I want to start by stressing that I know and Government knows the importance of advertising to the UK economy and especially the importance of online advertising.
We are the largest per capita e-commerce market in the world and that could not be the case without exceptional advertising.
The UK has the second largest online advertising market in the world today. In fact, in terms of percentage of total ad spend the UK is the world leader for online and mobile. That is something we should be hugely proud of.
I want to discuss some of the challenges we face with regards to advertising and privacy, including implementation of the e-Privacy directive, Do Not Track and the upcoming revision of the Data Protection Directive.
There is certainly a difficult balance to strike here but I’m an optimist and I see these challenges we are facing as a real opportunity to cement the UKs position as a world leader when it comes to balancing the promotion of innovation and the protection of online privacy.
One of the primary reasons for the success of the Internet as a medium has been the enormous amount of information and content people can access online for absolutely no cost. By all rights, providing content for free should be an unsustainable business model but advertising has made it possible to give something away for free and still make money.
From Facebook and Twitter to Google and Yahoo! Advertising has been the foundation for the way some of the largest, most successful businesses in the world have achieved the massive success they have.
But this isn’t just about a few big companies. Advertising is indiscriminate. It also funds the little guy with the dream of one day providing a service to rival those I just mentioned. From the blog you read every morning to the podcast you download when you get home - all free - all funded by advertising.
It’s democracy in action. The better your content, the more people want it and the more people that want it, the more money you can make by selling advertising space alongside it.
Advertising and Privacy
This is a model we have no intention of restricting unnecessarily but with the incredible innovations in delivering advertising that is not only elegant, unobtrusive and informative but also actually relevant to the users own interests comes questions and concerns about privacy.
There’s a very careful balance we need to achieve between protecting a user’s privacy online and encouraging continued innovation in advertising, allowing it to continue to be the foundation for so many online business models. But I do not believe there is any reason that innovative advertising and privacy need to be mutually exclusive.
The Internet is based on trust. People give companies their data because they trust that those companies will not abuse or misuse that data and it is essential that people do not lose that trust in the future.
Behaviourally targeted, or preference based advertising is an incredible innovation that can be of huge benefit to both business and to the consumer. But it needs to be done right.
Users should not feel stalked around the web by companies wishing to sell them something. Users should be able to understand why they are seeing the ads they are seeing, who is responsible for that ad, and be able to exert a level of control over the extent to which ads are tailored to their preferences.
And it is important that this is done in a way that allows consumers to genuinely engage with the process and be able to make informed decisions about the information put in front of them.
Users should not be forced to make a decision about something they don’t understand and may or may not care about. But that does not mean we shouldn’t give users the ability to make those decisions.
There needs to be easy to understand information and easy to use controls in place so users can make those informed decisions and exercise their right to have complete control over their data and their privacy online.
Implementing Article 5.3
That brings me to cookies and the implementation of Article 5 (3) of the e-Privacy directive.
5 (3) calls for consent to be sought if you are accessing or placing information on a user’s machine.
My Department has spent much of the last year working closely with industry, the regulator (ICO) and consumer groups to find a sensible, practical way of implementing the e-Privacy Directive. This is a difficult and challenging piece of work that has sought to balance often contradictory views and demands and I know that the IAB has played an important role in our attempts to comply with the new requirements.
The Directive is well intentioned but I acknowledge that this new law is not an easy one for business to implement, it is potentially both disruptive and costly, but I believe our approach to implementation has struck the right balance by keeping in mind the original intent of the directive, complying with the letter of the law and also being flexible enough to allow business to find solutions which suit them best.
I mention the original intent because I believe it is not only important in terms of understanding the legislation but also in finding practical ways to implement it.
This is about privacy. It is about the user’s right to have control over their data and it is about ensuring that companies cannot abuse the trust of users by misusing their data.
Obviously we are not there yet, there is still some way to go and there is still work to do. But thanks to real engagement and open, sensible dialogue with industry, consumer groups and the regulator, the UK is in a position to take a lead role and provide a sensible, pragmatic framework for implementation that I hope will be replicated across the EU.
It may not be possible to have 27 identical implementations (as much as we would all like that to be the case) but as one of the first to implement the Framework we are taking a leadership role and will continue to work closely with our colleagues from other Member States to ensure a sensible and pragmatic implementation.
The Online Behavioural Advertising (OBA) framework
The key is finding solutions which engage users. There is no point in putting a block of text and a tick box in front of users. People will simply ignore it and click through. The consequences of users being forced to make an uninformed decision on something which can so profoundly affect the internet economy are potentially dire.
That is why something like the IAB’s Online Behavioural Advertising (OBA) Framework is so important. This is something which offers users further information about the ads they are seeing without doing so in an obtrusive or disruptive way. And it is a fantastic example of the willingness of industry to work together to find solutions which suit both business and users.
The OBA framework is an essential element of a series of measures being taken across industry, which we believe will give users more control over their privacy online.
The approach we are taking demands real engagement, this is about education, reminding users that they are in control of their data and their privacy online and making it easier for users to exercise that control if they feel it is necessary. We have spoken many times about the need for increased information, easier access to that information and simple, easy to use controls and I believe all three are essential, not only to comply with the new requirements but also to ensure users can trust that their data is not being misused.
