Pluralistic: To save the news, shatter ad-tech (25 May 2023)

Originally published at: Pluralistic: To save the news, shatter ad-tech (25 May 2023) – Pluralistic: Daily links from Cory Doctorow

Today's links

EFF's banner for the save news series; the word 'NEWS' appears in pixelated, gothic script in the style of a newspaper masthead. Beneath it in four entwined circles are logos for breaking up ad-tech, ending surveillance ads, opening app stores, and end-to-end delivery. All the icons except for 'break-up ad-tech' are greyed out.

To save the news, shatter ad-tech (permalink)

Big Tech steals from news, but what it steals isn't content. Talking about the news isn't theft, and neither is linking to it, or excerpting it. But stealing money? That's definitely theft.

Big Tech steals money from the news media. 51% of every ad-dollar is claimed by a tech intermediary, a middleman that squats on a chokepoint between advertisers and publishers. Two companies – Google and Meta – dominate this sector, and both of these companies are "full-stack" – which is cutesy techspeak for "vertical monopoly."

Here's what that means: when an advertiser wants to place an ad, it contracts with the "demand-side platform" (DSP) to seek out a chance to put an ad in front of a user based on nonconsensually gathered surveillance data about a potential customer.

The DSP contacts an ad-exchange – a marketplace where advertisers bid against each other to cram their ads into the eyeballs of a user based on surveillance data matches.

The ad-exchange receives a constant stream of chances to place ads. This stream is generated by the "supply-side platform" (SSP), a service that represents publishers who want to sell ads.

Meta/Facebook and Google both the "full stack" of ads: they represent buyers and sellers, and they operate the marketplace. When the sale closes, Googbook collects a commission from the advertiser, another from the publisher, and a fee for running the market. And of course, Google and Facebook are both publishers and advertisers.

This is like a stock exchange where one company operates the exchange, while serving as broker and underwriter for every stock bought or sold, while owning huge amounts of stock in many of the listed companies as well as owning the largest companies on the exchange outright.

It's like a realtor representing the buyer and the seller, while buying and selling millions of homes for its own purposes, bidding against its buyers and also undercutting its sellers, in an opaque auction that only it can see.

It's a single lawyer representing both parties in a divorce, while serving as judge in divorce court, while trying to match one of the divorcing parties on Tinder.

It's incredibly dirty. These companies gobble up the majority of every ad dollar in commissions and other junk fees, and they say it's because they're just really danged good at buying and selling ads. Forgive me if I sound cynical, but I think it's a lot more likely that they're good at cheating.

We could try to make them stop cheating with a bunch of rules about how a company with this kind of gross conflict of interest should conduct itself. But enforcing those rules would be hard – merely detecting cheating would be hard. A simpler – and more effective – approach is to simply remove the conflict of interest.

Writing on EFF's Deeplinks blog this week, I explain how the AMERICA Act – introduced by Senator Mike Lee, with bipartisan cosponsors from Elizabeth Warren to Ted Cruz (!) – can do just that:

The AMERICA Act would require the largest ad-tech companies to sell off two of their three ad-tech divisions – they could be a buyer's agent, a seller's agent or a marketplace – but not all three (not even two!). This is in keeping with a well-established principle in antitrust law: "structural separation," the idea that a company can be a platform owner, or a platform user, but not both.

In the heyday of structural separation, railroad companies were banned from running freight companies that competed with the firms that shipped freight on their rails. Likewise, banks were banned from owning companies that competed with the businesses they loaned money to. Basically, the rule said, "If you want to be the ref in this game, you can't own one of the teams":

Structural separation acknowledges that some conflicts of interest are so consequential and so hard to police that they shouldn't exist at all. A judge won't hear a case if they know one of the litigants – and certainly not if they have a financial stake in the outcome of the case.

The ad-tech duopoly controls a massive slice of the ad market, and holds in its hands the destiny of much of the news and other media we enjoy and rely on. Under the AMERICA Act's structural separation rule, the obvious, glaring conflicts of interest that dominate big ad-tech companies would be abolished.

The AMERICA Act also regulates smaller ad-tech platforms. Companies with $5-20b in turnover would have a duty to "act in the best interests of their customers, including by making the best execution for bids on ads," and maintain transparent systems that are designed to facilitate third-party auditing. If a single company operated brokerages serving both buyers and sellers, it would need to create firewalls between both sides of the business, and would face stiff penalties for failures to uphold their customers' interests.

EFF's endorsement of the AMERICA Act is the first of four proposals we're laying out in a series on saving news media from Big Tech. We introduced those proposals last week in a big "curtain raiser" post:

Next week, we'll publish our proposal for using privacy law to kill surveillance ads, replacing them with "context ads" that let publishers – not ad-tech – control the market.

Hey look at this (permalink)

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Colophon (permalink)

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