the current generation of companies in the space.

As you sort of look closer though, it really starts to resemble the market bubbles that we know of and have seen in other places. So explicitly, the metaphor of the book is the subprime mortgage crisis. I think the idea though is that you have this market that is highly opaque, there’s a lot of evidence to suggest that the value of ads is misidentified, and you have a lot of people interested in boosting it even in spite of all that.

For the book, I wanted to look at that market and then what the internet could look like after all this. Are there other alternative business models that we want to adopt for the web going forward?

#adtech, #advertising-tech, #book-review, #digital-advertising, #facebook, #finance, #google, #online-advertising, #tim-wu

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We need universal digital ad transparency now

Dear Mr. Zuckerberg, Mr. Dorsey, Mr. Pichai and Mr. Spiegel: We need universal digital ad transparency now!

The negative social impacts of discriminatory ad targeting and delivery are well-known, as are the social costs of disinformation and exploitative ad content. The prevalence of these harms has been demonstrated repeatedly by our research. At the same time, the vast majority of digital advertisers are responsible actors who are only seeking to connect with their customers and grow their businesses.

Many advertising platforms acknowledge the seriousness of the problems with digital ads, but they have taken different approaches to confronting those problems. While we believe that platforms need to continue to strengthen their vetting procedures for advertisers and ads, it is clear that this is not a problem advertising platforms can solve by themselves, as they themselves acknowledge. The vetting being done by the platforms alone is not working; public transparency of all ads, including ad spend and targeting information, is needed so that advertisers can be held accountable when they mislead or manipulate users.

Our research has shown:

  • Advertising platform system design allows advertisers to discriminate against users based on their gender, race and other sensitive attributes.
  • Platform ad delivery optimization can be discriminatory, regardless of whether advertisers attempt to set inclusive ad audience preferences.
  • Ad delivery algorithms may be causing polarization and make it difficult for political campaigns to reach voters with diverse political views.
  • Sponsors spent more than $1.3 billion dollars on digital political ads, yet disclosure is vastly inadequate. Current voluntary archives do not prevent intentional or accidental deception of users.

While it doesn’t take the place of strong policies and rigorous enforcement, we believe transparency of ad content, targeting and delivery can effectively mitigate many of the potential harms of digital ads. Many of the largest advertising platforms agree; Facebook, Google, Twitter and Snapchat all have some form of an ad archive. The problem is that many of these archives are incomplete, poorly implemented, hard to access by researchers and have very different formats and modes of access. We propose a new standard for universal ad disclosure that should be met by every platform that publishes digital ads. If all platforms commit to the universal ad transparency standard we propose, it will mean a level playing field for platforms and advertisers, data for researchers and a safer internet for everyone.

The public deserves full transparency of all digital advertising. We want to acknowledge that what we propose will be a major undertaking for platforms and advertisers. However, we believe that the social harms currently being borne by users everywhere vastly outweigh the burden universal ad transparency would place on ad platforms and advertisers. Users deserve real transparency about all ads they are bombarded with every day. We have created a detailed description of what data should be made transparent that you can find here.

We researchers stand ready to do our part. The time for universal ad transparency is now.

Signed by:

Jason Chuang, Mozilla
Kate Dommett, University of Sheffield
Laura Edelson, New York University
Erika Franklin Fowler, Wesleyan University
Michael Franz, Bowdoin College
Archon Fung, Harvard University
Sheila Krumholz, Center for Responsive Politics
Ben Lyons, University of Utah
Gregory Martin, Stanford University
Brendan Nyhan, Dartmouth College
Nate Persily, Stanford University
Travis Ridout, Washington State University
Kathleen Searles, Louisiana State University
Rebekah Tromble, George Washington University
Abby Wood, University of Southern California

#advertising-tech, #column, #digital-advertising, #digital-marketing, #facebook, #google, #media, #online-advertising, #opinion, #snapchat, #social, #targeted-advertising, #tc, #twitter

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Google-Fitbit deal to be scrutinized in Europe over data competition concerns

In a set-back for Google’s plan to acquire health wearable company Fitbit, the European Commission has announced it’s opening an investigation to dig into a range of competition concerns being attached to the proposal from multiple quarters.

This means the deal is on ice for a period of time that could last until early December.

The Commission said it has 90 working days to take a decision on the acquisition — so until December 9, 2020.

