Massachusetts vs. the scam economy

If search and social advertising are so good for small business, why are webuying more and more of our stuff from fewer and fewer companies? If the Big Tech lobbyists were even half right about the benefits of their ad services to small firms, we should have had a small business boom in the mid to late 2010s, aftermost adults had smartphones but before CCPA and Apple ATT. Instead, small businesses are gettingsqueezed, as their own ad budgets work against them. InConsumer Data Privacy Act helps MA small business, consumers, Theodora Skeadas writes,

Such success stories are increasingly hard to find these days. One insidious, and perhaps unexpected, reason: the rise of online surveillance, enabled by the unrestricted mining and exploitation of consumer personal data.

Many technology companies track users’ every move through the digital world, amass detailed dossiers about consumer habits, hobbies and preferences, and repeatedly sell that data to the highest bidders. That means consumers are constantly served online ads based on information that was never intended to be shared with anyone.

These ads prompt many shoppers to turn away from local vendors, and buy instead from big corporations that utilize their leverage and wider supply chains to undercut local businesses on price.

And the beneficiaries of cross-context tracking aren’t just big retailers competing on scale or“partnerships.” Much of the benefit of cross-context tracking flows toobvious fraudulent advertisers.

The Big Tech companies don’t exactly “sell…data to the highest bidders.” What happens inside a big platform when a small business runs an ad is an auction: the legitimate ad must bid for impressions against other ads—and theBig Tech companies add extra bidders to drive up the price. And the price has to keep going up. Companies that already dominate a market that’s growing at single-digit rateshave to keep taking a bigger piece of the action from every sale in order to sustain their own startup-like, double-digit growth rates. The result is anonline scam crisis that benefits only Big Tech and the scammers.

It’s time to rethink state privacy laws in the context of scam culture. State laws can be win-win when they focus not on the “compliance” paperwork thatBig Tech has already learned how to offload, but on reducing the real-world privacy harms that result in losses to scams and value extraction by Big Tech. (For example, state laws that focus on“data brokers” are effective against the “Lumascape” of legacy adtech firms, but not against the Big Tech platforms where data checks in but doesn’t check out.)

Most of the large-scale privacy harms to users are side effects of various schemes that Big Tech is running against either the creators of ad-supported resources or the buyers of advertising. Some of those schemes are run openly, like thebogus attribution reports thing, and some are behind the corporate firewalland hard to analyze. A kind ofcheat code for privacy protection would be state laws that protect advertisers. Everyone else would win as an unavoidable side effect—customers are on the same side as legitimate businesses, because every win-win deal has two sides. It’s basic accounting: a positive outcome for a consumer means that some honest company made a sale, and a negative outcome means some money that won’t get spent or invested.

More: Suspicion and slop in the rugpull economy

Bonus links

Distributed terrorism as ARG by Adrian Hon. Anyway, maybe I’m crazy but maybe we should provide exciting real world activities for teens to do that don’t further the FSB’s agenda?!

The Casino of Attention — AdTech did not “improve the internet.” by Sylwester Mielniczuk. Instead of rewarding quality, programmatic advertising rewarded volume, arbitrage, cheap traffic, SEO spam, outrage, and “made-for-advertising” pages. Even industry reports admit ad fraud, MFA sites, and campaign measurement remain major concerns.

Apple added a second ad to App Store search results. My downloads stayed flat, my costs doubled by Chris Lindsay. Search ads used to feel additive, like a way to accelerate growth. Increasingly, they feel mandatory: a way to pay for visibility you previously earned organically. Thanks toNick Heer for the link.

The Invisible Cost of “Dirty Data by Jay Mandel. The data economy has morphed from tailoring experiences to active manipulation, creating severe economic disadvantages based on who algorithms think you are.