Saturday, September 15, 2012

“Do Not Track” Unintended Consequences

If "Do Not Track" becomes law, consumers would be able to opt out of behavioral advertising. That would significantly disrupt advertising revenue for a wide range of applications, rendering the Facebook Exchange virtually useless, for example, argues Eric Wheeler, 33Across CEO.

The Facebook Exchange needs anonymous cookie data about consumers who browse off Facebook in order to target them with relevant ads on Facebook, Wheeler notes.

Advertisers also require the ability to measure the online ads they run on Facebook in the same way they measure performance on other sites. Doing so requires use of anonymous third-party cookies that "Do Not Track" could block.

Paradoxically, a measure that aims to protect user privacy, arguably a good thing, also will undermine the revenue model for many applications users find valuable, thus causing unexpected harm. It's an example of how well-meaning laws to benefit consumers can have unintended consequences that actually harm consumer welfare in other ways. 

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