Mar 2, 2022 4:30 PM

Biden Puts Big Tech’s Favorite Business Model on Notice

The regulation of surveillance advertising used to be a fringe idea. Now it’s in the State of the Union address, at least when it comes to kids.

President Biden speaking at podium in front of large American flag

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If the leaders of Big Tech platforms thought geopolitics would take the heat off their companies during Joe Biden’s first State of the Union address, they were mistaken. In a speech that covered plenty of ground, the president took time to scold social media companies for what he called “the national experiment they’re conducting on our children for profit.” Biden called on Congress “to strengthen privacy protections, ban targeted advertising to children, demand tech companies stop collecting personal data on our children.”

Though it was just a passing reference, Biden’s call to ban targeted advertising to children—which generated noticeable applause—was something of a milestone. Regulating targeted advertising was not even close to a mainstream idea until quite recently. Now it’s in the State of the Union.

Not long ago, the highest-profile example of federal lawmakers addressing online advertising was when Orrin Hatch asked Mark Zuckerberg, during the CEO’s first-ever appearance before Congress, how Facebook made money from a free product. Zuckerberg went viral for deadpanning: “Senator, we run ads.”

Hatch actually knew Facebook sold ads; he was feigning ignorance for rhetorical effect, as lawmakers often do during hearings. No matter. The exchange went viral as a supposed example of how out of touch Congress was when it came to technology. Facebook employees wore T-shirts with Zuckerberg’s phrase printed on them. Look at these old geezers: They don’t even know how social media companies make money. How will they ever regulate them?

As recently as two years ago, Congress hadn’t made much progress on that front. In a March 2020 piece titled, “Why Don’t We Just Ban Targeted Advertising?” I wrote about a small group of thinkers who were beginning to publicly attribute a litany of ills to the practice of tracking users to serve them personalized advertisements. Most obviously, this includes almost anything having to do with online privacy abuses. When a Catholic priest was fired for frequenting gay bars, for example, it was thanks to his employers using geotargeting data from Grindr that exists primarily to help target ads. But microtargeted advertising is also linked to other problems. It diverts ad revenue away from the organizations that create media content and toward the aggregator platforms that keep the most extensive files on users. And it arguably turbocharges the incentives of platforms like Facebook, Instagram, and YouTube to optimize relentlessly for user engagement.

But small was the operative word to describe that group of critics: a lawyer here, a professor there. There was little indication that they had made headway with the people who could actually effect change. Congress had spent two years arguing about what to do with Big Tech, particularly social media. But its members had paid vanishingly little attention to the business model that drives it.

That is no longer the case. Over the past year, lawmakers have started to zero in on the advertising model that sustains social media platforms, which is increasingly referred to as “surveillance advertising,” a term that captures not just the targeting, but the data-gathering that the targeting requires. (This is thanks in part to a push by an advocacy group called Ban Surveillance Advertising, which launched in March 2021.) “The problem’s with the business model,” said congressmember Kelly Armstrong (R-ND) at a hearing in December. “One that is designed to attract attention, collect, and analyze what keeps that attention, and place ads.” And so, he asked, “Should we restrict targeted advertising?” In January, House members Anna Eshoo (D-CA) and Jan Schakowsky (D-IL), along with Sen. Cory Booker (D-NJ), introduced the Banning Surveillance Advertising Act. That same month, Sen. Mike Lee (R-UT) introduced a bipartisan bill to regulate the online ad market more like the stock market, directly challenging Google’s current status as primary buyer, seller, and marketplace for targeted ads.

The digital advertising industry of course denies the bad rap that surveillance advertising has accrued. Industry proponents argue that getting rid of behavioral targeting would make it harder for small businesses to reach customers and would force consumers to pay for services that are currently free. Those talking points are crafted to appeal to business-minded legislators, but at a hearing Tuesday morning, even Rep. Greg Pence (R-IN), the former vice president’s less famous brother, was skeptical that small businesses benefit from targeted advertising. “I wrestle with that,” he said. “I hear that a lot from the small businesses that use social media. Some it’s good for, but the vast majority say, ‘It gets nothing for me.’”

For a long time, surveillance advertising pretty much ran in the background, driving the economic fortunes of Big Tech companies while receiving very little scrutiny. Those days seem to be over.

“It’s a big deal to see something like that on the State of the Union agenda, especially given how many things are happening in the world right now,” says Jesse Lehrich, cofounder of the advocacy group Accountable Tech, who helped organize the Ban Surveillance Advertising coalition. It would be a bigger deal still, Lehrich says, if the call to ban surveillance advertising extended beyond just protecting kids.

But “think of the children” seems to be the easiest bipartisan starting point for a Congress that struggles to get much of anything done and has been spinning its wheels on privacy regulations for years. In fact, that’s not just true in the US. In the European Union, an effort to get a surveillance ad ban into the upcoming Digital Services Act faces long odds, but the EU Parliament did pass an amendment banning targeted ads for kids. (The law has yet to be finalized.) No one in power seems to want to line up to defend pervasive targeting and tracking of minors. Last year, Facebook itself announced that it would stop allowing advertisers to target users under 18 using data gleaned from other websites and apps, though a federal ban would likely go much further.

“The FTC and Congress should use their limited resources to modernize COPPA and COPPA enforcement rather than waste time and money on misguided efforts to ban the reasonable use of data for advertising purposes,” said Lartease Tiffith, executive vice president of public policy for the Interactive Advertising Bureau trade group, in an emailed statement, referring to the Children’s Online Privacy Protection Act of 2000.

As it happens, Sen. Ed Markey, the author of COPPA, introduced an update to the law last spring that would ban behavioral ad targeting of minors—a sign of how much momentum the idea has.

Duncan McCann, who works on children’s privacy issues in Europe, told WIRED last year that children’s rights were the gateway to getting people to care about surveillance advertising.

“Back in 2018, it was seen as crazy to talk about banning surveillance advertising,” he said. But talking to parents about their children’s privacy got them interested. “I realized, maybe the way into getting society to care about this is first of all getting society to care about it from a children’s perspective.”

Beeban Kidron, a British filmmaker turned children’s rights advocate who spearheaded the development of the United Kingdom’s Age Appropriate Design Code, made a similar point in an interview with WIRED last summer. Banning surveillance advertising for children while still allowing it for adults might seem like half a loaf. But, she said, it could also begin to shift norms for a generation of children.

“What I hope,” she said, “is that the generation of kids that do get a higher level of respect, a higher level of transparency, greater privacy, are less willing to give it up when they’re adults.”

Of course, a policy recommendation in a State of the Union speech is nothing more than a wish. From health care to voting reforms, Biden’s speech was full of calls to action that are certifiably dead on arrival. Whether Congress can agree to ban surveillance advertising for kids will be a bellwether for how serious its members are about regulating online privacy more broadly. What’s clear is that an industry devoted to capturing attention has finally gotten Washington’s.