Commenting on opening an “in-depth investigation” in a statement, Commission EVP Margrethe Vestager — who heads up both competition policy and digital strategy for the bloc — said: “The use of wearable devices by European consumers is expected to grow significantly in the coming years. This will go hand in hand with an exponential growth of data generated through these devices. This data provides key insights about the life and the health situation of the users of these devices.Our investigation aims to ensure that control by Google over data collected through wearable devices as a result of the transaction does not distort competition.”

Google has responded to the EU brake on its ambitions with a blog post in which its devices & services chief seeks to defend the deal, arguing it will spur innovation and lead to increased competition.

“This deal is about devices, not data,” Google VP Rick Osterloh further claims.

The tech giant announced its desire to slip into Fitbit’s data-sets back in November, when it announced a plan to shell out $2.1BN in an all-cash deal to pick up the wearable maker.

Fast forward a few months and CEO Sundar Pichai is being taken to task by lawmakers on home turf for stuff like ‘helping destroy anonymity on the Internet‘. Last year’s already rowdy antitrust drum beat around big tech has become a full on rock festival so the mood music around tech acquisitions might finally be shifting.

Since news of Google’s plan to grab Fitbit dropped concerns about the deal have been raised all over Europe — with consumer groups, privacy regulators and competition and tech policy wonks all sounding the alarm at the prospect of letting the adtech giant gobble a device maker and help itself to a bunch of sensitive consumer health data in the process.

Digital privacy rights group, Privacy International — one of the not-for-profits that’s been urging regulators not to rubberstamp the deal — argues the acquisition would not only squeeze competition in the nascent digital health market, and also for wearables, but also reduce “what little pressure there currently is on Google to compete in relation to privacy options available to consumers (both existing and future Fitbit users), leading to even less competition on privacy standards and thereby enabling the further degradation of consumers’ privacy protections”, as it puts it.

So much noise is being made that Google has already played the ‘we promise not to…’ card that’s a favorite of data-mining tech giants. (Typically followed, a few years later, with a ‘we got ya sucker’ joker — as they go ahead and do the thing they totally said they wouldn’t.)

To wit: From the get-go Fitbit has claimed users’ “health and wellness data will not be used for Google ads”. Just like WhatsApp said nothing would change when Facebook bought them. (Er.)

Last month Reuters revisited the concession, in an “exclusive” report that cited “people familiar with the matter” who apparently told it the deal could be waved through if Google pledged not to use Fitbit data for ads.

It’s not clear where the leak underpinning its news report came from but Reuters also ran with a quote from a Google spokeswoman — who further claimed: “Throughout this process we have been clear about our commitment not to use Fitbit health and wellness data for Google ads and our responsibility to provide people with choice and control with their data.”

In the event, Google’s headline-grabbing promises to behave itself with Fitbit data have not prevented EU regulators from wading in for a closer look at competition concerns — which is exactly as it should be.

In truth, given the level of concern now being raised about tech giants’ market power and adtech giant Google specifically grabbing a treasure trove of consumer health data, a comprehensive probe is the very least regulators should be doing.

If digital policy history has shown anything over the past decade+ (and where data is concerned) it’s that the devil is always in the fine print detail. Moreover the fast pace of digital markets can mean a competitive threat may only be a micro pivot away from materializing. Theories of harm clearly need updating to take account of data-mining technosocial platform giants. And the Commission knows that — which is why it’s consulting on giving itself more powers to tackling tipping in digital markets. But it also needs to flex and exercise the powers it currently has. Such as opening a proper investigation — rather than gaily waving tech giant deals through.

Antitrust may now be flavor of the month where tech giants are concerned — with US lawmakers all but declaring war on digital ‘robber barons’ at last month’s big subcommittee showdown in Congress. But it’s also worth noting that EU competition regulators — for all their heavily publicized talk of properly regulating the digital sphere — have yet to block a single digital tech merger.

It remains to be seen whether that record will change come December.

“The Commission is concerned that the proposed transaction would further entrench Google’s market position in the online advertising markets by increasing the already vast amount of data that Google could use for personalisation of the ads it serves and displays,” it writes in a press release today.

Following a preliminary assessment process of the deal, EU regulators said they have concerns about [emphasis theirs]:

  • “the impact of the transaction on the supply of online search and display advertising services (the sale of advertising space on, respectively, the result page of an internet search engine or other internet pages)”
  • and on “the supply of ‘ad tech’ services (analytics and digital tools used to facilitate the programmatic sale and purchase of digital advertising)”

“By acquiring Fitbit, Google would acquire (i) the database maintained by Fitbit about its users’ health and fitness; and (ii) the technology to develop a database similar to Fitbit’s one,” the Commission further notes.

