Are Privacy Rules Different for The Digital Duopoly?

Posted by Apomaya on Jul 17, 2019 7:17:32 PM

Look up “duopoly” in the dictionary, and you’ll see Google and Facebook. In digital advertising, these two tech giants have been unstoppable.

In its latest State of the Digital Market, Polar reports that digital advertising will grow 15 percent year over year from $266 billion in 2018 to $465 billion by 2022. Of this market, Google and Facebook currently own a whopping 63 percent, with Google taking the largest share (43 percent, or $115 billion in 2018).

Like any duopoly, Google and Facebook wield clout. They can set terms that ripple throughout the industry. They have the money and resources to put toward issues they back and the status to get seats at the table of government officials. And they can also wield clout when it comes to privacy laws.

Consider GDPR, for instance. From the get-go, the tech giants applied the new GDPR law stringently, which set the stage for smaller digital ad players.

While Google told website owners and app publishers they’d have to get consent for targeted ads on behalf of each of their digital ad vendors, Google simultaneously informed digital ad vendors they would be blocked from targeting any user who hadn’t given consent to the vendors and each of their partners. Meanwhile, Facebook showed over 275 million daily European users prompts that urged them to approve its use of their personal information, including sensitive data such as religion.

Ad tech firms worried that the duopoly’s actions compel publishers to seek consent on behalf of ad tech firms that people have never heard of before.

The worry over lack of recognition isn’t unfounded. In a 2018 Digiday survey of 281 media buyers, publishers were grouped into the channel “open exchange”—strongly hinting at the lack of identity publishers have among consumers. This lack of identity has correlated with lower ad spend.

Do Privacy Violations and Fines Matter?

In terms of data privacy allegations, 2018 was a tumultuous year for Facebook. Cambridge Analytica, through which the personal data of 87 million users were exposed, rocked the industry and was followed by other highly publicized privacy breaches.

And yet, the privacy violations don’t appear to have significantly impacted Facebook’s digital ad business. In the 2018 Digiday survey, only 1 in 5 of the marketers planned to reduce its spending on Facebook despite the recent privacy scandals.

Meanwhile, Facebook has made moves that help keep its users solely within its platform. In October 2018, for example, it removed the capabilities for advertisers to use their third-party data for targeting purposes.

Both Facebook and Google have been dealt with hefty penalties for privacy violations that resulted in fines of tens of millions of dollars. Those kinds of fines would bring many smaller players to their knees.

However, the duopoly doesn’t seem fazed. On the contrary, Facebook and Google publicly express strong support for a U.S. privacy law akin to GDPR. While this support buttresses their commitment to enforcing data privacy, some industry pundits see a federal privacy law as a way for the duopoly to make an end-run around stricter state privacy laws such as the California Consumer Privacy Act.

References

Hubspot, “State of Digital Media, Market Brief Q1 2019” https://app.hubspot.com/documents/4934439/view/35422028?accessId=bc7916

Bloomberg, “Google, Facebook Ad Sales Seen Rising Even Amid Privacy Woes” https://www.bloomberg.com/news/articles/2019-01-28/good-times-keep-rolling-for-facebook-and-google-s-ad-businesses

The Wall Street Journal, “Google and Facebook Likely to Benefit from Europe’s Privacy Crackdown” https://www.wsj.com/articles/how-europes-new-privacy-rules-favor-google-and-facebook-1524536324

What’s New in Publishing, “Fines are fine. But they’re not enough to shake the duopoly’s dominance” https://whatsnewinpublishing.com/2019/01/fines-are-fine-but-theyre-not-enough-to-shake-the-duopolys-dominance/

Topics: +third-party, +google, +facebook, +duopoly

Recent Posts

SCHEDULE A DEMO