Industry's 'Sensible Wins' in Australia's Privacy Act Review Need Public Interest Rebuttal

In February 2023, the Australian Attorney-General released the Privacy Act Review Report, which provided over one hundred proposals for reforming the country’s 1988 Privacy Act. One of these was a proposal to provide Australians with an unqualified right to opt-out of receiving targeted advertising. Despite being a modest step, the Government’s formal response to the Attorney General seven months later simply ‘noted’ this proposal, leaving it without a path to implementation.

The walkback on a straight-forward opt-out right was heralded as a “sensible win” by the Australian Association of National Advertisers, and welcomed by numerous Adtech industry players. Adtech and Big Tech’s interests are closely aligned, and both industries brought hefty lobbying power to Canberra to secure this outcome.

For example, immediately after February’s Privacy Act Review Report was released—which called for the opt-out—Meta flew its privacy policy director Melinda Claybaugh to Australia to defend claims that providing users with opt-outs would hurt small businesses and that Meta’s business model couldn’t support users to both opt-out of targeted advertising and continue to use its services for free. Meta’s claims were largely unsubstantiated, as evidenced by the fact that subscription fees have not emerged as a result of opt-outs being provided in Europe, California, Colorado, Texas and Montana.

It is likely the Australian Government’s decision to sideline the proposed opt-outs was a result of industry pressure, exacerbated by confusion around the nature and extent of the harms stemming from targeted advertising and associated data collection practices. This analysis is a cautionary tale for other jurisdictions, and the diversity and extent of the harms is worth discussing.

The diverse harms fueled by targeted advertising

Beneath the surface of targeted advertising lies an often-overlooked environmental cost. The process of collecting, storing and utilizing massive amounts of data for personalized ads consumes a substantial amount of energy and resources. This has a significant impact on the environment, as it contributes to increased carbon emissions and exacerbates the already pressing environmental challenges of the 21st century.

Beyond the carbon footprint of the ads themselves, the practice often pushes consumers beyond their means. The fact that advertisers can buy data that reveal characteristics such as someone’s age, income, location, and credit history makes this particularly concerning as it enables the targeting of vulnerable groups such as children, gamblers or those experiencing financial distress.

Targeted ads are particularly concerning when served to children. Adtech companies have boasted about targeting children precisely when they are feeling insecure or in need of a boost. Research has also revealed that advertisers can buy the ability to target children with ads related to alcohol, tobacco, gambling, and extreme weight loss.

Protecting privacy is about more than concealing personal secrets, and information held about people may put them at a disadvantage at different points in their lives. Targeted advertising mechanisms can fuel discriminatory practices. For example, the US Federal Trade Commission found that targeted advertising and underlying associated data was used to drive discriminatory advertising that breached the Fair Housing Act. Targeted ad platforms can also skew job ads, and associated professional opportunities, by gender.

Left underregulated, targeted advertising can also facilitate larger social harms. The Cambridge Analytica scandal, for example, illustrates how behavioral micro targeting can be used to influence election results. The way targeted advertising is deployed—finding our weaknesses and vulnerabilities— is specifically used to bypass our conscious faculties and influence our behavior.

Moreover, there is a significant issue related to data leakage to entities outside Australia, primarily driven by real-time bidding in online advertising. This technology, operational on most websites and apps, essentially conducts automated auctions where information about users' browsing activities is shared with numerous companies globally. This process occurs trillions of times annually, with individuals typically experiencing it hundreds of times daily. This data-sharing extends to various countries, including those that may be viewed as foreign adversaries, posing not only privacy but national security concerns. The scale of this issue is enormous, affecting virtually every internet user, including prominent figures like judges, politicians, defense contractors, and military decision-makers, among others.

What comes next in Australia?

While it is disappointing that the Government did not commit to providing what is in fact a very modest opt-out provision, it did commit to further consider “how to give individuals more choice and control in relation to the use of their information for targeted advertising, including layered opt-outs and industry codes". This indicates a willingness to engage with the issue and, hopefully, take concrete action in the future. In further considering the issue, the Government should recognize the extended harms of targeted advertising and associated data practices, and potentially extend beyond providing Australians the right to-opt out and instead place requirements for adtech providers to secure opt-in, active consents.

For more information on the harms of targeted advertising, listen to Reset.Tech Australia’s limited podcast series or read its new report, ‘Australians for Sale’.

Disclosure: in 2023, Tech Policy Press received an unrestricted grant from Reset.