“The data collected via wrist-worn wearable devices appears, at this stage of the Commission’s review of the transaction, to be an important advantage in the online advertising markets. By increasing the data advantage of Google in the personalisation of the ads it serves via its search engine and displays on other internet pages, it would be more difficult for rivals to match Google’s online advertising services. Thus, the transaction would raise barriers to entry and expansion for Google’s competitors for these services, to the ultimate detriment of advertisers and publishers that would face higher prices and have less choice.”

The Commission views Google as dominant in the supply of online search advertising services in almost all EEA (European Economic Area) countries; as well as holding “a strong market position” in the supply of online advertising display services in a large number of EEA countries (especially off-social network display ads), and “a strong market position” in the supply of adtech services in the EEA.

All of which will inform its considerations as it looks at whether Google will gain an unfair competitive advantage by assimilating Fitbit data. (Vestager has also issued a number of antitrust enforcements against the tech giant in recent years, against Android, AdSense and Google Shopping.)

The regulator has also said it will further look at:

  • the “effects of the combination of Fitbit’s and Google’s databases and capabilities in the digital healthcare sector, which is still at a nascent stage in Europe”
  • “whether Google would have the ability and incentive to degrade the interoperability of rivals’ wearables with Google’s Android operating system for smartphones once it owns Fitbit”

The tech giant has already offered EU regulators one specific concession in the hopes of getting the Fitbit buy green lit — with the Commission noting that it submitted commitments aimed at addressing concerns last month.

Google suggested creating a data silo to hold data collected via Fitbit’s wearable devices — and where it said it would be kept separate from any other dataset within Google (including claiming it would be restricted for ad purposes). However the Commission expresses scepticism about Google’s offer, writing that it “considers that the data silo commitment proposed by Google is insufficient to clearly dismiss the serious doubts identified at this stage as to the effects of the transaction”.

“Among others, this is because the data silo remedy did not cover all the data that Google would access as a result of the transaction and would be valuable for advertising purposes,” it added.

Google makes reference to this data silo in its blog post, claiming: “We’ve been clear from the beginning that we will not use Fitbit health and wellness data for Google ads. We recently offered to make a legally binding commitment to the European Commission regarding our use of Fitbit data. As we do with all our products, we will give Fitbit users the choice to review, move or delete their data. And we’ll continue to support wide connectivity and interoperability across our and other companies’ products.”

“We appreciate the opportunity to work with the European Commission on an approach that addresses consumers’ expectations of their wearable devices. We’re confident that by working closely with Fitbit’s team of experts, and bringing together our experience in AI, software and hardware, we can build compelling devices for people around the world,” it adds.

#ambient-intelligence, #android, #antitrust, #competition, #digital-advertising, #europe, #european-commission, #european-union, #facebook, #fitbit, #gadgets, #google, #internet-of-things, #margrethe-vestager, #online-search, #operating-system, #policy, #privacy, #privacy-international, #rick-osterloh, #search-engine, #smartphones, #sundar-pichai, #united-states, #wearable-devices, #wearable-technology, #wearables, #whatsapp

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Data from Dutch public broadcaster shows the value of ditching creepy ads

For anyone interested in the contested question of how much ‘value’ — or, well, how little — publishers derive from the privacy-hostile practice of tracking web users to behaviorally target them with ads, pro-privacy browser Brave has published some interesting data, obtained (with permission) from the Netherland’s public broadcaster, NPO.

The data shows the NPO grew ad revenue after ditching trackers to target ads in the first half of this year — and did so despite the coronavirus pandemic landing in March and dealing a heavy blow to digital advertising globally (contributing, for example, to Twitter reporting Q2 ad revenues down nearly a quarter).

The context here is that in January the broadcaster switched to serving contextual ads across its various websites, where it has an online video audience of 7.1M per month, and display reach of 5.8M per month.

Brave has just published an analysis of six months’ worth of data which shows NPO’s ad revenue increased every month over this period. Year-over-year increases after the broadcaster unplugged the usual morass of background adtech that makes surveillance capitalism ‘function’ are as follows:

  • January: 62%; February 79%; March 27%; April 9%; May 17%; June 17%;

Earlier this month Brave published five months’ worth of the NPO ad revenue data. So this is actually an update on an earlier blog post on the topic. The updated figures from Ster, the NPO’s ad sales house, slightly amend the earlier amounts, revising the reported figures further upwards. So, in short, non-tracking ad revenue bump has been sustained for half a year. Even amid a pandemic.

