FTC Official: Balance Needed Between Targeted Ads and Data Protection

“There are no solutions in life, only trade-offs,” said Christopher Mufarrige, director of the FTC's Bureau of Consumer Protection. “What we see today in the free internet is that it's largely in place because of the data that's being used. … Anytime we take any sort of action -- whether it's law enforcement and guidance, rulemaking, [etc.] -- it's critical for us to appreciate those trade-offs and understand the imperatives on the ground using good economics. Otherwise, we risk harming consumers rather than benefiting consumers.”

Marketecture Media CEO Ari Paparo said it’s important to “differentiate between 'open internet' meaning open to advertisers versus 'open internet' meaning free to consumers.”

Mufarrige agreed. “Targeted advertising, like any practice, can be good [or] it can be bad,” he said. “It depends on how it's used. It depends on the facts and circumstances.”

“We shouldn't be dogmatic in the way that we approach these things,” Mufarrige continued. “We should use evidence … to understand what's going on in their marketplace and then choose regulatory approaches that make sense for consumers.”

He said the evidence shows there are instances where targeted ads have a positive trade-off for consumers, but in other instances, like children’s privacy, the trade-off is negative. That's why “not being dogmatic about these issues [and] really being empirically data-driven” is key.

Paparo said “there's a pretty big trend towards what you want to call the ‘logged-in effect,’” where content is behind a paywall, requiring you to sign into your account to access it, but it's also open to advertisers. “It's the only way to build a sustainable advertising business and to know who the consumers are,” he said.