This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 1 1 NEAL R GROSS CO INC 2 RPTS SHIPLE 3 HIF165170 4 5 6 UNDERSTANDING THE DIGITAL ADVERTISING 7 ECOSYSTEM 8 THURSDAY JUNE 14 2018 9 House of Representatives 10 Subcommittee on Digital Commerce and Consumer 11 Protection 12 Committee on Energy and Commerce 13 Washington D C 14 15 16 17 The subcommittee met pursuant to call at 10 15 a m in 18 Room 2322 Rayburn House Office Building Hon Robert Latta 19 chairman of the subcommittee presiding 20 Members present Representatives Latta Kinzinger Burgess 21 Upton Lance Guthrie Bilirakis Bucshon Walters Costello 22 Schakowsky Cardenas Dingell Matsui Welch Kennedy Green NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 2 23 24 and Pallone ex officio Staff present Melissa Froelich Chief Counsel Digital 25 Commerce and Consumer Protection Adam Fromm Director of 26 Outreach and Coalitions Ali Fulling Legislative Clerk 27 Oversight Investigations Digital Commerce and Consumer 28 Protection Elena Hernandez Press Secretary Paul Jackson 29 Professional Staff Digital Commerce and Consumer Protection 30 Bijan Koohmaraie Counsel Digital Commerce and Consumer 31 Protection Mark Ratner Policy Coordinator Austin Stonebraker 32 Press Assistant Greg Zerzan Counsel Digital Commerce and 33 Consumer Protection Michelle Ash Minority Chief Counsel 34 Digital Commerce and Consumer Protection Jeff Carroll Minority 35 Staff Director Lisa Goldman Minority Counsel Carolyn Hann 36 Minority FTC Detailee Caroline Paris-Behr Minority Policy 37 Analyst and C J Young Minority Press Secretary NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 3 38 Mr Latta Well good morning and welcome to the 39 Subcommittee on Digital Commerce and Consumer Protection 40 really appreciate you all being here and we look forward today 41 to your testimony 42 We And at this time I'll recognize myself for five minutes 43 for an opening statement And again good morning and I wanted 44 to again thank our witnesses for being with us today 45 An advertisement used to mean a quarter-page section in your 46 local newspaper a billboard along the highway or as our chairman 47 of the full committee would know in his radio days a radio spot 48 during the rush-hour commute 49 While those types of advertisements still exist targeted 50 digital advertising has begun to dominate the advertising and 51 marketing industry 52 The digital advertising ecosystem is complex and often 53 misunderstood Today we hope to clear up some of this confusion 54 for consumers and discuss both the benefits and emerging often 55 high-profile challenges of online advertising 56 Our expert panel of witnesses will explain how this 57 technology works and its place in our economy and our lives 58 According to the Interactive Advertising Bureau the 59 ad-supported internet ecosystem generated over $1 trillion for NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 4 60 the U S economy in 2016 and was responsible for 10 4 million 61 jobs with 44 percent of those jobs employed by small and medium 62 businesses 63 The massive growth of online advertising's contribution to 64 GDP can be tied to improved data collection and subsequent ad 65 targeting 66 information and data and many of the largest companies in the 67 world -- Facebook Google and the like -- are supported by revenue 68 generated from the collection of this data for the use of targeted 69 ads Digital ads are dependent on consumer-related 70 While these companies clearly have dominance in this space 71 many of the benefits of this data collection trickle down to small 72 businesses and create a more tailored online experience for 73 consumers 74 For example a local greenhouse can use their limited time 75 and resources to advertise in the most effective way for less 76 cost by using targeted ads 77 catch-all ad in the newspaper they can purchase ad space on 78 websites dedicated to gardening or set up a geolocation range 79 for IP addresses in driving distance in their greenhouse Instead of publishing an imprecise 80 This ensures that their ad is reaching their most likely 81 group of customers -- avid gardeners who live within 10 miles NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 5 82 of the greenhouse In the same transaction the gardeners 83 benefit from knowing what promotions and deals are available in 84 their home area 85 To some consumers these practices can feel like an invasion 86 of privacy or leave them wondering how much personal information 87 about them is being sold 88 grapple with the many privacy issues and data breaches of the 89 past few years we are no stranger to the risks of collecting 90 such detailed consumer profiles and amassing it in centralized 91 data repositories susceptible to bad actors 92 As this subcommittee continues to This hearing is yet another opportunity to discuss these 93 risks and understand what those are in the private sector -- and 94 what those are in the private sector are doing to address them 95 Additionally ads are only effective if they're reaching 96 actual people Digital ad fraud and the scourge of traffic bots 97 algorithms designed to look like actual humans complicate this 98 system in new ways and undermine the trust in the current 99 advertising model 100 Businesses who think they are paying for ad space because 101 of high audience interest might not get the response they want 102 because of bots 103 ads were viewed only by bots One study found that 22 percent of desktop video NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 6 104 The online advertising ecosystem has many players that 105 contribute to its effectiveness Understanding how each of these 106 players interact with each other and with consumers is an 107 important step in discussing larger issues like privacy and data 108 security 109 As always it is one of the primary goals of the Energy and 110 Commerce Committee to ensure that consumers are informed and can 111 make educated decisions about their online habits 112 The advertising-based model supports the platforms that we 113 use to communicate connect shop and work Today we hope to 114 hear of the many efforts undertaken by industry to innovate and 115 grow in this space while at the same time responding to consumer 116 demands for privacy and security of their data 117 Again I want to thank our witnesses for being with us today 118 and at this time I will yield back my time and recognize the gentle 119 lady from Illinois the ranking member of the subcommittee for 120 five minutes 121 Ms Schakowsky 122 Ads are ubiquitous often irritating as you browse the 123 internet 124 ads are there 125 Thank you Mr Chairman Most of the time we get a little thought to why those But as we touched on during the Facebook hearing earlier NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 7 126 this year the ads that consumers see are often highly targeted 127 I've certainly noticed them in my own experience that I am 128 being tracked online 129 thing you know an ad for the very same product I was looking for 130 turns up on a completely different website 131 I start to shop on a website and then next Companies may claim that consumers like targeted ads and 132 some may 133 are polled 134 steps to block tracking 135 But consumers tell a different story often when they In fact most Americans report taking at least some Americans are realizing how little control they have over 136 their own information 137 Facebook collects information about you 138 You may not even be on Facebook but You can block cookies but you are still tracked You are 139 tracked regardless of whether you're on a computer smart phone 140 or tablet and the internet of things expands which devices can 141 collect your data even further 142 The use of targeted digital ads can have serious 143 consequences 144 more and more in the past year about how Russia used targeted 145 ads to spread disinformation and meddle in our elections 146 147 It's not just online shopping We have learned The grand jury in Special Counsel Robert Mueller's investigation has indicted 13 Russian nationals and three NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 8 148 149 companies for waging information warfare on the United States Targeted ads can also be tools for discrimination A 150 ProPublica investigation last year found that Amazon Verizon 151 UPS and Facebook all posted jobs -- job ads that were targeted 152 specifically to specific age groups excluding older Americans 153 We have also seen ads for junk financial products that are 154 directed to communities of color 155 option to exclude certain ethnic groups for advertising 156 the potential for discrimination remains in the online ad market 157 Congress has been woefully slow in responding to