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- [00:00]
A
This is adtech God and I command you to listen to this house ad. So if you're listening to this show, just know that you've really stumbled upon a giant network of content across advertising, marketing, media, publishing, and of course the people that work in this great advertising industry. So go to market, check out all of our brands. We have multitude of shows from the Brand Forum, the Advertising Forum, the Monopoly Report, the Ad Tech God Pod, the Market and more. We are bringing more podcasts to our network. We are consistently and constantly bringing on new shows. So check it out. Market or search for any of those brands in the app that you use to listen to this podcast. Enjoy the show and see you all soon.
- [00:59]
B
Welcome to the Monopoly Report Podcast. I'm recording this intro on Friday, March 20, which is one week after Marketecture Live here in New York City. Hats off to everyone at marketecture as it was an absolutely first class event. There was a great discussion between Eric Paparo and Jeff Green, Terry Kawaja dressed as Bad Bunny and of course we had my fireside chat with Commissioner Mark Meadow of the Federal Trade Commission. Now before we get to that, I'd like to thank everyone on the Market team as well as Commissioner Meador and his team at the FTC for helping me take over the main stage to discuss a number of critical policy issues within the ad space. I'd also like to thank everyone who pulled me aside at marketexture Live and said a kind word about the Monopoly Report podcast or the work everyone is doing here. Commissioner Meddaugh shared his thoughts on protecting kids industry self regulation on the privacy and ads front and even talked a bit about the competitive implications of browsers using privacy as a weapon, which is really timely given the regulatory push towards global privacy control signals. It's a great discussion and I hope you enjoy it.
- [02:11]
C
Commissioner Medar, it's I'm so grateful that you're here and thank you so much for joining us.
- [02:16]
D
Thank you so much for having me.
- [02:18]
C
So I want to start with a discussion on self regulation because self reg in the ad space has sort of a complicated history. You've got the nai, you got the daa, and you've got various other bodies and they've essentially tried to fill a gap left by the absence of a federal privacy law and they've done it with sort of mixed results over the years. So from where you sit at the ftc, does industry self reg still have a meaningful role to play or has the window for the approach effectively closed?
- [02:50]
D
No, it's a great Question. I think self regulation is always going to have a role to play in any industry. Even if you have state and federal laws, it's important for industry to be taking compliance seriously, to be working together on ways to protect the integrity of any industry. When I'm thinking about it, there's a few things that come into play. One, to have I think effective self regulation, you're looking for sort of a neutral third party that can play a role that has buy in from industry and then has authority to do something about concerns that arise. So a good example is the National Advertising division of the Better Business Bureau which has been particularly effective. They'll often make referrals of complaints to the ftc and we take those very seriously. So I think there's a model out there that can work and when it's done well, it can be very helpful. Of course, the, you know, my, the antitrust lawyer in me wants to also point out that on the consumer protection side when we talk about industry coming together to solve a problem, we're like, yeah, great. And then the competition lawyers are always saying, whoa, hold on, you know, so have your lawyers involved. You know, if you're, you have competitors getting together to talk about their business raises red flags and concerns. So, you know, we also want to make sure that any venue for self regulation doesn't inadvertently become a venue for collusion or coordination.
- [04:07]
C
No, fair point. What does it need to look like? What are the, so you mentioned one thing, you know, turning over bad actors to regulatory authorities. And I think that's helpful, maybe even kicking out bad actors from the self reg group as long as you're not crossing over to the collusion. But, but other than those two things, what does self reg really need to look like in order for the FTC to look at it and say, okay, this seems pretty robust.
- [04:33]
D
I think we're going to be looking at whether things are slipping through the cracks, right? Is it effective? Is it actually working to deal with the problem? And of course, I mean the existence of self regulation does not mean that the FTC takes their foot off the gas, that we're not looking at problems in an industry. They go hand in hand. You know, we love it when there's effective self regulation in an industry. It makes our job easier. We don't have unlimited resources to pursue every single potential case out there. And so it's great when industry is being proactive to limit the effects of bad actors, but we're still going to be looking at what's slipping through the cracks and where do we need to step in to fill any gaps?