Now the idea that switching from behavioral to contextual targeting can lead to revenue growth is not a narrative you’ll hear from the ad tracking industry and its big tech backers. Aka the platform giants whose grip on the Internet’s attention economy and the digital infrastructure used for buying and selling targeted ads has helped them to huge profits over the past half decade or so (even as publisher revenues have largely stagnated or declined during this boom period for digital ad spending).

The adtech industry prefers to chainlink tracking and targeting to ad revenue — claiming publisher revenues would tank if content producers were forced to abandon their reader surveillance systems. (Here’s Google’s VP of ad platforms, last year, telling AdExchanger that the impact of tracker blocking on publishers’ programmatic ad revenues could cut CPMs in half, for example.)

Yet it’s not the first time there’s been a report of (surprise!) publisher uplift after ditching ad trackers.

Last year Digiday reported that the New York Times saw its ad revenue rise in Europe after it switched off creepy ads ahead of a major regional regulatory update, shifting over to contextual and geographical targeting.

The NYT does have a certain level of brand cache which not every publisher can claim. Hence the tracking industry counterclaims that its experience isn’t one that can be widely replicated by publishers. So the NPO data is additionally interesting in that it shows revenue uplift for a public broadcaster even across websites that aren’t dominant in their particular category, per Brave’s analysis.

Here’s its chief policy & industry relations officer, Dr Johnny Ryan, who writes:

NPO and its sales house, Ster, invested in contextual targeting and testing, and produced vast sales increases even with sites that do not appear to dominate their categories. This may be a tribute to Ster’s ability to sell inventory across NPO’s media group as a collective, but this benefit would have applied in 2019 and does not account for the revenue jump in 2020. A publisher does not therefore need to have market dominance to abandon 3rd party tracking and reproduce NPO’s vast revenue increase.

And here’s Ryan’s take on why “legitimate” (i.e. non junk/clickbait) publishers of all sizes should be able to follow the NPO’s example:

Although it is a national broadcast group, NPO websites do not dominate the web traffic rankings in the Netherlands. Only one of NPO’s properties (Nos.nl) ranks in the top 5 in its category in the Netherlands, according to Similar Web. None of the other NPO properties are in the Netherland’s top 100. The other NPO websites for which Similar Web provides a traffic rank estimation (versus other websites in the Netherlands) range from 180th to 5,040th most popular in the Netherlands. NPO properties’ popularity or market position in each content category are not correlated with increases in impressions sold. Country site rank, category site rank, and numbers of page views, vary widely between the properties, whereas the increases in impression sold are all above 83%, with one explicable exception [due to technical difficulties over the tracked period which prevented ads being served against one of its most popular programs].

Brave has its own commercial iron in the fire here, of course, given its approach to monetizing user eyeballs aligns with an anti-tracking marketplace ethos. But that hardly takes away from the NPO’s experience of — surprise! — revenue growth from ditching creepy ads.

Joost Negenman, NPO’s privacy officer, told TechCrunch they had certainly not expected to see ad revenue uplift from making the switch. The decision to move to contextual ads was made mid last year, as a result of the public broadcaster becoming “convinced” the programmatic targeting ad system it was using wasn’t compatible with its “public task”, as he tells it.

“We expected a rather dramatic drop in revenue,” says Negenman, noting that at that time the NPO was only getting a consent rate from users of around 10% for the ad cookies Ster needed for its programmatic ad system — down from 75%+ prior to GDPR (“probably” because its Cookie Consent Module at the time had been based on “implicit instead of explicit consent”; whereas GDPR mandates for consent to be legally valid it must be specific, informed and freely given).

“We also expected a drop because advertisers could completely ignore us when NPO and Ster turned away from this market adtech standard together, at a time when there was no sophisticated alternative in place,” he continues. “This fortunate misjudgment on our side was also fuelled by the strong belief (and preaches) in programmatic ad-solutions by online marketeers and companies.”

Negenman attributes the surprise revenue bounty from selling contextual ads to a couple of factors: Namely the “A-brand” pull of NPO and its affiliate broadcasters, meaning advertisers still wanted to be able to reach their users. And, well, to having the pro-privacy zeitgeist on its side.