the risks 158 that online advertising practices pose to privacy fairness and 159 our very democracy 160 Facebook has now removed the But The Federal Trade Commission does not have the resources 161 it needs to be an effective consumer watch dog 162 close to enough staff to monitor anti-consumer practices online 163 and it has weak enforcement tools 164 The FTC has limited rulemaking authority It does not have It cannot impose 165 civil penalties right away 166 consumer privacy instead it has to negotiate a consent order 167 and only if it later finds a violation of that consent order does 168 a company actually pay for misusing consumer data 169 When a company fails to protect Perversely the Republican majority tried the last Congress NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 9 170 to further restrict the FTC's authority 171 legislation was not passed 172 Consumers deserve a real protection Fortunately that We need rules of the 173 road for what information can be collected and stored on -- and 174 stored about consumers 175 Consumers need real options when it comes to how their 176 information is used 177 breaches in recent years have made consumers increasingly aware 178 of how much data is sitting out there -- how much of their own 179 data 180 The Facebook scandal and the many data After the Equifax data breach we had a witness describe 181 the steps a consumer could take to protect the information and 182 she basically made protecting your privacy sound like a full time 183 job 184 It shouldn't be that way I am glad that we are having this 185 -- we are continuing to discuss the field of digital ads 186 question is what comes next 187 Is the subcommittee finally going to take up legislation 188 to strengthen consumer privacy protection 189 issue 190 191 My This is a complicated But I believe that we are up to the challenge Let's bring our ideas to the table and hash out the solutions that are -NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 10 192 that our constituents deserve 193 People are fed up with big corporations tracking their every 194 move online and controlling what they see 195 action and it is time for Congress for this committee to deliver 196 I yield back 197 Mr Latta Thank you very much They are demanding The gentlelady yields back 198 and I believe the chairman of the full committee has not arrived 199 yet 200 chairman's time 201 Is there anyone on the Republican side wising to claim the If not at this time I will recognize the gentleman from 202 New Jersey the ranking member of the full committee for five 203 minutes 204 Mr Pallone Thank you Mr Chairman 205 Today's hearing will explore online advertising and its role 206 in society 207 was like other forms of advertising 208 In the early days of the internet online advertising Advertisers would place ads aimed at broad audiences But 209 that has all changed 210 targeted categories of audiences those most likely to purchase 211 their products and services 212 213 Advertising is now directed to smaller Targeted advertising can provide more relevant advertising to consumers It also provides revenue to advertisers NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 11 214 For example it allows a small business selling boutique men's 215 razors to reach men say in their 40s and 50s who may be able 216 to afford a specialty product 217 However it also allows a scammer to reach women over a 65 218 in a particular zip code who have been duped in the past to give 219 their money to fake veterans charities 220 Moreover contrary to industry claims it's not always 221 anonymous 222 advertising to a list of 20 names and send a specialized adjust 223 to them 224 Right now anyone willing to pay can target Without explaining or justifying the list an advertiser 225 could send an advertisement to 20 specific people who have a mental 226 health condition or are taking a particular medication 227 And target advertising is possible because of the vast 228 amounts of information collected about individual consumers by 229 companies across the advertising ecosystem 230 Beyond the websites you go to the advertisers today to see 231 there are numerous middlemen ad networks ad agencies data 232 brokers and the like 233 These companies lurk in the background often unknown to 234 consumers and not just collecting and storing data that would 235 choose to share They track what websites we visit what NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 12 236 purchases we make and even the movement of your mouse on the 237 computer screen 238 And information collected about our online activity is 239 increasingly being merged with our offline identity to create 240 extremely detailed profiled 241 Moreover they can go beyond facts to include inferences 242 about our interests and demographic information 243 advertising by its very nature separates people into categories 244 and shapes our choices 245 Targeted We have shown limited options that are chosen for us by 246 automated processes based on our profiles 247 internet may end up being very different from what you see and 248 neither of us getting all the information that may help us make 249 our purchasing decisions 250 251 252 So what I see on the Even if we seek out additional information we may get created content further limiting our choices In addition to the risks of scams targeted ads can result 253 in blatant discrimination 254 targeted advertising systems have allowed housing ads to exclude 255 people of color and job ads to exclude older workers 256 257 It's been well documented than At this committee's hearing last year on the effect of algorithms on consumers we discussed how bias can be built into NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 13 258 algorithms resulting in bias results and that problem does not 259 just apply to content and search results 260 advertisement as well 261 It applies to It is good that Google and Bing have now blocked ads for 262 predatory payday loans but that's not enough The American 263 people rightfully feel like they've lost control 264 One survey showed that 84 percent of people want more control 265 over what companies can learn about them online yet 65 percent 266 of people are resigned to the fact that they have little control 267 So we hear a lot about self-regulatory transparency notice 268 and choice but we all receive many updated privacy policies 269 spurred by the EU's new data privacy regulations 270 have time to read all of them let alone actually understand and 271 remember what each company is doing with our data 272 273 274 None of us And what about the companies collecting our data that we don't even know exist The Equifax breach brought that issue up front and center 275 and people weren't just upset that their data was stolen 276 were upset that a company that may have never -- they've never 277 interacted with had all that data 278 279 They So I think we can do better and I think we must do better Mr Chairman It's time we all admit that the current system NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 14 280 just isn't working for consumers and Congress needs to do a better 281 job and pass comprehensive privacy legislation so people can take 282 back control that they've lost 283 And I yield back 284 Mr Latta 285 286 Thank you very much The gentleman yields back the balance of his time And that now concludes member opening statements The chair 287 reminds members that pursuant to committee rules all members' 288 opening statements will be made part of the record 289 290 291 Again I want to thank our witnesses for being with us today and taking time to testify Today's witnesses will have the opportunity to give a 292 five-minute opening statement followed by a round of questions 293 from the members 294 Our witness panel for today's hearing will include Ms Rachel 295 Glasser who is the global chief privacy officer at Wunderman 296 Mr Mike Zaneis president and CEO of Trustworthy Accountability 297 Group Mr Justin Brookman the director of privacy and technology 298 policy at Consumers Union and Dr Howard Beales professor of 299 strategic management and public policy at George Washington 300 University 301 Again we want to thank you all for being with us and taking NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 15 302 the time to testify and again Ms Glasser you're recognized 303 for five minutes for your opening statement 304 mic up close and press the button to get her on and we appreciate 305 hearing your testimony today 306 So just pull that Thanks very much NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 16 307 STATEMENTS OF RACHEL GLASSER GLOBAL CHIEF PRIVACY OFFICER 308 WUNDERMAN MIKE ZANEIS PRESIDENT AND CEO TRUSTWORTHY 309 