I’m Alan Chapell. Over the past 20+ years, I’ve been outside privacy counsel to hundreds of digital media companies and have brought over 40 of them to successful exits. I write a monthly syndicated report called The Chapell Regulatory Insider, and I’m also a regulatory analyst for The Monopoly Report.
The latest Monopoly Report podcast! This week, I welcome Xoogler-turned-author-activist Claire Stapleton, who wrote a best-selling book about her time at Google. In comparing notes, we came up with a few strategies that might be helpful when operating in this post adtech antitrust remedies decision world.
If the most important criteria is ownership, then privacy considerations are undermined
Author’s note: If you’re at Marketecture Live in Chicago today, find me at the breakfast area from 8-9 a.m. and share your thoughts on the Google remedies, what the industry needs from our trade associations, the Amazon auction case, or what I’m writing about below.
Infillion Does It Again!
Last week, Infillion announced that it had acquired precise location graph company Foursquare, the latest in a serious of strategic acquisitions. I’ve read lots of great analysis on the business implications of this transaction. And for the record, I agree with most of it.
If you suspect a “yeah, but” coming, you’d be right. In my view, this transaction drives home just how ham-fisted the U.S. approach to privacy can be.
I’m not here to hate on Infillion. They seem like very nice people. If anything, they’re smart to be capitalizing on a legal loophole.
What legal loophole, you ask?
Some Background on the Precise Location Rules
As you may know, several U.S. states started to really curtail the use of precise location data ever since the Supreme Court’s decision in Dobbs v. Jackson overturning Roe v. Wade. Your mileage may vary, but for me, the fallout from that decision crystalized my thinking re: the ways that precise location data can be used to harm people. I’ve covered those concerns on the TMR podcast.
It was also around the time of the Dobbs decision that precise location (i.e., collecting the lat/long of a device within a 2,000-foot radius) started to be targeted as “sensitive” by an enhanced ruleset under U.S. state privacy law. The regulatory focus at the state level has increased rapidly and continues to gain momentum. To wit:
Connecticut, Oregon, Maryland, Virginia, New Jersey (and soon, maybe even California if AB 1542 doesn’t get vetoed) flat-out prohibit the sale of precise location data.
Other states, like Colorado, Delaware, Indiana, Kentucky, Minnesota, Montana, Nebraska, New Hampshire, Rhode Island, Tennessee, and Texas impose an opt-in consent standard for the sale of precise location. And for what it’s worth, the opt-in consent standard goes well above what the industry associations have traditionally required and looks much closer to an EU requirement in most cases.
This means that 40+% of U.S. data subjects are pretty close to off limits for anyone seeking to purchase precise location data.
How Do These Rules Apply to Adtech?
If you’re operating a DSP, these rules severely restrict your ability to purchase precise location data and use it for targeting, measurement, or whatever. What’s worse, as new states revamp their privacy laws next year, the DSP’s precise location footprint is very likely to shrink even further.
That puts your DSP at a competitive disadvantage to those who are able to leverage that data without it counting as a sale.
Why Infillion’s Acquisition of FourSquare is Brilliant!
By acquiring Foursquare, Infillon pulls itself outside the scope of the “sale” requirements. Not to say there aren’t other privacy requirements, but if you can receive data, it’s fair to say that you’re in better position to leverage it than those who can’t.
Accordingly, when Infillion’s Mediamath platform seeks to acquire the data from Infillion’s Foursquare platform, it doesn’t count as a sale of data, and it isn’t subject to those restrictions or prohibitions.
Compare that to say, The Trade Desk, which doesn’t own a precise location graph company and can’t ingest that type of sensitive data in the same way.
As a result, Infillion’s footprint is significantly larger than that of the Trade Desk when it comes to precise location data. That’s potentially a huge win for Infillion.
Why This Makes Zero Sense for Privacy
To each his own, but I am uncomfortable with adtech data being used for things like: outing gay priests, arresting those seeking reproductive care in places where it is legal, enabling the work of ICE, and targeting U.S. military personnel. This isn’t theoretical, folks.
But also, those documented harms aren’t any more or less possible based on whether or not one happens to own the data flows.
Accordingly, I struggle to understand how the Infillion data flow is any better or worse for privacy than my hypothetical Trade Desk data flow. Ownership of data might be part of the privacy analysis of any data flow, but it should not be the only part. But the way that the rules are currently written, those that own the entirety of the data flow are able to get somewhat of a free pass.
In my view, that’s not right.
There are many legitimate reasons for reining in the trafficking of precise location data. But creating rules based on ownership of data rather than basing them on an earnest assessment of risks doesn’t address those concerns. That alone is a clear policy failure.
If anything, the current state ruleset incentivizes the marketplace to get bigger rather than safer. And while this is an egregious example, it’s not the only example.
So while I applaud Infillion’s strategic approach, I’ll also issue a plea to the policymakers operating at the state level. (Yeah, I’ve given up on Congress too.)
Antitrust law has a hard enough time fixing what’s broken in this marketplace without privacy law coming in and making things worse.
And if any state legislature or regulatory authority would like to discuss publicly or privately, I’d welcome that discussion.
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DISCLOSURE - The Trade Desk is not a client nor a subscriber to the Chapell Regulatory Insider. Who knows, maybe this gets Jeff Green to come on my podcast. :)
If there’s an area that you want to see covered on these pages, if you agree or disagree with something I’ve written, if you want to tell me you dig my music, or if you just want to yell at me, please reach out to me on LinkedIn or in the comments below.
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