- [05:11]
C
I've written a bunch on input. So as the ad space seems to be moving into agentic, that's where sort of a lot of the energy is. You still need something in the middle there to say data partner A, good, Data partner B, maybe not so good. And you could say that the same thing with the DSP good, this DSP not good. What I'm hoping is that self reg can be one of those inputs and it sounds like potentially that can still exist.
- [05:38]
D
Yes. I mean, again, that's where I would raise some of the competition concerns you don't want to get to. I mean, sometimes there's a fine line between self regulatory efforts that are meant to punish bad actors or resolve concerns, but it can quickly turn into some large incumbents have teamed up and used self regulation as a pretext to keep out this new upstart competitor. Right. So that's something you always have to be aware of as well.
- [06:03]
C
That could never happen in the ad space. Are you, are you trying to tell me that somebody would use privacy as a pretext for anti competitive behaviors?
- [06:11]
D
It's a novel theory. I know. I'm sure no one's thought of it before. Wow.
- [06:16]
C
So I want to shift a little bit and talk about cookies. And it's funny because we're sort of, it's a great transition because we had a whole mess with cookies over the last five years and apparently that's entirely gone away. But, but I want to talk specifically regarding cookie based opt out mechanisms because they've been the industry's default privacy tool for like 25 years. The challenge, and this has really been the challenge since day one, cookies are technically fragile. They get deleted, they don't persist across devices, they're invisible to most consumers. Other than that, by the way, they're great. But given everything the FTC knows about how these systems actually perform in the real world, do cookie based opt outs still meet the bar for meaningful consumer choice?
- [06:58]
D
So this is one of those times where I give the completely unsatisfying but truthful lawyerly answer of it depends. Right. So I think those criticisms are fair. Right. No technology is perfect and there's shortcomings with cookies. When we're looking at it from a law enforcement perspective at the FTC of whether the use or failure to use any technology amounts to an unfair, deceptive practice. That's a very contextual question. Right. So it depends upon what are the other options that are available in the marketplace. I think this is a space where new technology poses a lot of opportunity to come up with better alternatives. And so whether or not cookies continue to be an adequate method will really depend on, well, what are the alternatives? And of course, again, to keep sneaking the antitrust side into things. We're aware that there have been competition concerns about the degradation of cookies and whether the shift again to a platform that is ostensibly oriented around increasing privacy isn't simply a pretext to lock up the browser market or access to critical data.
- [08:03]
C
And that really gets me into what is effectively a competition question. So there's been a fair amount of regulatory energy, particularly at the state level, regarding this global privacy control or browser based opt out signals. And I'm just curious, wearing your privacy hat, I would love to know what you think about those signals as being potentially a good solution. And then I would love it if you would wear your antitrust hat and say, okay, great, but the browsers, all of them have a competing ad business. And how do we, if the industry were to get behind those types of signals, would there be any assurances, you think around? Well, we're going to keep them off by default. And so it has to be a proactive consumer choice. I know, I've just filibustered there, so we'd love to hear the privacy side first. Sure.
- [08:53]
D
I mean, I think this is something we would need to dig into the details of, but it's always encouraging to see new, new ideas come out there. Right. New technology, new proposals. And ideally, you know, this is where the market, the free market really has a role to play. Necessity is the mother of invention. When we need these new approaches, that spurs people to, to come up with new ways to solve these problems. So it's encouraging to see those ideas. You know, I think the key, what I would say here about our approach is that this is one area and there are others we'll probably talk about more this morning, where the FTC is not trying to do a top down approach. Right. We're not looking to march into the industry and say you all have to operate this way, you have to use this tool that we want to see what's the best and most creative solution that the industry can come up with. And so seeing those kind of developments is encouraging. We're going to be looking at it to see, you know, is it effective? Does it actually protect privacy? And then, you know, the second part of your question, you know, what are the competition impacts? There really is sort of a sliding scale between competition and privacy. And no one likes to admit it, but at Times they're intention, they really are. You know, as I've told people, from a privacy standpoint, you kind of, you could think of ideal privacy. All information is locked down, siloed, you know, minimal transfer or access. From a competition standpoint, all data would be accessible to everyone and everyone would have an equal access. And that's going to maximize the competitive nature of a marketplace and you'll have new entry and all of that. Neither of those extremes is desirable for obvious reasons. And so, you know, the challenge is striking that balance where we have free, open, competitive markets that are also capable of protecting privacy in a reasonable and, and fulsome way.