ACCOUNTABILITY GROUP JUSTIN BROOKMAN DIRECTOR PRIVACY AND 310 TECHNOLOGY POLICY CONSUMERS UNION HOWARD BEALES PROFESSOR OF 311 STRATEGIC MANAGEMENT AND PUBLIC POLICY GEORGE WASHINGTON 312 UNIVERSITY 313 314 STATEMENT OF RACHEL GLASSER 315 316 317 318 Ms Glasser Thank you very much Chairman Latta Ranking Member Schakowsky and members of the subcommittee Good morning and thank you for the opportunity to speak 319 at this important hearing 320 New York to appear before you to today to discuss how responsible 321 digital advertising supports innovative diverse and 322 services that are the foundation of our online economy 323 I am honored to have traveled from My name is Rachel Glasser free I am the global chief privacy 324 officer for Wunderman who's the parent company of KBMG 325 I am responsible for data privacy strategy and 326 implementation and ongoing process improvements for all of 327 Wunderman including KBMG 328 KBMG is headquartered in Louisville Colorado with offices NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 17 329 in New York Texas and Brazil We help brands companies and 330 nonprofit large and small use data as a strategic asset and 331 provide data-driven marketing engagement for improved marketing 332 performance and a resident customer experience 333 The internet has drastically improved the way people work 334 consume content learn travel access health care spend leisure 335 time and communicate with one another 336 Many of these life changing benefits are available to 337 consumers for free because it's supported by digital advertising 338 In short digital advertising is the lifeblood of the internet 339 economy and connects business with consumers who are most likely 340 to value their products and services 341 Data is at the center of this American success story and 342 is core to the marketing services that KBMG provides the clients 343 Accordingly the foundation of our business model is trust 344 We work every day to earn and maintain the trust of both consumers 345 346 347 348 and companies with whom we work My job is to help ensure that privacy and respect for the consumer are integrated into every initiative This message comes from the top Respect consumer privacy 349 be transparent about our data collection and use practices offer 350 consumer choice and honor those choices NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 18 351 352 353 This trust allows us to innovate faster provide more value to clients and create better experiences for consumers Digital advertising is a broad term used to describe the 354 paid advertising that publishers put on their websites or apps 355 It enables these publishers to provide consumers with content 356 357 and services for free Today I am focusing on digital advertising tailored to 358 consumers' likely interests 359 interest-based advertising or IBA 360 This is generally known as IBA is why consumers see ads that are relevant to their 361 interests 362 advertisers collect information across some of the sites and apps 363 that they visit 364 With this type of advertising companies and This information is then used to predict what ads might be 365 the most interesting to consumers 366 information that may be personally identifiable such as a 367 consumer's name or a phone number or postal address 368 IBA doesn't depend on In fact most ad tech companies do not want to know the 369 identity of a consumer for the purposes of IBA 370 to link an interest category to demographic data with the 371 consumer's browser so that they can serve up relevant ads 372 They only want Of course different companies may use different methods NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 19 373 of IBA 374 that there are several different players in the advertising 375 ecosystem 376 To kind of level set it's important to go over the fact We have the consumer the publisher the advertiser and 377 the third party advertising company and that's where my company 378 sits 379 We are third party advertising company As I mentioned 380 KBMG as a digital marketing company places a high priority on 381 consumer privacy and reasonable use of data 382 We expect that participants in the online economy will honor 383 high standards regarding the collection and use of online data 384 This supplies the publishers platforms social media data 385 management companies ad tech providers commerce sites and 386 more 387 At a minimum when data is collected and used to support 388 various activities such as online advertising or to create 389 personalized experiences each player in the data life cycle has 390 a responsibility to be transparent offer consumers appropriate 391 choices and honor those choices with respect to data collection 392 and use 393 394 We also expect every company to take reasonable measures to secure that data prevent -- to secure that data and prevent NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 20 395 396 potential misuse This leads me to my final point this morning Businesses 397 have a vested interest in acting responsibly and building user 398 trust on line 399 potential applications of data online the digital ecosystem has 400 taken initiative and thorough measures to put in place a set of 401 codes and principles to reinforce these practices Recognizing the value of user trust and the 402 The NAI and the DAA are two self-regulatory groups committed 403 to maintaining and enforcing responsible privacy practices and 404 high standards for data collection 405 These standards include providing consumers with enhanced 406 transparency and control and companies like mine voluntarily 407 commit themselves to these organizations 408 These companies demonstrate their desire to be good actors 409 and they are obliged to abide by the respective codes and 410 principles 411 to act responsibly build user trust and help drive innovation 412 and grow the internet economy 413 There is no question that data privacy is on everyone's minds 414 these days 415 two decades 416 This is a clear indication of the intent of companies But for our industry it's been on our mind for nearly While not to be downplayed by any means we do not want the NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 21 417 recent events of recent to overshadow the extraordinary benefits 418 of the online advertising ecosystem and we are very pleased that 419 the Energy and Commerce Committee is taking the time to learn 420 more about this vibrant and exciting sector 421 Thank you 422 The prepared statement of Ms Glasser follows 423 424 INSERT 1 NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 22 425 426 Mr Latta Well thank you for your testimony this morning and Mr Zaneis you are recognized for five minutes NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 23 427 STATEMENT OF MIKE ZANEIS 428 429 Mr Zaneis Thank you Chairman Latta Ranking Member 430 Schakowsky distinguished members of the subcommittee it's 431 wonderful to be before you again today 432 May name is Mike Zaneis I am the president and CEO of 433 the Trustworthy Accountability Group or TAG as it's known in 434 the industry 435 TAG is a industry not-for-profit organization whose mission 436 is to fight criminal activity throughout the digital advertising 437 supply chain 438 It may come as a surprise to all of you that that's a necessary 439 mission 440 the same criminal networks that operate globally often to commit 441 human trafficking drug trafficking and widespread digital 442 identity theft 443 But let me assure you it is Why is that Our industry is fighting It's because digital advertising is the engine 444 that drives America Mr Justin Brookman 445 Director Privacy and Technology Policy Consumers Union's 446 digital data-driven economy 447 448 This is an industry that contributed $1 12 trillion to the domestic economy in 2016 and in so doing created 10 4 million NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 24 449 jobs and these are incredibly high quality jobs that pay very 450 well spread across the country in literally every congressional 451 district 452 With that prosperity though comes added attention as I 453 mentioned 454 the digital supply chain -- the fact that you may have dozens 455 of companies touching an ad from the marketer the agency the 456 tech firms all the way down to the publisher before it ever 457 appears hopefully in front of a real consumer creates sometimes 458 an opaque supply chain and that allows criminals to hide in the 459 dark murky corners and to infiltrate it 460 The complexity then Ms Glasser talked about with It's estimated then that this criminal activity as I 461 mentioned causes more than $8 2 billion in harm 462 just domestically and the impact is greater globally 463 But that's The industry found a