An ecology of solutions
The OBA framework is a crucial part of our package of compliance but it is not the only part. Obviously this isn’t only about advertisers. Publishers (website owners) and Browsers have a big role to play here too.
Publishers are just as responsible as advertisers for the cookies they place on a user’s machine. So they should do what they can to make the user aware of the cookies they use and consider how best they can seek consent from users especially if they are particularly intrusive.
Browsers are also a crucial part of this, they are the natural place for users to exercise control over their privacy settings and by extension are a means to signify consent.
We are working closely with browsers to find ways of ensuring users have increased and easy to understand controls, and easier access to those controls.
It is essential that all these solutions can come together to form a cohesive whole. On their own they are not enough to be compliant with the new legislation but together they form an ecology of solutions that we believe will not only be compliant with the directive but also give users the increased access, information and control over their data and privacy that reflects the original intention of the legislation.
Do Not Track (DNT)
Many of you will be aware that 5(3) is not the end of the debate around privacy online. Far from it.
Commissioner Kroes has called for an industry wide standard to be agreed on Do Not Track (DNT) by June 2012. This is a challenging deadline but it is my hope that industry can find a suitable way forward here without the need for legislative interference.
Thankfully our American cousins are already engaged in this debate so we are not starting from scratch here and W3C is rightly playing a leadership role.
Any solution we find must be worldwide or it will simply not be relevant.
If any kind of DNT standard is to be successful we need real engagement from industry and especially from advertisers. We simply cannot have a situation where users ask explicitly not to be tracked and believe that is the case when in fact some websites and advertisers are ignoring that instruction.
I know that the IAB is already heavily engaged in this work and it is important that others follow their lead.
It is imperative that users can continue to trust the browsers they use and the websites they visit.
Advertising, inappropriate content and copyright abuse
I welcome the role advertisers and broking intermediaries can play in helping prevent advertising appear on websites with inappropriate and / or illegal content. We want to protect consumers from inappropriate content and help the creative industries tackle pirated material.
The UK is the only country in the world to have a self-regulatory system such as IASH - the Internet Advertising Sales House - to help with this.
In August, ABC independently audited 33 billion ad impressions from campaigns in the first half of the year. This self-regulatory system is evolving as technology and the market changes and I encourage all advertisers and technology platforms to work with IASH to help address this issue.
The internet is a huge driver for growth in this country and we must ensure that can continue. I believe the UK is in a position to have a best in class policy that ensures consumers are protected and also encourages innovators to do what they do best, innovate.
But if we want to ensure the Internet remains free of any overly burdensome regulation and can continue to drive growth and innovation we need to continue to work closely with our partners abroad.
We live in an increasingly interconnected world, so decisions cannot be made by nation states in isolation.
I say this now because the European Commission is quite rightly looking at revisions to the Data Protection Directive and the issues that we have discussed today will play a key a role in shaping that debate.
DCMS will partner with the Ministry of Justice in the negotiation and implementation of this Directive. It is important that the concerns of consumers and industry and our attempts to achieve that balance between privacy and innovation are given the attention they deserve in these discussions.
The Commission are due to publish their proposals early next year and obviously we will have to look at those proposals in detail.
But, in principle, we support the idea that consumers should have more control over the processing of their data. And of course we support greater transparency.
But we also need to be clear about the practicalities of any regulation. For example, how do we enforce the ‘right to be forgotten’ when data can be copied and transferred across the globe in an instant? No Government can guarantee that photos shared with the world will be deleted by everyone when someone decides it’s time to forget that drunken night-out. We should not give people false expectations.
We agree; data should be processed in accordance with expectations of privacy in Europe. But we need to be aware that questions of liability could jeopardise the ability of European firms to use the Cloud for data processing and storage. We should question the logic of trying to make firms outside of the EU subject to EU law.
The data we share online has formed the foundation of the success the Internet has had. It is extremely important that we do not undermine that model with burdensome regulation but it is important that consumers have control over their personal data and that there are consequences for those who abuse the personal data of others online.
When it comes to discussing these revisions or later even putting them into practice, we need to think carefully about how to ensure that they do not stifle innovation and we must ensure they are future proof. It is all too easy for directives to become irrelevant when dealing with a medium as fast moving as the Internet.
We need to ensure that the international transfer of data, so critical to economic growth, can continue. And we need to ensure that changes are both practical and proportionate.
This is why it is so important that we start finding solutions together.
We all want to have better control of our data. We all want to see business thrive and innovate. The trick is ensuring that we strike the right balance.
Good data protection laws will allow innovation to continue, and technologies like the cloud to flourish while also ensuring appropriate protections for peoples’ personal data.
I firmly believe that the UK is ideally placed to lead this debate.
So in conclusion, I fully recognise the difficulties we face in trying to achieve the balance between ensuring the user’s right to privacy and ensuring that the data people share can continue to be the foundation for innovative businesses online.
But nothing worth doing is ever easy. We are at an important crossroads in the history of this incredible platform. It is essential that users can continue to share their data willingly and trust that it is in good hands.
The U.K. Internet economy is likely to reach 10% of GDP by 2015, and it certainly won’t stop there. I believe that if we can achieve that balance, we will reap the rewards and the Internet will continue to drive innovation and growth for many years to come.