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The online advertising industry breaks the law, says the UK’s data watchdog

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Sales imagesMs. Tech

An inquiry found that the global $200 billion ad tech sector is rife with illegal practices.

The what sector? Virtually all of us have firsthand experience of the ad tech industry. Ever searched for an item to buy online, only to have it follow you around the internet for days on end after? That’s a direct result of real-time bidding, which was the focus of this report. The practice is common within online advertising across Facebook, Google, Amazon, and the many thousands of data brokerage firms.

What is real-time bidding? It’s a marketplace for your data, essentially. As the website you visit loads, the website owner auctions a space on the page you’re looking at. An advertiser then buys that space, because it wants to reach people like you. The process can involve lots of companies, and it happens in a split second. Real-time bidding underpins the entire online advertising industry, and that’s why this report is so significant.

The findings: The Information Commissioner’s Office, the UK’s data regulator, has concluded that these highly invasive data-driven online ads break both UK and European Union law.

How? Simply put, users are not being given a genuine opportunity to say whether they consent to their data being collected. For consent to be legal, people need to understand what they’re agreeing to, and privacy policies and consent pop-ups routinely fail to explain this, the report says.

What’s next: The UK’s regulator is notoriously light-touch. It has said it will give ad tech companies time to respond before it revisits these issues in six months’ time, while also acknowledging that there is no evidence the industry will address its concerns or change voluntarily.

However, other European regulators—including the EU Commission itself—may be less cautious. There are at least 10 pending legal complaints against this practice across the EU right now, so we can expect to see European regulators taking a closer and closer look at this industry in the coming months.

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