common chain of criminal activity a 464 few years ago 465 digital content 466 to create content like our own homegrown creative community does 467 The first link in this chain is the theft of Criminals don't take the time or the effort Instead they steal it Maybe it's a blog posting a local 468 news article all the way up to the latest music and movies and 469 they put this content on websites that they own and that's because 470 domains are inexpensive and easily accessible NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 25 471 Once they have a website with quality content on it they 472 have to generate an audience to visit that's website 473 very difficult to do 474 That's Here again criminals of course cheat as they always 475 do They prefer to distribute malware onto consumers' computers 476 and devices 477 Once infected that device can actually open up individual 478 browsers or even behind-the-scenes mobile apps unbeknownst to 479 the consumer and it visits websites 480 We call this fraudulent nonhuman traffic That's because 481 there's not a person on the other end of that screen 482 estimated then to digital app at a cost to the industry $4 billion 483 a year here in the U S 484 It's Finally now that a criminal network has a website with great 485 content they have what appears to be large engaged audience 486 They're a perfect candidate to attract digital advertising 487 revenue 488 Like any legitimate business they can embed ads into that 489 site and begin to receive revenue into a matter of weeks a great 490 democratization tool for small businesses in this country 491 TAG was created by the industry to solve these challenges 492 And so we are often referred to as sort of the good housekeeping NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 26 493 494 seal of approval To date the industry has rallied behind these efforts 495 although we are only three years old 496 have applied to join TAG More than 680 companies 497 That's spread across 27 countries and six continents 498 importantly more than 100 companies have already achieved a TAG 499 certification 500 Most What that means is that these companies are living up to 501 the highest standards using the best technology to fight fraud 502 to fight ad-supported piracy to fight malware and also we have 503 an overarching goal of increasing transparency throughout the 504 supply chain 505 We've been very gratified to learn over the past year that 506 these programs are working Two pieces of independent research 507 showed that in our anti-fraud program that if marketers worked 508 with TAG-certified entities through what we call a TAG-certified 509 channel they could remove at least 83 percent of those fraudulent 510 non-human impressions that they receive 511 billions of dollars a year It can save them 512 With our anti-piracy efforts a study by EY -- Ernst and 513 Young -- found that industry efforts to keep ads off of sites 514 and steal content and have illicit material on them had kept more NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 27 515 than half of that revenue from flowing to these pirate sites 516 I think most encouraging about that research is that the 517 little revenue that does flow to pirate sites comes from 518 nonpremium marketers meaning the smaller less reputable folks 519 So I appreciate the opportunity to speak to you today and 520 521 I look forward to answering your questions The prepared statement of Mr Zaneis follows 522 523 INSERT 2 NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 28 524 Mr Latta 525 Mr Brookman you are recognized for five minutes 526 Well thank you very much for your testimony you NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com Thank This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 29 527 STATEMENT OF JUSTIN BROOKMAN 528 529 Mr Brookman Chairman Latta Ranking Member Schakowsky 530 members of the committee thank you very much for holding this 531 hearing into the digital ad ecosystem and for the opportunity 532 to testify here today 533 I am here today on behalf of Consumers Union We are the 534 advocacy division of Consumer Reports We are the world's 535 largest independent testing organization rating thousands of 536 products and services for consumers every year 537 I've been working on ad tech for a number of years now dating 538 back to suing adware companies in the 2000s for deceptive install 539 practices 540 I recognize the value of ad targeting I also recognize 541 that a lot of consumers really don't like it and they don't feel 542 they've agreed to be tracked everywhere they go with everything 543 they do in exchange for free content 544 It used to be that online ad tracking was fairly 545 straightforward A lot of people didn't like it but it was 546 simpler to understand 547 anonymous cookies in your browser and they serve you ads based 548 on the sites you visited in your browser but not based on who Advertising companies would put NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 30 549 you are and you can control it by deleting or blocking cookies 550 Today however the techniques companies use are a lot more 551 sophisticated Companies like Google and Facebook track you by 552 real name not just on their own services but on the majority 553 of other sites and apps that are out there across all of your 554 different devices 555 Deleting cookies or using private browsing mode may not do 556 much good anymore if companies are using other technologies like 557 digital fingerprinting to monitor you instead 558 And we are not just tracked on our computers anymore It's 559 other devices as well 560 smart TVs earlier this year and all of them tried to use automated 561 content recognition to take snapshots of what was on our screens 562 to try to figure out what shows we are watching 563 564 565 Consumer Reports looked at a bunch of Ad companies also want to tie what we do online to the physical world So a couple days ago I was in New York City I bought a cup of coffee at a place I would never been before 566 567 A day or so later I got an email from them welcoming me 568 to their rewards program 569 address 570 I had never given them my email Now I can see why companies might want to do some of these NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 31 571 things but I also see why consumers might want to make it stop 572 Privacy is at some level a right to seclusion -- a right to 573 be left alone -- a right to autonomy over our own devices and 574 what they share about us and it's getting harder and harder to 575 manage that personal information 576 Now in response to this constant creeping encroachment into 577 our personal spaces there are some companies who are pushing 578 back 579 apps on iPhones 580 to give users more control over cross-site tracking Apple for example has done a lot to limit tracking and Just this week they announced further changes 581 Mozilla maker of the Firefox browser has also taken a lot 582 of positive steps to limit tracking in their browsers and we've 583 also seen a tremendous rise in the use of ad blockers like 584 Disconnect and Privacy Badger and uBlock and Brave by consumers 585 who are frustrated by aggressive ads or the underlying tracking 586 Ad blocker penetration is expected to rise to 30 percent 587 of the market this year showing that users really are not 588 satisfied with online ads' ecosystem 589 In my organization Consumer Reports -- long-time testing 590 lab -- we are starting to test products based on privacy and 591 security in response to consumer demand 592 So I mentioned how we analyse privacy and security issues NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 32 593 with TVs earlier 594 evaluations into our everyday product testing 595 We are looking to build those sorts of And so far though all this pressure hasn't really been 596 enough to get industry to reform itself 597 self-regulatory programs but they've always suffered from the 598 same problems -- they're too weak they don't apply to all the 599 companies in the space they don't really address the data 600 collection issue the interfaces can be complicated and 601 confusing and a lot of times the tools are just broken 602 There are Now the online ad industry had agreed to address these 603 failings back in 2012 when they promised to honor do not track 604 instructions in browsers 605 in your web browser 606 want to be targeted and tracked 607 These are the easy-to-use settings You can signal to the world that you don't Well then a couple of years later the industry backtracked 608 on that promise Now it's been over seven years since consumers 609 have been activating do-not-track in their browsers 610 industry still by and large just ignores those signals The ad 