“We’re all aware of the growing scrutiny on the adtech business, no explanation needed!” he says.

It’s worth noting the NPO’s switch to contextual ads did require some investment to pull off. The publisher shelled out for technology to enable contextual targeting across its web properties — such as building out descriptive metadata to enable more granular contextual targeting on video content. And the level of investment required to achieve similarly sophisticated contextual ad targeting might not be available to every publisher.

Yet the sustained revenue bump NPO experienced post-switch means it very quickly earned back what it spent — so for publishers that can afford to invest up front in transitioning away from tracking it looks like a very compelling case study.

“It paid for itself within a month or so!” confirms Negenman. “Considering all the money Ster didn’t have to share with Google and other in-betweens. From 1 advertisement Euro, 1 Euro goes to Ster!”

Though he also notes the broadcaster was helped by Dutch law placing an obligation on it to have subtitles for over 90% of its assets — meaning some of the leg work to build out contextual targeting had already been done.

“Subtitles data of course provides valuable descriptive metadata. So those tools where already in place,” he says. “But beside subtitles — that are nowadays easier to automate — standard program information like (sub)genre, titles of actors are of great value as well to add context on a video asset.”

Brave’s Ryan posits that the role of NPO’s sales house is also important to its success with contextual ads. “Smaller publishers may benefit from engaging with reputable sales houses that can aggregate supply as Ster does for NPO’s various properties,” he suggests. “Publishers of all sizes will benefit according to their reputations — unless advertisers and agencies purchase from sales houses with poor reputations.”

Asked whether he believes the switch would work for all publishers, Negenman does not go that far. “For all A-brands I definitely see this approach working, also news outlets have the perfect (meta)data needed to feed such a system,” he says, arguing there’s a place in the market for both contextual and targeted ads.

“Not all online advertising is the same,” he argues. “A shoe annoyingly following you online is something other than creating (A-)brand awareness. Perhaps the contextual system can start by creating privacy friendly ‘lagoons’ where a person is not tracked or followed by a shoe. There the system gets time to prove its worth in revenue and respect for its audience.”

“For other public broadcasters I believe they have more or less an (moral) obligation to at least start testing contextual ads,” he adds. “The adtech system’s use of personal and behavioral data has become so un-explainable that the GDPR information obligation is almost impossible to meet.”

As we’ve said before, the evidence of viable alternatives to privacy-torching surveillance capitalism is stacking up — even as harms linked to adtech platforms’ exploitation of people’s information keep piling up.

And while contextual ads may not sum to a revenue boom for every type of publisher, the notion that it’s tracking or nothing is clearly bogus.

(You could also make a pretty compelling case that abusive exploitation of people’s data that sustains low grade publishing is not at all a net societal good and so supporting a system that supports bottom feeding clickbait (and massive levels of ad fraud) is simply bad for everyone — well, other than the bottom feeders… )

Ryan goes so far as to call conventional adtech “a cancer eating at the heart of legitimate publishers”. And having worked inside the beast he’s castigating, via an earlier stint at anti-ad-blocking adtech company called PageFair, his critique is all the more hard hitting.

He’s used his insider knowledge to file a number of complaints with European regulators — most notably against the real-time bidding (RTB) practice programmatic advertising can rely on, drawing in vast quantities of Internet users’ personal information and scattershotting it back out again.

He contends this high velocity trading of personal data can’t possibly be compliant with Europe’s data protection framework — which, conversely, mandates that people’s information be securely handled, not spread around like confetti. (Though he believes RTB can work fine if you strip out personal data and only use it for contextual ads.)

European data protection regulators agree there’s a ‘lawfulness’ problem with current adtech practices. But have so far sat on their hands rather than taking enforcement action, given how widespread the problem is.

(Interestingly, Negenman says the NPO investigated continuing using programmatic RTB but with personal data stripped out. Though, in the event, he says this idea never got past the production stage. “Personally I can imagine a compliant combination,” he notes, adding: “Most importantly, the personal data must not leave the trusted data partner [and be shared with] the advertisers.”)

Turning a tanker clearly takes time. But the more publishers that see not pushing creepy ads on their users as an opportunity to experiment with alternatives, the more chance there will be for the market to shift wholesale for privacy — a shift that can be a huge win for publishers and users alike, as the NPO experience illustrates. 

