Those who thought the FTC under President Trump would forget the consumer are wrong. The FTC’s decision and imposed penalties on Smart TV maker Vizio was a win for the consumer and officially put the entire electronics industry on notice. In an environment where “always on, always listening” electronic devices gather massive amounts of consumer data, which could then be sold to direct marketers or worse yet, captured by hackers or foreign governments, this ruling is of particular interest. Manufacturing a network-connected hardware device (“Internet of Things”) carries meaningful obligations to consumers and duties to protect their privacy.
Far from “ending” the case, this FTC decision has broad ramifications for the advertising and audience measurement industry which is hungry for more consumer data. FTC Chairwoman Ohlhausen said the government will further investigate the potential for consumer harm arising from these device-level datasets.In finding that Vizio has infringed on the privacy rights of consumers with respect to the way Vizio gathers and sells viewership data without consent, the FTC introduced a new concept into the discussion – that TV viewing is “sensitive data” that should be handled with care. This is a view that Samba has long held because we generate datasets from over 200 million devices, and lacking specific laws or regulations in this area, we have always navigated this new market with self-imposed guiding principles and limitations.
This FTC investigation began when Vizio was named in more than 20 class action lawsuits last year, and the Commission engaged the leading smart TV providers to understand their practices around data handling, opt-in procedures, product features, and business model. We participated in an FTC Workshop in Washington DC, and held discussions with various regulators in the U.S., Europe and Asia who were all focused on this issue. The FTC was able to eventually distinguish between all the players in the Smart TV arena, and Vizio was a clear outlier among all TV companies. Vizio was engaged in selling raw viewership data tied to its consumers’ IP addresses and other identifiers, which could with minimal effort tie back to an individual household. That would be the equivalent of Google selling all of your personal search history for the last couple years to advertisers without your knowledge or consent. Not just selling ads against one of your search results, but selling ALL of your search history and your IP address to many unknown parties without notification to you, or giving you the ability to clear your history from all businesses who have access to it. Google would be insane to do that.
At the heart of the FTC’s issue, is Vizio’s sale of raw viewership data to ad tech companies without any consumer awareness of where the consumer data was being held or sold. The FTC found that reasonable amounts of disclosure or choice were not provided to consumers for sharing something any reasonable person would consider “sensitive.” So where does this leave the industry?
As a result of its investigation, the FTC has issued several directives: the device manufacturer (in its opt-in screen) must be clear in disclosing what data is collected from consumers, how the data will be used, and which third parties will have access to the data.
Samba from the beginning of our company has taken a different approach from Vizio. Although we work with 10 of the top 13 brands in the TV manufacturing business, we have never worked with Vizio data. We’ve always had an explicit opt-in and a simple process to opt-out (that also enables users to purge data from all servers that hold it). Most importantly, we never sold raw data to our clients even when they requested it.
The FTC’s decision provides guidance to the custodians of device-level datasets generated by IoT platforms. The willingness of others like Vizio to sell raw, individualized datasets has put a lot of pressure on us (and others in this industry) to follow suit. It strained some of our client relationships because there was a perception that selling raw, granular data was an industry-accepted practice despite our warnings against it.
We have also been quite public in our concerns that buyers and users of datasets share responsibility for how the data was collected, and in using the data, have potentially exposed all of their users and clients to scrutiny of federal, state regulators, and consumers by way of the class action lawsuits already underway.
We have always believed that viewership data belongs to the viewer, and the data should be handled with same care that businesses handle transactional data or personal health data, and that just-in-time notifications for sharing data provide the most appropriate level of choice to consumers. This belief – especially in light of the FTC judgement – is critical for the industry to adopt. It goes beyond what the FTC has required of Vizio, but it’s what we would want as consumers and owners of these products ourselves.
If the industry requires granular cross-platform viewing data to make better products then it behooves the industry to work in partnership with the consumer to ensure that data which drives our industry is available through transparent and easy to understand communication and choice. Samba has long believed that we can learn a lot from the behaviors associated with connected devices. As an industry we can develop more content that people enjoy and stop producing content that people ignore. We can make better commercials that try to inspire our consumers rather than those that annoy them. These kinds of insights are in the consumers interest and do not require a business model that exposes what any singular viewer is watching.
We look forward to collaborating with our colleagues in the industry to make sure that the FTC’s guidelines are implemented, and thank the FTC for taking a leadership position to prevent what appeared to be a harmful direction the industry was taking. We can do a better job self-regulating as an industry, and we certainly will.