• by Wendy Davis  @wendyndavis, April 16, 2024

The ad industry is weighing in against a new privacy bill that could curb companies' ability to engage in online behavioral advertising.

“The bill could significantly limit the ability of advertisers in every Congressional District (businesses, nonprofits, political campaigns, and the government alike) to reach their customers at the most relevant time and with the most relevant message with targeted advertising,” the Association of National Advertisers and American Association of Advertising Agencies writes in a letter to lawmakers on the House Energy and Commerce Committee.

The letter comes in advance of Wednesday's House Energy and Commerce Subcommittee on Innovation, Data, and Commerce hearing on a package of tech policy bills -- including the bipartisan American Privacy Rights Act, released last week in draft form by Senator Maria Cantwell (D-Washington) and Representative Cathy McMorris Rodgers (R-Washington).

If passed, the American Privacy Rights Act would override many state privacy laws. The provisions regarding online advertising are ambiguous, but could be interpreted as prohibiting companies from serving ads to consumers based on their activity across sites and apps.

The ad organizations are urging lawmakers to revise the proposed measure by allowing companies to engage in behavioral targeting on an opt-out basis.

“Targeted advertising benefits both consumers and businesses because it ensures advertising reaches the people who want to see it, thereby reducing unwanted ads, driving greater sales, strengthening competition, meeting consumers’ desire for advertising, and lowering prices,” the groups write. “We believe any limits on such communication would also run afoul of the First Amendment, under which advertising is protected speech that both businesses have a right to speak and consumers have a right to receive.”

As currently drafted, the bill includes seemingly contradictory restrictions on advertising.

The authors said in a summary of the bill that it would give consumers the right to opt out of “targeted advertising,” broadly defined as ads pegged to consumers' known or predicted interests.

The text of the draft appears to require companies to allow consumers to opt out of targeted advertising based on non-sensitive data -- but, critically for ad-tech companies, defines the cross-site and cross-app data that fuels behavioral targeting as "sensitive."

The draft has language requiring companies to obtain consumers' opt-in consent before transferring that cross-site data, but also has a provision that could prohibit businesses from harnessing such data for ad targeting.

The 21st Century Privacy Coalition, an organization funded by cable companies and telecoms, is separately calling for revisions.

“The discussion draft needs to be improved before this subcommittee or the Energy & Commerce Committee takes any additional action on the legislation,” Maureen Ohlhausen, co-chair of the group and a former Federal Trade Commissioner, will tell lawmakers on Wednesday, according to her prepared testimony.

Among other requests, Ohlhausen plans to urge lawmakers to revise the proposed law by explicitly allowing communications companies to engage in interest-based advertising.

Some privacy advocates who support tough restrictions on behavioral advertising are also expressing concerns over ambiguities in the draft bill.

Justin Brookman, director of technology policy at Consumer Reports, says legislation that overrides state laws should be “exceedingly clear and strong.”

The American Privacy Rights Act “isn’t there yet,” he wrote in a recent analysis of the discussion draft.

Brookman specifically notes the bill's “confusing treatment of online advertising,” writing that it's “very difficult to assess” how the measure would affect targeted advertising and online data sharing.

Consumer Reports added in a letter sent to lawmakers Tuesday that the bill's “core protections relating to targeted advertising and online tracking ... are too unclear and contradictory to support in their current form.”

Samir Jain, vice president of policy at the Center for Democracy & Technology, likewise says in prepared testimony that the bill “should be clearer in its advertising language.”

The bill “treats ads differently depending on whether they are matched with an audience based on context, on first-party data, or on third-party data, but all of these key terms lack definitions,” Jain states.

Jain adds that it “is not completely clear” how the bill would restrict those types of ads.

On Tuesday evening, the California Privacy Protection Agency -- which enforces that state's privacy law -- voiced opposition to the draft bill.

That agency argued in a letter to lawmakers that the proposed law was weaker than California's statute.

“Strong federal protections do not have to come at the expense of the states,” Ashkan Soltani, executive director of the state agency, wrote. “Indeed, if we view states as laboratories in our federal system, the [American Privacy Rights Act] would slam the door closed when it comes to privacy and emerging technology.”