Competition regulators, meanwhile, are closing in on big (ad)tech’s market power — and the conflicts of interest that arise from the “vertically integrated chain of intermediaries” which work to funnel the lion’s share of digital ad spend into platform coffers. So it’s not hard to conceive of an intervention to force market reform by breaking up Google’s business empire — to separate the ‘ad’ bits from its other ‘tech’.

The self-interested forces that underpin surveillance capitalism made their fortunes when no one was really looking at how their methods exploit people’s data. Now, with many more eyes trained on them, they are operating on borrowed time. It’s no longer a question of whether change is coming. The sands are shifting, with platforms themselves now moving to limit access to third party tracking cookies.

Savvy publishers would do well to get out ahead of the next round of platform power moves — and skate to where the puck’s headed.

#adtech, #advertising-tech, #brave, #digital-advertising, #digital-marketing, #europe, #gdpr, #google, #johnny-ryan, #marketing, #media, #netherlands, #online-advertising, #privacy, #real-time-bidding, #rtb, #targeted-advertising, #tc, #the-new-york-times

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Trump campaign demotes Brad Parscale, who famously led its Facebook political ad blitz in 2016

The Trump campaign’s unlikely digital marketing whiz is on the outs.

Brad Parscale made headlines for his social media savvy in 2016, a strategy still credited for giving the then-candidate a major boost by flooding social platforms, most notably Facebook, with targeted advertising. Parscale was named the Trump campaign’s digital director in 2016 and in 2018 ascended to the role of campaign manager, leading Trump’s bid for reelection.

In 2016, the Trump campaign outspent Hillary Clinton by $16 million on the platform, pushing out 5.9 million variations on ads and aggressively optimizing to replicate successes and avoid failed tactics in the process. During the same time period, the Clinton campaign only ran 66,000 different ads, roughly as many as the Trump campaign tested in a single day.

“Twitter is how [Trump] talked to the people, Facebook was going to be how he won,” the brash digital director told 60 Minutes in an election post-mortem the next year. In the same interview, Parscale explained how the campaign brought in “embeds” — employees from Facebook that taught Parscale and his staff how to hone their skills on the platform.

Under Parscale, the Trump campaign also reverse-engineered ad audiences from its current support base rather than targeting ads broadly or looking at traditional demographics.

“Brad Parscale, who has been with me for a very long time and has led our tremendous data and digital strategies, will remain in that role, while being a Senior Advisor to the campaign,” Trump wrote in the announcement.

As the Daily Beast reports, the title change formalizes the reality on the ground. Parscale had reportedly already taken a back seat on broad strategy to his 2016 communications director Jason Miller and deputy campaign manager Bill Stepien, who will step up as campaign manager.

The eleventh hour campaign change is certainly also a product of the president’s very real reelection concerns. The Trump administration’s national failure to rise to meet the coronavirus crisis, Trump’s ongoing racist appeals in the midst of a civil rights movement and his total lack of messaging discipline combines for a rocky path to reelection — a reality that lopsided polls reflect.

Parscale was reportedly already on the outs. CNN reported earlier this year that Trump berated and threatened to sue Parscale over plummeting poll numbers during the president’s early pandemic failures. That moment came after Trump appeared to recommend ingesting potentially deadly disinfectants as a treatment for the virus.

Recent events likely heightened that tension further. When President Trump traveled to a less than half-empty arena in Tulsa, Oklahoma in the midst of the coronavirus crisis, Parscale faced the blame for falling for a prank by TikTok users, led by anti-Trump K-pop fans, who drove up huge registration numbers. While the Trump campaign downplayed the role the fake registrations had in amping the event, the open seats made for a very visible embarrassment for the optics-fixated Trump.

Parscale, a political outsider, famously built the Trump campaign’s first website for $1,500. In spite of his lack of political expertise, he went on to helm Trump’s digital advertising operations as digital director, later becoming synonymous with the campaign itself and its crude, aggressive approach to social media marketing and digital branding.

A Buzzfeed profile from 2017 likened Parscale to a modest, loyal soldier for Trump, one who became “indispensable” for his intuitive ability to communicate the Trump brand. Parscale “believed in the message [and] knew how to promote it on social media.”

That ability to translate Trumpism to the online world developed the roughshod but relentless messaging that still characterizes the Trump campaign. It also had a hand in shaping — and in turn being shaped by — the active online world of Trump loyalists, who likely aren’t going anywhere no matter what happens come November.

#2020-election, #digital-advertising, #government, #tc, #trump-administration

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