- [10:33]
C
So I wanna add one more wrinkle to the question. So when I think about a browser 10, 15 years ago, they were very clearly a user's agent. They were this thing that their only goal was to protect the user. And so they were able to justify, look, users don't want pop ups. So we're gonna take steps to make sure that those types of things don't happen anymore. But as we transition now in the last two or three years, where you've got companies like Perplexity who are, and I'm not disparaging them, but they are clearly seeing their browser as an opportunity to monetize users. And so in that light, you know, you're no longer a user's agent. And so, you know, is, is there a benefit of the doubt that browsers no longer get in terms of how they're approaching this from a competition law standpoint?
- [11:22]
D
I don't know if there's a benefit of the DAO issue. This is a common dynamic we see where products start out oriented one way and then transition over time to serve different interests. The way I think this is a good blend of consumer protection and competition issues because they both rely on transparency. Right. So from the consumer protection standpoint, you know, if your browser is oriented towards protecting interests other than the users, we just want people to know that. Right. If you're not deceiving someone about how your product operates or what kind of privacy protections are or are not offered, that's okay, Right. And that feeds into the competition standpoint of when people are informed and they understand how a product works, then they can make an informed choice. And that's ultimately the basis of competition is consumers making choices about what products and services they want to use with full knowledge of how they're actually functioning. So I think it really brings those two together.
- [12:20]
C
I want to transition to children's. The FTC held an event I Think it was late January on children's issues. And so for, for many of the folks here probably weren't in that room. But what were the two or three most important takeaways in terms of how the FTC is looking at the children's issue? How do you protect kids?
- [12:39]
D
Yeah, so we had a workshop on, on age verification. And I think, you know, the first thing that really jumped out to me was how much innovation is going on. There really has been a lot of technological development in the age verification space. I think, you know, there are a lot of understandable concerns at times about age verification, but honestly, I think some of that is premised on an outdated understanding of just how far technology has come. So just to pick one example, at some point people were discussing the ability to use hand gestures. That AI is actually, they've developed systems that are incredibly accurate in predicting whether someone is a child or an adult based on their hand gesture. Something you would never think of really has sort of a minimal data burden or personal privacy burden there. So I'm not, I'm not endorsing that as like, the solution, but I'm just saying, like, there's a lot of creative thinking and work going on there and that really stood out. And I think, you know, Chairman Ferguson made clear in his remarks, and we've put out a statement since then too, that, you know, we don't want to get in the way of that innovation. And so one of the things we've done is put out an enforcement policy statement on COPPA clarifying that, you know, if you're collecting data in order to do age verification and of course, abiding by certain requirements to, you know, minimize the data that you're collecting, you're only using it for age verification, you're deleting it as soon as it's done things like that, that, that we would not bring a COPPA enforcement action in that situation. So, again, trying to make clear that we don't want COPPA to be an impediment to the adoption of age verification. That, and then just that, you know, we've already seen a lot of work in this space at the state and international level. So again, this is an active project with lots of people are thinking about it. And I think there's a lot of potential to find a solution that balances the real safety benefits that age verification brings for children, providing parents that extra backstop that they're looking for. There's a lot, I think, red herring arguments over, we'll just let parents take care of this, that if you support age verification, you're a lazy parent, that you're not adequately supervising your kids. And as a parent, myself and I think others with kids would understand and agree you do everything you can to protect your children and you try to keep track of what they're doing online. But I remember using AOL 3.0 when I was a kid and my parents had no idea how that worked or what chat rooms I was getting in, or, I mean, God, who knows what I could have encountered. And thank God I didn't run anything terrible. But every parent knows that a point comes when your kid knows more about technology than you do and you want that extra backstop. You want something there that's helping you as a parent, that you know that if you miss something not because you weren't trying, but because, I mean, look, you're trying to put food on the table and educate your kids and take care of everything. You can't be their digital chaperone 24 7. So you want to know that if something slips through the cracks, there's that backstop there. So I think that's, that's a legitimate goal and we can do that in a way that balances any privacy concerns, data security concerns. It was just very encouraging to find out how much work is being done on that front and how much energy and resources are going into finding that right solution.