611 And so while we at Consumer Reports are working to improve 612 the market for privacy and security ultimately I do think we 613 probably need some basic legislative protections 614 So we should have a discussion about what would work and NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 33 615 what wouldn't because privacy laws are already happening around 616 the world 617 Europe recently expanded their legal protections with the 618 GDPR that just went into effect and a lot of other nations around 619 the world are copying European models and those laws do affect 620 U S companies 621 States continue to pass privacy and security laws States 622 led the way on data breach notification laws and credit freeze 623 laws and a lot of other basic consumer rights 624 to see them advance more comprehensive privacy and security 625 legislation as well 626 We are starting So I would urge this committee not to leave the policy 627 decisions entirely to Europe or to the states but to really dig 628 in and think about what sort of practical protections can empower 629 consumers to make their own decisions about their personal 630 information 631 632 633 Thank you again for inviting me here today and I look forward to your questions The prepared statement of Mr Brookman follows 634 635 INSERT 3 NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 34 636 Mr Latta 637 And Dr Beales you are recognized for five minutes 638 Well thank you again for your testimony you NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com Thank This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 35 639 STATEMENT OF HOWARD BEALES 640 641 Mr Beales Thank you Chairman Latta Ranking Member 642 Schakowsky and members of the subcommittee 643 the opportunity to testify today 644 I am Howard Beales I thank you for I am a professor of strategic management 645 and public policy at the George Washington School of Business 646 I've written academic articles about privacy and from 2001 to 647 2004 I was the director of the Bureau of Consumer Protection at 648 the FTC at the time when the commission promulgated the National 649 Do Not Call Registry 650 I want to make three essential points this morning First 651 internet content is a public good 652 of such public goods has historically depended on revenue from 653 advertising as does internet content today 654 Private market provisions Second the value of advertising depends critically on the 655 availability of information about the likely viewer When 656 information is available advertising prices are roughly three 657 times higher than when there's no information about the viewer 658 Impairing the flow of information would significantly reduce 659 the revenues available to support internet content an impact 660 that would be particularly problematic for smaller publishers NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 36 661 Third advertising actually benefits consumers leading to 662 more competitive markets lower prices product improvements 663 and smaller differences between demographic groups 664 To return to my first point from an economic perspective 665 internet content is a public good 666 goods are not used up in consumption 667 Unlike private goods public Like free broadcast radio or television any number of 668 consumers can enjoy the content without any additional cost of 669 providing it 670 goods is advertising which converts the public good of media 671 content into a private good of exposures to advertising 672 The primary market mechanism for providing such Throughout history advertising support has been a vital 673 revenue source for media companies 674 models exist like satellite radio or premium cable TV market 675 behavior makes clear that most consumers most of the time are 676 not willing to pay a premium price to avoid advertising 677 Although purer subscription Online content is not fundamentally different Publishers 678 must cover their costs and advertising is critical to achieve 679 that objective 680 advertiser-supported media markets that fact should not be 681 surprising and it's not likely to change 682 Given the long histories of Second the value of advertising depends on information NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 37 683 What advertisers are willing to pay for an advertising slot 684 depends critically on what they know about the viewer 685 attractive to an individual viewer anonymity reduces the price 686 of the advertisement and therefore reduces the revenue available 687 to support the content the viewer is enjoying 688 However In short anonymity is a subtle form of free riding on the 689 contributions of others In two separate studies I've examined 690 the impact of better information on the price of digital 691 advertising 692 In a 2010 study I surveyed advertising networks to determine 693 the impact of behavioral targeting which uses browsing behavior 694 data to categorize likely consumer interest in a particular 695 advertisement 696 The price for behaviorally-targeted advertising was 697 roughly three times higher than the price of run of network 698 advertising sold without regard to audience characteristics and 699 that's a substantial prices premium 700 My 2013 study analysed data from automated advertising 701 exchanges If there was a cookie available the price of the 702 advertisement was roughly three times higher than if there was 703 no cookie 704 it was worth The longer the cookie had been in place the more With a 90-day-old cookie the price was between NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 38 705 3 7 and 7 1 times higher than the price with no cookie 706 We also found that even the largest publishers sold about 707 half of their ad slots through third-party technologies like ad 708 exchanges while smaller long-tail publishers relied on these 709 approaches for up to two-thirds of their advertising sales 710 Thus regulatory requirements that impair the flow of 711 information will significantly reduce the revenue available to 712 online content producers leading to a less vibrant internet 713 The impact will be greatest on the smallest publishers 714 Many important participants in the online marketplace are 715 not consumer facing at all because they work with publishers or 716 advertisers to observe behavior across independent websites 717 Consumers have never heard of most of them for example 718 33Across Accuen Acuity and Adara which happen to be the first 719 four names on the list of members of the national advertising 720 -- network advertising initiative 721 More elaborate consent requirements could seriously 722 disadvantage these companies with the primary effect of 723 protecting the market shares of the current leaders in the online 724 advertising market 725 726 As in any other market regulatory barriers that protect market leaders from competition are bad for consumers NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 39 727 Finally advertising is not evil It provides important 728 benefits for consumers 729 that restrictions on advertising increase prices for consumers 730 Numerous economic studies have shown Advertising also facilitates innovation and narrows the 731 differences between demographic groups 732 relationship between fiber consumption and cancer for example 733 resulted in the greatest increases in fiber consumption in racial 734 minority and single parent households 735 736 737 Advertising the When eyeglass advertising was restricted the least educated paid the highest prices To summarize the provision of internet content depends on 738 advertising revenue 739 availability of information about the viewer and online 740 advertising like other advertising benefits consumers 741 742 743 That revenue in turn depends on the Thank you again for the opportunity to testify today and I look forward to your questions The prepared statement of Mr Beales follows 744 745 INSERT 4 NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 40 746 Mr Latta Well Dr Beales thank you very much for your 747 testimony today and again I want to thank all of our witnesses 748 for being here and we'll move into the question and answer portion 749 of our hearing 750 751 I will begin the questioning and recognize myself for five minutes 752 Ms Glasser would you describe some of the tools that are 753 used to track consumers online and would you also tell what kinds 754 of information digital ad businesses have about consumers and 755 what they use it for 756 Put that mic on please Thank you 757 Ms Glasser Thank you Congressman for your 758 759 Thank you question Sure there are many different tools that you can use to 760 track users online 761 platform that you're using 762 I think it really could depend on the Persistent identifiers