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Because the FTC begins its lawsuit against Kochava, some start to see the danger sign to ad-tech while some see an uphill battle

Because the Federal Trade Commission begins its legal battle against among the smaller startups in the ad-tech ocean, some legal and privacy experts are wondering if the agency is going for a new method of frying fish.

In a fresh lawsuit contrary to the digital marketing data broker Kochava, the FTC alleges the Idaho-based company sold sensitive consumer geolocation data to companies collected from vast sums of devices. Based on the federal agencys complaint, data collected around sensitive locations places including reproductive health clinics, places of worship, homeless and domestic violence shelters and addiction recovery centers could put people vulnerable to stigma, discrimination, assault, emotional distress, along with other harms.

Since its filing on Monday in federal court in Idaho, the lawsuit has left ad-tech insiders wondering why Kochava was designated when its one among many data brokers that track location data. Some speculate the regulatory agency really wants to make a good example out of Kochava without getting overly burdened by suing much bigger companies in the ad-tech space. Experts start to see the lawsuit against an inferior player like Kochava as a danger sign to the broader data broker industry while some say the FTCs case will undoubtedly be legally challenging and face a higher bar. Whatever the outcome, the legal battle also raises new questions concerning the future of location-based data and the appetite advertisers have for this.

Even though FTC has investigated various areas of the web ad industry it issued a 2014 report contacting more transparency and accountability for data brokers the agency has traditionally focused more on giants like internet and telecom companies. Probably the most famous exemplory case of FTC enforcement linked to data privacy was its landmark settlement with Facebook 2019 following a study into the way the British firm Cambridge Analytica collected user data. (The FTC declined Digidays interview request about its Kochava lawsuit.)

Thats the most important section of this: Were moving down the supply chain, said Zach Edwards, an unbiased researcher. Its no more just the Cambridge Analyticas. Were going a foot deep rather than an inch deep.

The brand new complaint comes weekly prior to the FTC will hold its first public hearing within the information-gathering process to see potential new rules regulating commercial surveillance. In addition, it comes as Congress considers new federal regulations beneath the proposed American Data Privacy And Protection Act, which may supply the FTC expanded regulatory powers.

A very important factor is size, but its also their role, said Jessica Lee, chair of regulations firm Loeb & Loebs privacy, security and data innovations practice when asked about why the FTC would target Kochava. In the event that you actually want to make an effort to effect change particularly in cases like this where in fact the issue may be the data feeds which are made available it could make more sense ahead following a company thats in the supply chain, and thats really where Kochava is.

Another sort of case and a rare countersuit

Former FTC officials told Digiday that the agency is going for a different approach from how its sought to modify data privacy with giants such as for example internet and telecom companies. Rather than attempting to prove Kochava has been deceptive an integral tenet in the 2019 case involving Facebook and Cambridge Analytica the allegations concentrate on unfair practices with user data. Some lawyers say provides case more legal standing but others note the FTC must prove how Kochavas practices can harm consumers.

Other times the FTC sued companies over privacy include 2021 settlements with the period-tracking app Flo and the ad platform OpenX. Regardless of the FTCs recent history of privacy-related settlements, Kochava has chosen to preemptively fight. Earlier this month, it filed a countersuit contrary to the FTC claiming the agency has wrongly threatened the business and mischaracterized its business.

In a written statement, Kochava Collective General Manager Brian Cox said the FTCs lawsuit shows the unfortunate reality that the FTC includes a fundamental misunderstanding of Kochavas data marketplace business along with other data businesses. He said Kochava recently rolled out new methods to block geolocation data from sensitive locations, adding that the agencys desired settlement had no clear terms or resolutions and redefined the issue right into a moving target.

Kochavawhich buys precise geolocation data from various third-party vendorsuses the info in two main ways. Alongside helping brands measure ad performance predicated on footfall traffic, in addition, it sells data to other ad-tech companies that then provide targeted data predicated on location. The business says it vets data brokers it works together with, however the FTC claims the info isnt anonymized and may put consumers vulnerable to being identified by their devices along with other personal information. Even though you can find not yet new laws to modify location-tracking, legal experts say funds may have potential repercussions and that similar violations later on could open the entranceway for further FTC enforcement.

Real progress to boost data privacy for consumers will never be reached through flamboyant pr announcements and frivolous litigation, in accordance with Coxs statement emailed to Digiday. Its disappointing that the agency continues to circumvent the lawmaking process and perpetuate misinformation surrounding data privacy.

Ruben Schreurs, chief product officer at the media management firm Ebiquity, said the FTC is in a few ways developing a no-fly zone round the usage of sensitive data. Kochava isnt the biggest player, but he thinks a legal win would potentially supply the agency some meat to showcase before it begins to revamp its data privacy rules in the coming months.

The lawsuit also sheds more light on the location-tracking industry and may help blow open a broader discussion in what companies ought to be permitted to track, in accordance with Joseph Turow, a longtime privacy researcher and professor of media systems and industries at the University of Pennsylvania. However, he said it doesnt fully address what the agency wants companies to improve or the way the government should regulate data beyond sensitive topics.

It truly is a question of whether that is an acceptable facet of society, Turow said. And I believe the FTC must confront that.

The uphill battle

Some former FTC officials who spoke with Digiday have doubts about if the case could win in court. Megan Gray, a former FTC attorney centered on enforcing privacy who’s now CEO of GrayMatters Law and Policy, said she thinks the agency will eventually lose the case predicated on its merits.

How this case is understood that is the agency suing a data broker for selling geo-location data with out a sensitive locations filter and without delineating permissible purposes because of its customers thats new, she said. That’s on the bleeding edge forefront for privacy perspectives, and an organization can genuinely say we didnt know.

Although Gray thinks the FTCs own case has weaknesses, she said it rarely is practical to file suit contrary to the FTC, especially because the financial penalties tend to be small and the terms arent particularly onerous.

Whatever happens with Kochava, others suggest companies that sell or share precise geolocation data may possibly also potentially face similar actions. Meanwhile, concerns around abortion-related data because the U.S. Supreme Court overturned Roe v. Wade also have made data privacy an elevated priority at the FTC and across differing of the Biden administration.

Allison Lefrak who spent nearly ten years being an attorney at the FTC centered on privacy and identity protection noted part of the FTCs complaint that suggests Kochava must have created a blacklist for locations linked to the forms of data addressed in the lawsuit. Now senior vice president of public policy and ads privacy at Pixalate, Lefrak said recent actions suggest the agency is indicating an elevated interest in seeking the commercial surveillance industry.

EASILY were an ad-tech data broker, Id can get on this blacklist recommendation, Lefrak said.

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