- [15:48]
C
So I want to push on that a little bit because you said a moment ago that there's sort of a tension between privacy and antitrust. Totally agree. There's also a tension between privacy and child protection to a certain extent, because, I mean, doesn't age verification sort of trade in one set of problems for another?
- [16:06]
D
I think there's that potential there. And that's where again, I was encouraged to see how much work has been done to try to resolve that tension. There's a lot of creative work being done. And how can we set up an age verification system that minimizes the data that has to be collected and ensures that it's not retained, that it's not being used for any other purpose. You know, creative ideas around double blind architecture that allow third parties to provide age verification services without needing to have the full picture of all the identity information about the user. So this seems like a problem that is eminently solvable, especially with all the technological advancements, including AI, that we have today, that it's just a matter of will, of being able to get a across the finish line.
- [16:48]
C
So I may be inferring something that that isn't existing here, but it sounds like what the commission is pushing for now is, is not necessarily 100% verification of everybody who serves the Internet, but rather, you know, the platforms have enough signals to reasonably ascertain whether somebody is, you know, over 18 or not.
- [17:12]
D
Yeah, I mean, it's something that I would think would go without saying, but maybe needs to be stated explicitly, which is nobody wants a world in which you've got to show your driver's license to go read cnn. We don't want a world where you're having to share all your identity information just to go access anything on the Internet. The focus is really on that content that can be particularly harmful to children. The websites that as a parent you would be concerned about your kids stumbling upon. That's what the focus is. I think that's reasonable and should be obvious, but in case anyone was wondering, yes, that's the focus. This is not some backdoor attempt. We don't want the government involved in H verification. We don't want, you know, any sort of federal database. Like we have no interest in that. This is an issue where, you know, our interest is in the marketplace and industry coming up with solutions that are effective that don't require, you know, the government getting involved and don't require this sort of age gating of the entire Internet.
- [18:05]
C
Yeah. And just to highlight when, when, when the FTC is proposing a safe harbor harbor for data that could be used to, you know, to lightly verify. The last thing you said is. Yes, assuming that it gets deleted. So that the idea here is that it's not to create some persistent database of adults versus kids.
- [18:24]
D
Yes, that's right. And I would encourage folks that haven't seen it to look up the policy statement on coppa. It's on the FTC website. It makes very clear that this is sort of a, it's kind of a safe harbor. I mean, it's not a formal rule or anything. It's not like doesn't give anyone in legal rights. But it's clear about our enforcement priorities and when we would and would not bring a case. And there are very clear requirements about, you know, minimizing the data that's collected. It's only being used for age verification and it's being deleted as soon as that process has been completed.
- [18:56]
C
So I think it's fair to say that your primary expertise over the years has been on the antitrust side. And heck, if I'm understanding correctly, in a previous life, you wrote legislation seeking to sort of rein in some of the competitive practices existing in the ad tech space. So I wanted to touch on antitrust law a little bit more. So conceptually it was. Antitrust law is built under this fairly intuitive concept of consumer harm. So prices go up, competition goes down, consumers lose. But in digital media, the most consequential platforms are free to use. So I'm curious, has antitrust law actually figured out how to measure consumer harm when there's no price to raise?
