Editors' Note: This is the sixth in our third annual series examining important trends in data privacy and cybersecurity during the new year. Our previous entries were on cryptocurrency, emerging threats, state law trends, comparing the GDPR with COPPA, and energy and security. Up next: HIPAA.
Social media companies' and search engines' revenue models are based on creating valuable advertising platforms for marketers. These platforms allow advertisers to reach a broad and engaged user-base at a fraction of the cost of traditional advertising, and allow them to do so on highly targeted bases. Advertisers can market their products based on users' search terms, demographics, location, affiliations, interests, and much more. The extensive amount of personal data utilized by online advertising platforms creates attendant data-privacy concerns for users and lawmakers.
Data-privacy concerns are heightened in the context of political advertising. As a result of the foreign interference in the 2016 U.S. Presidential election, users are not only wary about who is funding and organizing the political advertisements interspersed in their social media feeds, but also how much personal data those advertisers have access to, and how that data can be used. Since the 2016 election, online advertising platforms such as Facebook, Twitter, and Google have responded to these (and other) concerns by adopting comprehensive political advertising policies. While federal lawmakers have yet to act, some states have enacted online political advertising regulatory regimes.
In 2019, a few more states may enact online political advertising reforms, but with a divided government, federal legislation is unlikely to come to fruition. Accordingly, the most consequential changes to online political advertising regulations in 2019 will likely come in the form of self-regulation. And evolving social and community norms surrounding data privacy will contribute to any such changes.
Post-2016 Election Regulation of Online Political Advertising
In the wake of the 2016 election, several states enacted laws to regulate online political advertising. These laws generally impose disclosure requirements on online advertising platforms, and obligate large platforms to maintain a database of political advertisements. For example, California's 2018 Social Media DISCLOSE Act requires online platforms to include "paid for by" disclaimers or hyperlinks to payers' identifying information in certain California political advertisements. It also requires platforms to maintain publicly-available databases of political advertisements, including information about the payer's identity, the cost of the ad, and the reach of the ad. New York's Democracy Protection Act similarly institutes disclosure and disclaimer requirements for online political advertisements. The law also obligates platforms to create databases for independent-expenditure advertisements, and requires platforms to verify that independent-expenditure advertisers are registered with the state board of elections. Washington State and Maryland have also implemented online political advertising disclosure reforms.
A handful of state reforms notwithstanding, most of the post-2016 regulation of online political advertisements has come in the form of self-regulation. The largest online advertising platforms – Twitter, Facebook, and Google – have developed (and are continuously modifying) robust policies that involve disclosure requirements, public databases of political advertisements, advertiser-identity verification processes, and, for Google, some ad-targeting restrictions.
Twitter's policy requires advertisers who want to air "political content" ads in the U.S. to complete a certification process, which varies depending on the type of political content ad. An individual who wants to air an issue ad – an ad that "refer[s] to an election or a clearly identified candidate," or "that advocate[s] for legislative issues of national importance" – must provide Twitter with a U.S. government-issued photo ID and a U.S. mailing address. An organization must supply its EIN or Tax ID number and a U.S. mailing address. For "political campaigning ads" – in relevant part, those "that advocate for or against a clearly identified candidate for Federal office" – individuals must provide a U.S. passport, a government-issued photo ID with a U.S. mailing address, and a notarized form affirming the accuracy of the submitted information. An organization that is not registered with the FEC and that wants to run a political campaigning ad must have a natural person submit his or her passport number, other identifying information, and a U.S. mailing address. Once this identifying information is submitted, Twitter sends a paper form to the provided mailing address to verify its legitimacy.
For Facebook, any advertiser that wants to run an "election-related or issue ad" must comply with an authorization process that includes identity and location confirmation. To confirm that the advertiser has a U.S. location, Facebook requires the advertiser to enter its address, then sends a letter to the address. The letter directs advertisers to a URL where it must enter a code included in the letter. To confirm the advertiser's identity, Facebook requires advertisers to upload an image of her U.S. driver's license, state identification card, or passport, to enter her zip code, and to enter the last four digits of her social security number.
