By Ryan Calo on August 14, 2013 at 11:39 am
The Stanford Center for Internet and Society, where I am an affiliate scholar, is a thought leader on consumer privacy and a source for potential solutions. The CIS Cookie Clearinghouse, for instance, intends to publish lists of tracking cookies to block or allow based on objective, balanced criteria informed by consumer expectations. According to recent work by Daniel Solove and CIS affiliate scholar Woodrow Hartzog, Federal Trade Commission privacy enforcement is also trending toward upholding what consumers have come to expect regarding their data. Violating consumer expectations around privacy is probably itself a sufficient reason for intervention. Consumers who take steps not to be tracked, or who rely upon representations that they are not being tracked, shouldn't be. My new project, however, asks a different question: Why should consumers worry about being tracked in the first place? What exactly is the harm here?
I locate the answer not in most contemporary practices, but in the all too likely future of online marketing. Today companies try to determine what individual consumers like, and then serve the ads they think best match those preferences. Ad matching is a lot of what cookies are doing in this context. The more information companies get, the better they can tailor ads, and the more money they make (in theory). There exists a case for harm here. Joseph Turow, for instance, explores how tailored advertising can sort consumers into "targets" and "wastes," leading to an uneven distribution of opportunity. Eli Pariser and Cass Sunstein have developed distinct socio-political harms related to tailored content. Many others, however, including FTC staff in an official report (PDF), acknowledge that consumers benefit from seeing ads that interest them, and of course from the fact that Internet content and services tend to be "free."
The problem is that digital advertising is not done evolving. Really it would be shocking if it were. And the way, I fear, things are headed, is toward cultivating consumer frailty. More specifically, some companies will face a mounting incentive not to just to match the right ad to the right person, but to match the right pitch (or price) to the right customer. The "right" pitch, meanwhile, will involve the technique of persuasion to which the individual consumer is most susceptible; the "right" price will be the highest possible price that specific consumer is willing to pay. To put this in behavioral economics terms, which I think is crucial to adding structure and concreteness, companies will be in a position to figure out where and how consumers are irrational, and exploit that irrationality for gain.
That advertising will evolve in this way is not inevitable. We can interrupt this cycle if we choose. Or so I argue in Digital Market Manipulation. I hope you get a chance to read the work and I warmly welcome your thoughts.
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