- [19:40]
D
Yeah, this is a question. It's a good question. As an antitrust lawyer, it's always kind of amused me because I think some people coming to antitrust for the first time think that it's sort of a gotcha. Like, ah, you're concerned about prices, but there's no prices in this market. So aha, what are you going to do? And it's really not complicated. And, and there's two responses I would point to. One is that there's no such thing as a free product, right? You look at all of the quote unquote free platforms and services on the Internet, people are making money and people are paying that money. And I think DOJ's suit against Google over their ad tech business and practices is a great example, right? I mean, advertising is what's behind all the quote unquote free products and services that we use. And DOJ was to able, able to focus on the actual economic transactions taking place related to those platforms and address the anti competitive conduct taking place there. So that's one approach. The other is to say that price is not the only signal or data point that antitrust takes into consideration. You know, we're looking at quality is a big one, right? So there's this concept of quality adjusted price. You can have an industry, a market where a monopolist is engaging in anti competitive behavior and instead of raising the price, they're able to reduce the quality. So you know, an easy thing would be like if you had a monopoly and canned green beans, instead of raising the price, you could just reduce the number of green beans that you put in each can. It's the same effect. We can see that in digital markets through for example, privacy degradation. You know, it's not a, it may be a free product, but if you have a monopoly, you can get away with reducing privacy protections on that platform, which allows you again to monetize that data to an even greater degree. So they're actually making more money, they are benefiting from an economic transaction and the consumer using the supposedly free service is suffering harm.
- [21:26]
C
So a lot of people in this room, particularly folks in the ad space have been eagerly following antitrust law for at least two or three years, but almost, almost like as a sporting activity in terms of like they're not necessarily into it in the weeds. What's your sense of how antitrust currently is really addressing some of the harms to the marketplace?
- [21:52]
D
Yeah, a lot of it is ongoing litigation. I think these are issues that started gaining prominence in 2016. It spurned congressional inquiries and hearings, which led to investigations at the antitrust enforcement agencies. And then, you know, under the last administration, those, those kind of cases that began under the first Trump administration went to trial during the Biden administration. And now, you know, we've had two results in the Google cases. There's an ongoing cases against Apple and Amazon. And so a lot of these questions are being actively litigated and then appealed. And so some of it's sort of hanging out there to see how it's all going to be dealt with. But that's sort of the status quo at the moment.
- [22:31]
C
And are you still optimistic that in the future of antitrust in terms of reining in, or do you think that there's a chance that some of these platforms have just gotten too big?
- [22:44]
D
It's a both and in general, the approach of antitrust is both through merger enforcement and conduct cases. You want to prevent problems before they get out of hand, but it always kind of goes hand in hand with regulation. I think of them on a sliding scale in a lot of cases that ideally you have competitive free markets and you don't need regulation, but you can't have situations where either there was conduct that was somehow outside the bounds of the laws and what it could stop, or you know, we've had cases where law enforcers have just been slow to keep up with the marketplace and slow to react to anti competitive conduct. And so you can find yourself in a situation then where, you know, these companies have gotten so large the conversation conduct has gotten unruly, it's not clear what an antitrust remedy might look like. And that's when you have Congress starting to say, well, hey, maybe we need to pass a law to deal with these issues or focus on that problem.
- [23:40]
C
Any predictions on whether Congress is going to do that in the next five or ten years?
- [23:44]
D
Zero predictions.
- [23:47]
C
Fair point. So, okay, so you talked a little bit about merger review and I know that this FTC and there's been people in this room who have been pretty critical of the previous FTC's approach to merger review. But conceptually you want to evaluate a deal before it closes. You want to block combinations that would harm competition, you know, but, but in digital media, many of the most consequential consolidations have already happened. I mean, I had John Leibowitz on the pod a number of months ago and a lot of this stuff that we're sort of seeing come home to risk now occurred way back then. So I guess my question is what tools does antitrust law have to actually address some of those entrenched dominance?
