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FTC Mulls New Online Ad Regulations, So Why Is Tech Industry Uninterested?

High tech companies are worried about the Federal Trade Commission's interest in potentially regulating online marketing, and for good reason. After more than a decade of the online industry promising self-regulation, the FTC essentially said late last year that self regulation wasn't enough. No wonder Google (GOOG) alone dropped more than $2 million last quarter on lobbying the feds on privacy and online advertising regulation.

With all that federal attention, you'd think that high tech companies would take every step they could -- short of actually changing how they operated, of course -- to cool the regulatory ardor. But you'd be wrong. The FTC began to seek public input in May on revising its guidance about disclosures in online advertising. Since comments were opened, there have been a total of 13 comments, only one of which came from a high tech company.

The FTC originally crafted its guidance in 2000 -- years before apps marketplaces, inescapable online tracking systems, video delivery through smartphones, and the widespread use of social media. How can a company avoid the FTC's definition of "unfair or deceptive acts or practices" through disclosures on Twitter or in a viral video?

Online disclosure policies should clearly be on the mind of high tech companies, even though the policies are phrased as "guidance" to businesses. Although not formal rules, you can bet that ignoring suggested disclosure is a good way for executives to ask the FTC to investigate their company's activities.

But the amount of response has been almost non-existent and mostly focused on practices that the individuals disliked online. Intel (INTC) was the only high tech company that filed a response, raising some interesting points:

  • How do you display a disclosure when a smartphone is connected to a car and the driver can't see the screen?
  • What a small screen has too little room to display a disclosure unless the text is so small that it's effectively unreadable?
  • In the changing landscape of computing, is the repetition of disclosures on individual Web pages most important, as it was in 2000? Or do the prominence and proximity of a disclosure to an advertising message become the primary issues?
You can imagine other topics, like whether viral videos that are actually ad campaigns require embedded disclosures, or how to handle marketing apps. Or maybe you can imagine these issues if you don't work at a high tech company. Maybe it's just the dog days of summer and all these companies that buy, sell, deliver, and benefit from online advertising will manage to get their comments in by August 10. It does seem hard to believe that they'd trust whatever the FTC decided on its own.


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