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The Future of Online Privacy:Online advertising and behavioral targeting

Kristina Irion

Third Internet Governance Forum

Thursday, 5/12/2008

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The Future of Online Privacy:Online advertising and behavioural targeting

Agenda

I. DefinitionII. Data collection practisesIII. Further processing of personal dataIV. Applicable regulation & effectivenessV. Consolidation in online advertising marketsVI. Conclusion

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I. Definition

Online advertising and behavioural targeting:

Definition FCC staff working paper (2008)“… online “behavioral advertising” means the tracking of a consumer ﾕ s

activities online - including the searches the consumer has conducted, the web pages visited, and the content viewed - in order to deliver advertising targeted to the individual consumer’s interests.”

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II. Data collection practises

Business model for Web 2.0 (multi-sided markets)

Free servicesand contentattract users

Subscriptions generateuser profiles

Data from usage/ traffic patterns

Personalised/ targeted advertisement

Onlineadvertisement

Behaviouraltargeting

• Search engine• Social network• Online newspaper• Photo sharing websites• ……

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III. Further processing of personal data

Enrichment of data from other sources Combining with data from other services or publicly available

informationData mining Describes a technology that discovers non-trivial hidden patterns in

a large collection of data, which can provide insights into individual lifestyles and their social and behavioural patterns.

Trading with personal data Transfer of user information to third parties

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IV. Applicable regulation & effectiveness

EU Data Protection rulesRequires informed consent of the data subject

Downside:• Bundling with the service offer• Generated via terms and conditions (?)• Reliance on and life-span of such a consent• Non-European services

U.S. model• Self-regulation based on privacy statements• Fair trade and consumer protection approach• Request for comment to FTC staff paper on Online Behavioral

Advertising Moving the Discussion Forward to Possible Self-Regulatory Principles (closed)

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V. Consolidation in online advertising markets Google/ DoubleClick merger

Clearance in U.S. and EU (2007)US Federal Trade Commission (FTC)

• Merger did not create market power in search engines and online advertisement

• Raised privacy concerns, however, are unrelated to antitrust concerns

• Privacy repercussions scrutinised as non-price attribute of competition, but argument dismissed

European Commission• concluded that the proposed concentration would not

significantly impede effective competition• Stressing the application of data protection laws

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V. Consolidation in online advertising markets

Yahoo! Inc. and Google Inc. cooperation agreement withdrawn

Department of Justice• informed the companies that it would file an antitrust

lawsuit to block the implementation of the agreement.• If implemented, the agreement between these two

companies accounting for 90 percent or more of each relevant market would likely harm competition in the markets for Internet search advertising and Internet search syndication.

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VI. Conclusion

1. Behavioral targeting still in its infancy2. Massive data gathering in preparation3. Privacy concern stemming from profiling and data mining4. Different policy approaches in U.S. & EU5. No effective policy tool tackling concentration of data

collections