- [24:30]
D
Yeah, the answer is Section 2 of the Sherman act and Section 5 of the Federal Trade Commission Act. Ideally, as you point out, right. You we would be stopping anti competitive mergers in their incipiency that if companies are trying to merge to monopoly or in a way that's going to, as a law says, substantially less in competition, we would go to court and stop that at the beginning. You know, enforcers don't always get things right. I've been critical in the past of prior administration sort of being asleep at the wheel and allowing a lot of this consolidation that had what I thought were predictable results that we have seen play out pretty much as people feared they would. And so then you get to a position where you do have these large dominant firms that have, you know, taken over a marketplace. And that's where, you know, the other part of antitrust law, which we refer to as conduct cases, come into play. That's where we're worried about companies that hold monopoly power, using that monopoly power to foreclose competition to keep out new entry or to hinder their rivals who are trying to compete. And that's why, I think that's probably why we've seen a lot more conduct cases in recent years than we had in the past. It used to be that, you know, I mean, it's probably 90% now, but it used to maybe being like 99% of antitrust cases were mergers. And we've seen a real uptick in conduct cases going after monopolists lately. And I think it's because we did miss a lot of those merger cases that we should have been bringing in the past and allowed the market to get to a spot where you have one big firm dominating things, engaging in anti competitive conduct. And so now we've got to go through this much more demanding analysis. The investigations, the litigation, all of it is far more complicated when you're dealing with trying to untangle a monopolist from a marketplace. But that's where we are now and we at least have the tools to do it. We just need to keep at it.
- [26:16]
C
So I had asked this question on the pod and I would love for this audience to hear that again. Nine months ago you gave a speech which sort of foretold the future of conservative antitrust. And I think what you are advocating for is a return to the good old days of focusing on the power of large organizations. And I don't want to infer too much, but it felt like you were, you felt like the antitrust law had gotten away from that. And I would love for you to maybe to restate some of that here for this audience.
- [26:48]
D
Sure. So my, you know, it was based off of a paper that I wrote and the thesis was essentially that the way that those on the right had come to view antitrust had really gotten away from the statutory text, that we would talk about concepts of consumer welfare. But when you looked at, you know, the economic analysis actually being done under that framework, it often wasn't actually looking at consumers welfare. It was looking at sort of the welfare of everyone in the marketplace, which ironically could include the monopolists. And so you end up in a situation where it's not hard to justify almost any merger or course of conduct. And that if we're serious about being faithful to the statutory tax of the antitrust laws and of actually protecting end consumers, which is usually, you know, like the average person walking down the aisle of a store buying something, but in the B2B context can also be, you know, trading partners in a between two companies, that we need to be focusing on how mergers and conduct affect those people. That that should really be the central focus of the antitrust laws. And that this is consistent with a broader theme in conservative thought and philosophy about concern over concentrated power. Conservatives spend a lot of time talking about the dangers of big government. But then when it comes to big business, people kind of mumble and get silent and don't say so much. But it's the same problem, right? It's still a large concentration of, in this case, economic power that we don't have standing armies and guns. They're not gonna come arrest you if you don't do what they want. But they can still take away your livelihood. They can prevent you from communicating, they can prevent you from shopping, from banking. You know, we've seen, especially folks on the right, I think experienced a lot of the power that large corporations have over our daily lives. And that should be equally concerning to us as law enforcers.
- [28:34]
C
So I want to follow up with a privacy question. I was going to ask you, by the way, if you were ad tech God, but I'm not going to do that. So the previous FTC had, had, had basically taken a position that browsing data was inherently sensitive and therefore required an opt in consent standard. Feels like the current FTC has backed away from that, from that notion. But it would be really helpful to get your sense of where the commission is on that.
- [29:03]
D
Yeah, I mean, to be perfectly candid, it's not an issue that's come before us in the last year that I've been at the commission. But again, it's a really unsatisfying lawyer answer. It's always going to depend on the context. You know, what sort of expectations do consumers have and what sort of representations are being made to users when they're using a product or service. That I think is really going to be the linchpin of whether something amounts to being unfair or deceptive.
- [29:29]
C
Fair point. Commissioner Medar, this has been a wonderful discussion. I really appreciate you sharing some time with us.
- [29:35]
D
Thank you so much for having me. It's a great speaker.
- [29:43]
E
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