Legislation Could Promote Privacy-Protective Business Models

For many years, online businesses have largely operated under the assumption that the behavioral advertising business model is superior to the contextual advertising business model,¹ but this belief is not necessarily true. Privacy-protective online business models exist in which companies do not need to rely on behaviorally targeted ads to be profitable. For instance, companies can employ and have employed contextual advertising—displaying ads based on the content of the website instead of the behavior of the user—to fund their business.²

Contextual advertising business models are still profitable. DuckDuckGo has successfully employed a contextual advertising business model for over a decade. If a company switched from a behavioral advertising model to contextual one, Gray said, “They would still be hugely profitable. They may not be obscenely profitable … but they would still be able to do their moonshots, and have all their businesses.”³ In fact, there is reason to be skeptical that behavioral advertising is more profitable—a recent survey found that 45 percent of publishing executives saw no notable benefit from behavioral ads, and 23 percent said they actually led to a decline in revenue.⁴ Further, an increased reliance on contextual advertising may even improve competition, because, as the CEO of DuckDuckGo recently wrote, “[W]hen contextual advertising regains prominence, more companies will be able to compete against Facebook’s and Google’s ad networks because they won’t need huge troves of personal data to do so.”⁵

45 percent of publishing executives saw no notable benefit from behavioral ads.

Additionally, legislation that curtails the behavioral advertising business model could spur innovation around privacy-protecting business models. As Gray stated, contextual ads have suffered from a lack of innovation. “We’ve had contextual online ads … since 1998 and nobody has spent any time trying to innovate,” she argued.⁶ Much of the innovation has gone specifically into matching people to ads based on their behavior rather than the context of the current website, such as showing an ad for various cleaning products when users searched for vacuums. “It would be wonderful to see folks … try to focus more on advertising innovation that is healthier for us as a society,” Gray argued.

Even without affecting business models, legislation could promote innovation. As Lamont detailed,

You can also imagine several ways that federal law could promote competition and promote innovation on privacy practices. I think we should pursue those in federal privacy legislation. One is transparency—the law should require that companies be upfront about what data they collect, how they process it, under what circumstances it could be transferred to a third party. That would allow consumers to think about what is the business model of the company that I’m signing up for to do business with and potentially switch. Another way to make that more probable and to promote competition on privacy-preserving interests and values is … data portability, where consumers would have an easier time moving the existing information and transferring between different services.⁷

Adopting these approaches may be helpful—and OTI supports creating a right to data portability⁸—but users may desire more protections than transparency and portability.⁹