Accountable Tech Petitions FTC to Ban Surveillance Advertising as an ‘Unfair Method of Competition’
Accountable Tech filed a significant rulemaking petition Thursday urging the Federal Trade Commission (FTC) to ban surveillance advertising – the extractive business model whereby Big Tech pervasively tracks and profiles people for the purpose of selling hyper-personalized ads – as an “unfair method of competition.”
The petition comes on the heels of the FTC reaffirming its broad statutory authority and obligation to police anticompetitive business practices, and President Biden’s July Executive Order encouraging the Commission to “establish rules on surveillance and the accumulation of data” and “rules barring unfair methods of competition on internet marketplaces.”
As the petition demonstrates, surveillance advertising is both inherently and cyclically anticompetitive. This unfair method of competition fuels a toxic feedback loop: Big Tech companies with massive scale and data advantages – which create high barriers entry and easy leverage into adjacent markets – are uniquely situated to (1) unfairly extract and monetize more user data; (2) unfairly integrate that data across business lines; and (3) actively suppress competition.
As the feedback loop accelerates, Big Tech’s ability and incentive to propagate anticompetitive harms builds:
For consumers of nominally ‘free’ products, paid for in the form of personal data and attention, each invasion of privacy and degradation of services is an effective price hike. Surveillance advertising giants’ exploitation of users to fuel this business model – like knowingly boosting harmful content and exacerbating teen depression to maximize engagement – would lead to an exodus in a competitive marketplace. Instead, the platforms grow even more dominant at the expense of locked-in users.
For publishers, dominant surveillance advertising firms have not only exploited the superior targeting capacity derived from their wealth of user data and attention to siphon away critical revenue, but also compelled the resource-starved publishers to effectively hand over proprietary audience data by embedding their tracking tools, further accelerating their consolidation of market power.
For advertisers, the complexity and opacity of surveillance advertising – and the end-to-end role Facebook and Google play in operating those marketplaces – has left them at the mercy of dominant firms with the incentive and capacity to rig the game. These firms have repeatedly inflated metrics, raised the cost of ads, extracted monopoly fees, and engaged in exclusionary conduct to suppress competition.
The petition concludes that the strongest and most administrable remedy is to “issue a rule prohibiting online platforms from using personal data for the purpose of delivering advertisements,” while preserving the ability to target ads to relevant audiences in non-invasive ways, such as via search and contextual advertising.
“For far too long, Washington has failed to grapple with the harm surveillance advertising inflicts on competition, consumers and society,” said Jesse Lehrich, Accountable Tech co-founder. “The unchecked power of Big Tech companies that employ this toxic business model has led to dominant digital platforms that exploit users and businesses – without recourse or competitive constraints – to pad their own profits at tremendous societal cost. Their behavior wreaks further havoc by driving a race to the bottom across the digital economy, as other market participants seek new ways to track and profile users to keep pace with the surveillance advertising giants. The FTC can and must meet the generational challenge we face by prohibiting this unfair method of competition.”