I’m Alan Chapell. Over the past 20+ years, I’ve been outside privacy counsel to hundreds of digital media companies. I write a monthly syndicated report called The Chapell Regulatory Insider, and I’m also a regulatory analyst for The Monopoly Report.
On the latest Monopoly Report podcast, I welcome Don Marti to discuss the Attribution Cartel, a group of large companies and browsers working within the W3C that Don believes are attempting to use privacy standards to dictate who gets access to the critical data that helps advertisers determine whether their campaigns are working.
Why Are We Focused on Agentic?
What’s the purpose of our industry’s move to agentic advertising? If I put 10 of you into a room, I might get 10 different answers. Some are using this as an opportunity to fix all (or at least some) of what’s wrong with the ads space. Many view agentic as a way to upend the power dynamic as it currently exists within independent adtech.
If you read the trades, the goal of these frameworks is to establish a shared, open-source technical standard that allows AI agents—built by different companies—to autonomously negotiate, plan, and buy media across the digital advertising ecosystem.
While I don’t disagree with the above, I think it might understate the practical goal: allowing the independent ads space (adtechs, publishers) to compete with the walled gardens for ad dollars. On some level, we’re creating all of this to make it just as easy for advertisers to spend dollars on independent digital media as it is to spend on Meta and Google. To that end, we’re looking to shift the process from manual tasks to autonomous, proactive, and continuous optimization.
That said, any gains in efficiency from agentic are undercut by the following two forces:
Big Tech and browsers continuing to own attribution
The current physics underpinning privacy law, particularly in the U.S.
Don Marti and I touch on the first force in this week’s Monopoly Report pod. Today, I’m focusing on the second.
Privacy Law Strikes Again?
I recognize that you’re probably thinking to yourself: “Great. So the privacy guy says that privacy law will limit our move to agentic.”
I recognize how the above might come off, but bear with me a minute. Privacy law as it pertains to the ads space focuses almost entirely on creating friction around interoperability and (perversely) creating incentives around ownership of the entire data flow (where there is almost no friction). So, if the goal for agentic is to be just as easy to buy as the walled gardens, this poses a challenge to those of us in the independent ads space.
Twenty-five companies are much smarter than you are about how the ads space is shifting. Want to catch up? Visit ChapellReport.substack.com.
When Privacy Laws Incentivize Consolidation
I recently came across a research paper from MIT Sloan that touches on what might be viewed as an inconvenient truth about privacy laws. Specifically, privacy rules designed to protect consumers can simultaneously accelerate the consolidation of the very industry those rules target. This paper, authored by Rozhina Ghanavi, Sepideh Hosseini, and Catherine Tucker, examines how the California Consumer Privacy Act (CCPA) reshaped merger and acquisition activity across the digital advertising ecosystem between 2018 and 2022.
I’ve touched on a very similar issue before on these pages. I’m certainly not looking to pick a fight, as I’ll be seeing Tom Kemp and his colleagues from CalPrivacy at next week’s NAI Summit in Washington, D.C. But the ruleset created under the CCPA provides as good example of this as anything.
The CCPA was designed to achieve the following goals:
Create friction for data brokers (which also negatively impacts interoperability within the digital ads world);
Enable data subjects to see, delete, and opt-out from certain uses of data; and
Force data flows involving personal information to be more transparent and auditable.
While these are certainly legitimate and perhaps even laudable goals, it’s worth noting that these same rules create a perverse set of incentives for companies to own as much of the adtech stack as possible.
Examples of How This Manifests Under Privacy Law
Let’s say that I own an app that collects precise location data and want to use it to target ads. I’ll need to work with an SSP that will in turn partner with one or more DSPs. But my transfer of this data to the SSP – and the subsequent transfer to a DSP – are likely to be considered a sale of sensitive data under CCPA and most state privacy laws.
Wearing my privacy hat, my response might be to partner with a data clean room. However, the way that CCPA is currently written, it’s not really clear whether the transfer of this data to the clean room counts as a sale. So as crazy as this might sound, the most viable compliance approach is to acquire or get acquired. If I own both the SSP and the DSP, then the transfer of this data doesn’t count as a sale. In fact, the data flow is barely regulated at all under state privacy laws.
If you’re like me, and have general concerns about the use of precise location within the ads space, the above example certainly doesn’t assuage those concerns.
The irony is that the CPRA ballot initiatives were sold to California voters as a promise to contain Big Tech, while the actual ruleset created by that ballot initiative arguably serves to further perpetuate Big Tech.
What Is the Solution?
I’m not sure there is an actual solution. And to be clear: I’m not saying that agentic can’t help reduce a good deal of the business friction that currently impacts the programmatic ads space. But will agentic reduce the regulatory friction? I’m not sure.
Here are some potential solutions, but none are either easy or simple:
Lobby Congress (LOL): One can certainly lobby the federal government to pre-empt the state laws geared to address a 2010 problem in favor of a federal law geared to address the current privacy problem. But there’s an obvious problem to this approach. Big Tech has thousands of lobbyists on the payroll to varying degrees. By way of comparison, third-party adtechs have the NAI. Also, the initial draft of the SECURE Act that just came out of the House Commerce Committee has a similar approach as CCPA in that it basically exempts first-party data.
Providing feedback to the CalPrivacy folks: To their credit, Tom Kemp and his colleagues are out there talking to the ad industry and are certainly asking for public comment as they create new rules. But this type of change would require a complete rethinking of the CCPA; I’m not even sure if the CPPA currently has the legal authority to make these types of changes.
Get other states to recognize and address this problem: We could try to work within select state governments. But they have a similar challenge as California.
Change the approach of agentic around data use: Is there a way to restructure the way that data gets leveraged via agentic? The challenge we’re up against is that the definitions of sale or share within U.S. state privacy laws are extremely broad. I don’t believe that the use of vector embeddings pulls adtech data flows outside of the definition of personal information or the ruleset of state law.
Go big: Make every company in the programmatic ads space a subsidiary of Chapell Labs so that the data flows aren’t counted as a sale/share. I’ll of course extract a small cut for my troubles. Sound crazy? Maybe. But that’s pretty much what Google tried to do with the Sandbox. And if we’re being honest, this idea wouldn’t even make the top 10 list of crazy public policy or regulatory ideas in 2026.
If only my last name began with a “T”…
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