Google's political advertising policy also requires verification through the submission of individual or organizational identifying information for certain types of political advertising. Uniquely, Google also requires advertisers to complete this verification process before they can target users based on users' political affiliations, ideologies, and opinions. If John Doe wants to market his political rally by advertising to Republicans on Google, he will first have to verify his identity and location in the U.S. For that matter, if ACME Corp. wants to market its widgets to pro-choice advocates, it will have to do the same.
Forecasting 2019: Industry Self-Regulation & Evolving Data Privacy Norms
For social media companies (and other online advertising platforms), 2019 will likely be an important and challenging year when it comes to online political advertising. As an initial matter, the status of state-level regulation is in flux. Recent Democratic pick-ups in Maine, Colorado, New Mexico, Nevada, Connecticut, and Illinois make those states possible candidates for online political advertising reforms. New regulatory regimes may prompt platforms to adopt special advertising rules for some jurisdictions, or to forego advertising in some state elections altogether. At the same time, a Maryland lawsuit calls into question the constitutionality of state disclosure regimes, as applied to media organizations.
On the federal level, social media companies such as Facebook have expressed support for the Honest Ads Act, which would increase disclosure requirements, mandate political advertisement databases, and require platforms to make reasonable efforts to ensure that foreigners do not buy political advertisements. While Congressional Democrats will almost certainly shepherd the Act through the House, it is exceedingly unlikely to survive in the Republican-controlled Senate.
With a lack of federal regulation and only minimal state regulation, changes in online political advertising regulation in 2019 will likely come in the form of self-regulation. Whether and how social media companies (and other online advertising platforms) change their political advertising policies will depend on how social and community norms evolve along a number of fronts. Most relevantly for present purposes, this includes data privacy norms.
Social media companies' self-regulation of political advertising requires a difficult balancing act. On the one hand, the companies' revenue models revolve around advertising; and more particularly, an advertising product that allows marketers to reach highly targeted audiences. On the other hand, social media companies must ensure that their advertising policies conform to social and community norms, lest their user bases become disaffected, causing a drop in user numbers or user engagement, and, correspondingly, a less desirable audience for advertisers. Further, social media companies may tailor their policies to address concerns raised by lawmakers, so as to not invite more stringent regulation. These factors create an incentive to restrict political advertising practices in some situations.
While there are several ingredients that go in to this chemistry of pro- and anti- self-regulatory incentives, evolving data-privacy norms play an important role in forecasting industry self-regulation of political advertising in 2019. In the coming year, data-privacy regimes in Europe and California will frequently be in the news, and public scrutiny of data policies will surely persist. Furthermore, campaign finance and political advertising practices are likely to be at the center of a Democratic presidential primary in which several candidates will be pushing for democratic reforms. As these inputs cause social and community norms to evolve, online political advertising policies may need to evolve along with them.
In particular, data-privacy norms related to online political advertising could shift based on what personal data should be utilized for political advertising purposes and who should be allowed to use that personal data for political advertising. As to the former, online advertisers are allowed to microtarget their ads based on a host of highly-specific user information. Community and social norms may evolve to become less tolerant of microtargeting when advertisements include political messaging or are targeted based on political affiliations or beliefs. This may prompt platforms to institute restrictions surrounding what personal data can be used to target political advertising, and how political personal data can be used in advertising.
As to who users will tolerate receiving targeted political advertisements from, lawmakers and users have thus far been mostly concerned with foreign actors exploiting social media to interfere in our democracy. That is why platforms have taken steps to attempt to verify that political advertisers are U.S. persons. But as norms around money-in-politics continue to shift in 2019, lawmakers and users may also grow weary of how domestic organizations – often anonymously – utilize user data for political messaging. These changed norms could prompt platforms to restrict the targeting capabilities of certain types of political organizations; namely, so-called "Dark Money" groups or "SuperPACs."
Conclusion
In sum, evolving norms surrounding data privacy and money-in-politics may intersect in 2019 to prompt significant changes in online political advertising policies. The precise nature and extent of these changes are difficult to predict; however, online advertising platforms should be attuned to these evolving norms in order to respond with appropriate policy changes.
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