tend to be of the most common and 763 those would include things like cookies or advertising IDs 764 don't identify an individual personally so they're not personally 765 identifiable 766 to make associations and inferences on the types of behavior and 767 the types of things that a consumer enjoys Instead it allows to -- it allows the advertiser NEAL R GROSS 202 234-4433 They COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 41 768 And can you repeat the second part of your question 769 Mr Latta Yes and would you tell us also what kind of 770 information the digital ad businesses have about consumers and 771 how it's being used 772 Ms Glasser Sure Again I think that also depends on 773 who you're speaking to in the supply chain 774 a company like mine the type of information that we usually hold 775 on the consumers would be things related to a cookie 776 But generally for So that could include an IP address cookie ID browser 777 information For example if you're using a certain version of 778 Google Chrome or Internet Explorer it might include a time stamp 779 and a date for verification purposes 780 depending on how you set the cookie to collect information It could really vary 781 Mr Latta 782 Mr Zaneis how significant of a problem are bots and fake 783 784 Thank you accounts in the digital ad ecosystem Mr Zaneis There's no question that it's a massive 785 challenge and a problem for the entire ecosystem I think then 786 there's a recognition that no industry can be based off of this 787 high level of fraud 788 The number that you quoted of 22 percent fraud in certain 789 display units -- you know we used to have a discussion around NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 42 790 791 is fraud 20 percent of all inventory or 30 or 40 percent Over the last two years we've sort of turned the corner 792 on that We have not solved it But now what we see again 793 working with reputable partners it's relatively easy to get your 794 fraud rate down well into as I mentioned less than 1 5 percent 795 796 I sometimes look at other industries like you know produce 797 shippers and manufacturers that have spoilage and breakage rates 798 around 15 to 20 percent and I look at where we are getting the 799 industry and think we are doing a good job 800 Mr Latta Let me follow up on that Is there a conflict 801 of interest in the industry if fake accounts are driving traffic 802 numbers higher 803 Mr Zaneis No I think that that's a common myth that 804 has been put out there by some advertising naysayer -- that because 805 there can be more revenue generated by more traffic even 806 fraudulent traffic 807 There's no question that some companies -- legitimate 808 companies -- could make more money from that We always say in 809 the industry that there are crimes of omission and there are crimes 810 of commission and sort of sitting back and maybe getting a little 811 extra revenue from a few fake hits on your website used to happen NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 43 812 813 all the time Nobody in our industry is committing commission crimes of 814 actually committing fraud but I am happy to say that now the 815 respectable companies -- as I mentioned 680 companies have sought 816 to join TAG -- now we've turned the corner on the crimes of 817 omission 818 Mr Latta 819 Ms Glasser in about my last minute that I have if I wanted 820 to create a website today and sell advertising space for example 821 a banner ad and some ads along the side how difficult would 822 that be and how much would it cost me to get started especially 823 if I was a small business 824 825 Ms Glasser Okay Thank you I would not be able to comment on how much it would cost because that could really depend on -- 826 Ms Schakowsky 827 Ms Glasser 828 Laughter 829 Mr Latta 830 Ms Glasser Mic Sorry It's my first time doing this It's fine I would not be able to comment on what it could 831 cost or even a range because that could really depend on the size 832 of the audience you're trying to market to or that you're trying 833 to attract to your website NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 44 834 It could also depend on the type of the audience right 835 Mr Latta How about the difficulty though How 836 difficult would it be for somebody to go out there to do that 837 -- to get a banner 838 Ms Glasser It's not very difficult You would most 839 likely have to engage with either -- I think the easiest thing 840 to do would be engage with an ad agency because they could 841 basically do everything turnkey for you or you could probably 842 approach some ad networks on your own 843 I've really only worked with ad networks from an agency 844 perspective so I wouldn't know how it is personally to go and 845 do it 846 companies who have been around a lot longer probably you know 847 have certain teams to handle the smaller businesses 848 But I think some of the bigger companies and some of the Mr Latta Okay Well thank you My time has expired 849 and I will recognize the gentlelady from Illinois the ranking 850 member of the subcommittee for five minutes 851 Ms Schakowsky Thank you 852 Mr Brookman in your written testimony you say just last 853 week Vice published a story purporting to prove that Facebook 854 listens to ambient conversation for the -- for ad targeting 855 purposes NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 45 856 You acknowledge that privacy researchers cast doubt on the 857 story but the fact that leading authorities cannot even agree 858 on whether Facebook is mining personal audio conversations is 859 emblematic of the generalized confusion about privacy 860 We do know for example that Samsung's smart TVs do record 861 everything 862 feature 863 you know some sort of tiny print thing that you can find when 864 you unbox the TV 865 They have some sound -- some voice-responsive And I don't know what disclosure means if it's in We also know that Vizio also a TV tracks second by second 866 viewing information 867 action or there was against them because they did not disclose 868 that 869 There is right now an FTC enforcement So you know what do consumers know and what don't they 870 know and how should they know and should this be done even if 871 they are informed 872 Mr Brookman 873 You know I think there's just a lot of understandable Yes No I think that's a good question 874 uncertainty because there's so many sensors right all around 875 our house 876 877 We have Echos We have -- we have a microphone right now I mean according to that Vice article you know any company NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 46 878 879 could be listening to it I do think that you know there are actually -- some 880 companies are kind of scared to go there I know that Samsung 881 in their privacy policy reserved the right to listen to everything 882 you do 883 we will only actually listen when the button is pressed down 884 and I think that's the right choice But they did I think fortunately clarify that no 885 Facebook has also tried to clarify you know we will only 886 you know listen you know if you -- we don't listen to what's 887 going on ambiently 888 But I think that's the question I mean according to Dr 889 Beales' testimony it would actually probably be good if Facebook 890 were listening to every single thing that I say and not just 891 Facebook but also Google or Samsung or any of the 650 companies 892 that Mr Zaneis mentioned because it could give us you know 893 more targeted ads 894 I think consumers reject that and I do think it's actually 895 unfair to kind of try to put that burden on consumers to try to 896 figure out you know what every single company is doing which 897 is why I definitely support what you're saying -- that there should 898 be some basic rules of the road to empower consumers to kind of 899 take some control over all these devices NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 47 900 Ms Schakowsky 901 What do you mean by rules of the road 902 903 Thank you Should we be passing legislation Mr Brookman Yes So there's a few things that could be 904 done like just better transparency for first right 905 right now privacy policies -- if you -- if you look at them -- 906 you know I review privacy policies as part of my job 907 make heads or tails of them and that's my job right 908 actually say what companies are doing 909 rights to do stuff 910 I mean I can't They don't They reserve really broad Actually requiring disclosure kind of like SEC filings 911 would I think will probably have some degree of accountability 912 for consumers who should not be affected read those but for 913 regulators and for folks like me who like try to rate products 914 based on these sorts of things there should