How the U.N.’s new privacy move will shake up the adtech industry

On March 26, the United Nations announced that it will appoint an expert to focus on a range of privacy-related issues, such as reviewing government policies, identifying and establishing global surveillance best practices, and addressing the level of transparency surrounding businesses that collect data and their relationship to how governments are able to collect and monitor this data.

The decision to appoint a privacy expert, whose official title is Special Rapporteur, was unanimously agreed upon by members of the U.N. Human Rights Watch and comes on the heels of unrelenting efforts by German Chancellor Angela Merkel and Brazil’s President Dilma Rousseff to tackle the issues of protecting privacy rights. Merkel and Rousseff, both of whom were the subjects of spying by the U.S., led the way in pushing the U.N. to adopt the Special Rapporteur.

“The pendulum at the U.N. is swinging towards balancing Freedom of Expression with the Right to Privacy. This announcement effectively signals that the U.N. is acknowledging that the U.S.’s 1st Amendment about the Freedom of Expression doesn’t supersede the European Right to Privacy. While it feels inevitable now that this evolution is effectively taking place, one of the major factors, in my opinion, that brought about this possibility for the U.N. is the E.C.J.’s judgement about the Right to be Forgotten (RTBF),” said Aurélie Pols, a key influencer in Europe regarding digital analytics privacy protection.

What does this mean for the adtech and digital analytics industries?

While the effects of the newly appointed expert won’t be immediately felt, they will surely affect how certain industries operate in the future. Companies in the advertising technology industry in particular will definitely feel the waves. Besides its international sway, the U.N. possesses enough power to convince national legislators to tighten data privacy laws. In the adtech space, this potential change in data privacy laws would drastically affect the way adtech companies collect, store, and use data and information.

Within the complex maze that is the real-time bidding (RTB) advertising ecosystem lie the ad exchanges. These robust technology platforms are the stock exchange of the display ad ecosystem, and they process gigantic amounts of user data.

Data flow in the RTB ecosystem

Here is just some of the sensitive user data that currently floats on the ad exchanges:

• GPS location data from apps
• Keywords data (in extreme cases, the app may share the content the user created in the app, such as an instant message, to allow the bidder to match it with the relevant ad!)
• IP address (considered personally identifiable information in some countries)

The data sent to the ad exchange is used to help advertisers bid on the available impression. In the simplest terms, if the user’s data matches an advertiser’s targeting parameters, that advertiser will bid higher in hopes of winning that impression. While it is somewhat understandable that the winning advertiser should receive this user’s data, it may astound you to learn this insider fact:

The user’s data is exchanged whether the bidder buys the inventory or not.

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This means that every advertiser who bid on that impression will receive the user’s data. While this is a pretty satisfactory runner-up prize for the losing advertiser, the user might have a few objections about how their information is being passed around. This situation only gets worse as more and more data about the user is exchanged between various parties in the adtech ecosystem. And things deteriorate even more once a tracking tag or an ad is served to the user, as this often involves loading another set of tracking scripts (the technique known as piggybacking) that shares the user’s data with other adtech vendors.

Data storage

So, how could future legislation changes affect adtech and digital analytics companies? Well, for starters, the very basic functionalities that adtech companies rely on every day, such as ad personalization, retargeting, and data collection, could all come under great scrutiny and require adtech companies to change not only their process, but also their technology — the very core of their business.

New legislation could also affect not only with whom the data is shared, but where the data is stored. The European Union has already taken steps in this area, as some EU privacy laws require companies who collect user data to store and keep it in their respective country or in the EU. In addition to the data-handling issues, new data privacy legislation could also spell the end for many shady techniques currently in place, such as Verizon’s undeletable unique identifier token header (X-UIDH) tracking code used to secretly gather user data, which, interestingly enough, San Francisco advertising agency Turn used to respawn cookies.

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Maciej Zawadziński is the CEO at Clearcode, a software development house that specializes in building programmatic advertising solutions. He was also the CEO and cofounder of Kanary NEST, a DSP that was acquired by Gravity4 in August 2014.