On February 4, 2013, the Online Interest-Based Advertising Accountability Program issued a decision that concluded its inquiry into how the online advertising industry's Self-Regulatory Principles for Online Behavioral Advertising (OBA)1 could be satisfied within Facebook's newly launched advertising platform, Facebook Exchange (FBX).2 The decision reports that Facebook has agreed to integrate the Digital Advertising Alliance's (DAA's) Advertising Option Icon (AdChoices Icon) into Facebook's notice and choice mechanism in order to provide users with more robust notice and choice regarding OBA and to ensure they have a consistent experience across the Internet. Rather than insisting that the AdChoices Icon appear visibly in each ad served through FBX, the decision allows Facebook to display the icon in a manner consistent with Facebook's own standard advertising display—but only after a user takes steps to learn about the ads being seen.
Background
In July 2009, the DAA, a coalition of the major online advertising trade associations, published its "Self-Regulatory Principles for Online Behavioral Advertising" (OBA Principles).3 The OBA Principles, which are binding upon members of the participating associations,4 represent the online advertising industry's effort to establish standard business practices concerning OBA. They consist of seven principles, most notably transparency and choice regarding the collection of data about consumers' online activities and the use of such information for OBA.5 The Online Interest-Based Advertising Accountability Program, run by the Council of Better Business Bureaus, is charged with monitoring compliance with the OBA Principles.
The DAA subsequently launched the AdChoices Icon, a small blue triangular icon that is displayed within or near a targeted ad or on webpages where data is collected and used for OBA. When consumers click on the icon, they are taken to a page with information about data collection and use practices associated with the ad or information about companies serving targeted ads on that website, as well as a means to opt out of receiving future targeted ads from those entities.6 In its final privacy report, the Federal Trade Commission endorsed the use of the AdChoices Icon as a reasonable means of providing transparency and choice to consumers in connection with the collection and use of online data for purposes of OBA.7 Use of the AdChoices Icon is steadily increasing, and, according to a statement issued by the Accountability Program in connection with its Facebook decision, the icon is used in trillions of ads served monthly across the Internet.
In early September 2012, Facebook announced that FBX was out of beta and the Accountability Program began an inquiry into how its transparency and consumer control requirements would be met in connection with targeted ads served through the exchange. The Accountability Program learned that, unlike other publisher websites, ads displayed through FBX would have to conform to Facebook's advertising style and other guidelines, which, as released, did not allow for the display of the AdChoices Icon within targeted ads.
Decision
The Accountability Program's decision reflects an agreement by Facebook to change the format of its standardized ads in order to provide greater transparency and control for ads targeted to Facebook users based on information the advertisers collected about users on other sites. Although FBX does not permit advertisers to collect data from Facebook and Facebook does not obtain any information about users from the advertisers, Facebook and its advertising partners "sync" or "match" cookies so that Facebook is able to notify an advertiser when its users visit Facebook. The advertiser can then bid to show an ad and, if it wins the bid, Facebook serves an ad on the advertiser's behalf.
As originally designed, and consistent with non-OBA ads on Facebook, each targeted ad on Facebook contains a grey "x" in the top right-hand corner. When a user hovers over the "x," linked text appears, saying, "Report this ad." When users click on the link, they see a menu box with the following options: "Hide this ad," "Hide all from [advertiser/website]," and "About this ad." If the ad is not targeted and a user clicks on "About this ad," the user is directed to a Facebook page with general information about advertising on Facebook. If the ad is targeted, the user is directed to the advertising partner whose ad is displayed, where the user can obtain information about that partner's OBA data collection and use practices as well as opt out of further targeting by that partner. However, FBX partners subject to the OBA Principles cannot display the AdChoices icon within their ads, thereby providing real-time notice in the same manner as they do on other platforms.
Following its discussions with the Accountability Program and to address concerns that FBX does not provide enough transparency in connection with OBA, Facebook has agreed to serve—at the request of an FBX partner—the AdChoices Icon in conjunction with the "About this ad" text. The icon will appear once a user has clicked on the grey "x" in the upper right corner of each ad. Additionally, Facebook has agreed to change the initial text that appears when a user hovers over the grey "x," from "Report this ad" to a more descriptive phrase, such as "Learn about Facebook Ads."
Implications
The Facebook decision is significant for companies that are members of the organizations comprising the DAA and therefore subject to the OBA Principles, as well as the third parties that do business with them as part of the online advertising ecosystem. The decision shows that the Accountability Program will continue its enforcement efforts, including reviewing the practices of the third parties that contract with companies subject to the OBA Principles to deliver and display targeted ads. The good news for OBA advertisers and their business partners is that the decision reflects some flexibility in the Accountability Program's approach, as it only requires Facebook to display the AdChoices Icon after users take steps to learn about the ads they see.
Wilson Sonsini Goodrich & Rosati's attorneys routinely help clients manage risks relating to the collection, use, and disclosure of consumer data by mobile applications, along with compliance with the COPPA Rule and attending to other rapidly changing domestic and international privacy and data security issues. For more information, please contact: Tonia Klausner at tklausner@wsgr.com or (212) 497-7706; Tracy Shapiro at tshapiro@wsgr.com or (415) 518-9273; Lydia Parnes at lparnes@wsgr.com or (202) 973-8801; or any of the many members of our privacy and data security practice.