be easier kind of 915 global choices 916 that I worked on for a long time 917 know opt out of everything at once 918 be opt in for some things right or maybe some things that just 919 shouldn't be happening 920 921 I talked about do not track which is a thing You should be able to you I mean maybe it should You know principles like data minimization -- don't just collect every single thing like through the microphone just NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 48 922 because it might be interesting one day You know security -- 923 well we don't have baseline security legislation in this country 924 925 926 927 928 929 The FTC has done a pretty good job of trying to interpret the statutes to require it But they've run into some roadblocks You know access to your information -- if the company has the information about you they should tell you about it And so I mean there's been proposals floating around I 930 think there are some good elements to there's some bad element 931 too but certainly where we are right now where there's very 932 little law right the basic privacy law is Section 5 of the FTC 933 Act which just says don't lie 934 but it's not enough right 935 I have these privacy policies I can't figure out what they're 936 saying 937 Ms Schakowsky And don't lie is a good principle I mean don't lie -- if it's why In the few seconds I have how common is 938 it that there's discrimination in terms of -- and maybe that's 939 a loaded word -- but in terms of hiring ads that do particularly 940 age discrimination 941 Mr Brookman Yes So I am familiar with the ProPublica 942 work that was pointed out -- you know targeted ads for age but 943 also you know you are allowed to target ads based on racist NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 49 944 945 terms right And part of the problem is you know Facebook is like 946 a $500 billion company or whatever -- they make a lot of money 947 -- but they don't have a lot of staff right 948 They don't review all these things 949 950 951 It's all automated It's all programmatic which is efficient in some ways but it's harder to snake out the fraud and the discrimination And I have a lot of respect for the work that Mr Zaneis 952 does to try to tackle that But by and large I mean you look 953 at the sort of ads that you see online 954 a bad experience for consumers 955 Ms Schakowsky 956 Mr Latta 957 The chair now recognizes the gentleman from Illinois the 958 959 960 Thank you A lot of times they're Thank you I yield back The gentlelady yields back vice chair of the subcommittee for five minutes Mr Kinzinger Well thank you Mr Chairman I thank you all for being here today 961 Professor Beales we want the internet to continue to thrive 962 but we also don't want consumers to lose faith in the internet 963 because their information is being used in an unanticipated or 964 even a harmful way 965 Aren't there some baseline protections that would balance NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 50 966 both innovation and consumers' trust in the privacy of their 967 sensitive online information 968 Mr Beales Well I think the approach you're trying to 969 get consumers to understand the gory details of how this works 970 and make choices on a provider by provider basis is just hopeless 971 972 It's like trying to understand -- trying to ask consumers 973 to understand all of the code that's on your computer and how 974 it works and what it does 975 It's not going to happen It shouldn't be used -- the information however it's 976 collected and by whoever it's collected should not be used in 977 ways that are harmful to consumers 978 But you need to figure out what harm you're worried about 979 and figure out what's the best way to stop that harm specifically 980 It's not an information problem It's what people are doing 981 with the information and if there's specific things that they're 982 doing that are bad that's what you ought to address 983 But targeted advertising isn't one of those 984 Mr Kinzinger Yes and so that you basically answered my 985 second question which is shouldn't the privacy protections be 986 based on the potential for consumer harm and I think 987 Mr Beales Absolutely -- Absolutely NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 51 988 I mean that -- I think it's always been telling to me that 989 in Europe it's about data protection and in the U S we do privacy 990 through a consumer protection agency 991 Mr Kinzinger More people now access the internet from 992 a device -- phone tablet or IOT product -- than from desktops 993 or laptops 994 increasingly important to these companies 995 companies target ads based on location but companies like Google 996 and Facebook can assemble profiles and patterns of life about 997 consumers 998 999 Knowing the geolocation of a consumer is Not only can I would like to hear your opinions about as to whether precise geolocating information should be considered sensitive 1000 information meaning consumers should have to affirmatively opt 1001 in for tracking and collection of their location 1002 So Mr Zaneis can you explain to me how consumers are tracked 1003 between devices and how is it that ads on one device might be 1004 seen on another 1005 Mr Zaneis 1006 Just to be clear TAG does not work on consumer privacy Sure Thank you for the question 1007 issues But I certainly have a lot of experience here and have 1008 testified in front of the subcommittee in the past on privacy 1009 issues and data issues So I am happy to elaborate a little bit NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 52 1010 Certainly there are technologies -- desktop and mobile 1011 browsing is technologically different than mobile apps and 1012 cookies don't generally exist in the mobile app space 1013 have different types of identifiers such as device identifiers 1014 for a mobile phone or a tablet that can be used 1015 So you But the concept is the same which is advertising requires 1016 an identifier Whatever it is is less important The technology 1017 that empowers it is less important than what it is and we've 1018 proven as an industry -- Ms Glasser mentioned the Digital 1019 Advertising Alliance and the Network Advertising Initiative to 1020 wonderful self-regulatory programs not dissimilar from TAG that 1021 have been able to put in place consumer protections even in the 1022 mobile space 1023 Really the key is to be technology agnostic but to set policy 1024 and self-regulatory principles based on principles and standards 1025 that everybody must meet 1026 Mr Kinzinger 1027 Back to you Professor I think that's the effective method Thank you There's been a lot of debate about 1028 the concept of selling data which culminated with the Facebook 1029 hearings recently 1030 These large online businesses often assert that they don't 1031 sell their consumers' private -- personal information to anyone NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 53 1032 Yet five data companies -- Google Facebook Apple Microsoft 1033 and Amazon -- represent a combined market share of nearly $4 1034 trillion 1035 So regardless of ownership of the data they're well 1036 compensated for their commodities through the transactions that 1037 they conduct 1038 sell consumer data and is it really as nuanced as they -- as they 1039 say 1040 What do you think of their claim that they don't Mr Beales Well the way I've seen it in the context of 1041 ad exchanges for -- you know for the purchase and sale of the 1042 advertising is there's not data that's bought and sold but there 1043 are cooperators in that process who are sharing data 1044 For example an ad comes up that General Motors might be 1045 interested in The publisher sends some information about what 1046 it knows about me based on the cookies that are on my machine 1047 to the ad exchange 1048 Somebody who's a potential bidder like General Motors who 1049 knows something else about me matches that information and now 1050 they know more than either party knew in the first place and they 1051 use that information in deciding on whether to bid on the ad 1052 But people think -- companies in this space tend to think 1053 their data is their lifeblood and they're not going to give it NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 54 1054 to somebody else 1055 can is the experience I've seen 1056 I mean they hold on to it as closely as they Mr Kinzinger And just -- with 10 seconds because I am 1057 going to just get yes or no -- consumer privacy laws and policy 1058 makers have regularly complained about the length and complexity 1059 of consumers facing privacy policies 1060 Do any of you believe consumers have a clear understanding 1061 of what's contained in a privacy policy 1062 no from each of you would be great 1063 Ms Glasser 1064 Mr Beales 1065 Mr Brookman 1066 Mr Zaneis 1067 Mr Kinzinger 1068 Mr Latta 1069 1070 1071 1072 And so a quick yes or No No No No Thanks I yield back The gentleman yields back and the chair now recognizes the gentlelady from California for five minutes Ms Matsui Thank you Mr Chairman and thank you very much for our witnesses here today As we discuss here today and in previous hearings a 1073 fundamental tenet of digital advertising is explaining to 1074 consumers what data is being collected and for what purpose -- 1075 in other words providing meaningful and robust transparency NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 55 1076 But that of course is more complex than a list of the 1077 information on the types of data collected and whether that data 1078 is sold 1079 Specifically companies are able to take user data and sell 1080 ads based on the data users provide to those platforms without 1081 having to ever sell that data to a third party and the more data 1082 that platforms have access to and importantly the more they 1083 can use that data to create inferences to target these users 1084 the better these platforms can target advertisements 1085 Entire panel -- so even if data isn't so-called sold how 1086 do we work towards meaningful transparency with both more clarity 1087 and nuance about data usage that don't make distinctions without 1088 differences 1089 Anyone want to start 1090 Ms Glasser 1091 1092 Sure I think plain and simple we just need to be better at describing what we do It is a complicated space It does get very technical and I think the easiest way to explain 1093 what we do is to provide an example Explain to the user what 1094 happens when they go to Facebook or why they're seeing a certain 1095 ad 1096 I think in addition to that the self-regulatory groups have 1097 made a tremendous effort toward that end by creating an icon that's NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 56 1098 supposed to indicate when certain types of advertising is 1099 happening or a certain type of data collection is happening for 1100 interest-based advertising which I talked about earlier 1101 Ms Matsui 1102 Ms Glasser 1103 Right I think we just need to be more clear and we need to write these policies much better 1104 Ms Matsui Do you agree 1105 Mr Zaneis I do I mean we all just agreed that privacy 1106 policies are not understandable by consumers just because you 1107 have to tell the truth but that's all you have to say and you 1108 have to disclose everything 1109 mechanism for disclosure which is why programs such as industry 1110 self-regulatory ones -- the DAA and NAI -- are so important 1111 It's not a -- it's not an effective A lot of these third-party entities don't have a consumer 1112 touch point So having a very simple policy disclosure outside 1113 of a privacy policy is key and I will just add I think then the 1114 platforms that do have a consumer touch point have done a fantastic 1115 job of developing things like privacy centers and communicating 1116 with their users clearly 1117 Ms Matsui 1118 Mr Brookman 1119 Okay Yes Okay I mean I think you're right that companies like Facebook or AT T they make a big deal of the fact NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 57 1120 that they don't sell the data right but then it goes down to 1121 the question of excess data collection 1122 You know I give Facebook a lot of information about me on 1123 plenty of stuff -- pictures of my kids things I like my religious 1124 and political affiliation 1125 But that's not good enough right I mean they actually 1126 -- and this was I thought a fascinating part of the Cambridge 1127 Analytica hearings -- a lot of the questions were not about 1128 Cambridge but how Facebook watches what I do in all my other apps 1129 and websites and that's the thing I think a lot of folks object 1130 to 1131 So really you know AT T is like a service provider for 1132 me 1133 ads to me 1134 everything I do online where I have no control because they're 1135 my pipe in order to target ads 1136 They never used to listen to my phone calls to try to target Do they have a -- should they be able to watch I think that's the sort of out of context data collection 1137 and use that I think consumers object to 1138 surprised by that 1139 prohibitions but very much at least some sort of rights 1140 1141 Ms Matsui I think they're I think that there should be maybe more Do you think the public is more aware of this today based upon what's happening -- the coverage NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 58 1142 Mr Brookman I think -- I think there's a generalized 1143 awareness that our privacy is under siege 1144 to the questions from Ranking Member Schakowsky 1145 feel like I am being listened to all the time by everyone -- 1146 what do I do about it -- what's happening now 1147 just a lot of paralysis and a lot of confusion and a lot of like 1148 upset right 1149 don't like it but they don't know how to -- I think people And I think there's I mean we talked about the poll numbers 1150 Ms Matsui 1151 Mr Brookman 1152 This kind of goes People They don't know what to do They don't know what to do That's exactly right 1153 Ms Matsui Okay How about you 1154 Mr Beales Well as I said I think -- I think the key 1155 is to think about what it is that we are worried about would happen 1156 as a result of this information and then think about ways we can 1157 keep that from happening 1158 The information is out there It can be observed in a lot 1159 of different ways using a lot of different technologies and new 1160 ones will be invented if not every day every year 1161 Ms Matsui Right The horse has left the barn to a 1162 degree so we have to figure out what we could do about it and 1163 try to explain it to everybody so people understand it and then NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 59 1164 it's more of sense of how we deal with our own data and 1165 understanding as we click on things what could happen right 1166 1167 Yes Okay Well I am running out of time so I yield back Thanks 1168 Mr Latta Thank you 1169 balance of her time The gentlelady yields back the 1170 The chair now recognizes the gentleman from Michigan the 1171 chairman of the Subcommittee on Energy and the former chair of 1172 the full committee for five minutes 1173 Mr Upton Well thank you Mr Chairman 1174 Ms Glasser I want to follow up a little bit on what Ms 1175 Matsui said 1176 sharing a consumer's name or similarly identifiable information 1177 is not necessary in many cases to provide rich personalized 1178 and relevant advertising 1179 In your testimony you stated quote Using and So what's your thoughts as to why Facebook does in fact 1180 collect so much information along those lines like phone numbers 1181 and location and calling histories 1182 are they doing with that if they don't really need it and to tee 1183 up that interest-based ad 1184 Ms Glasser 1185 Mr Upton What information -- what Thank you for your question If you want to comment I don't -- NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 60 1186 Ms Glasser Yes I can't speak specifically to the 1187 motives behind Facebook for doing it 1188 that insight 1189 Just simply I don't have However my perception of the reason why they collect it 1190 is when you sign up for their platform you have to provide this 1191 information so you can create your actual profile page 1192 Now as I understand it I don't think you actually have 1193 to give your phone number but in that case if you decide to it's 1194 a way that they can -- they use it for a means to text you certain 1195 sort of updates or they can use your phone number to identify 1196 that particular device and be able to provide you continuity of 1197 services 1198 number is the same 1199 them to keep linking it 1200 Maybe you get a new phone but you know the phone The device is different It's a way for Facebook is sort of a unique case in the broader ecosystem 1201 because they are a subscription-based platform 1202 Facebook you provide your email your name and all of that 1203 information as a condition of signing up 1204 When you go to I think when you are looking on a website just like New York 1205 Times for example or the Washington Post unless you have a 1206 subscription -- let's assume you don't -- you're not providing 1207 any of that information NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 61 1208 You're not giving your name your phone number your email 1209 address and you don't need to in order to get advertising placed 1210 on that site that's relevant to your interests or things that 1211 you might have looked at before 1212 Mr Upton So you mentioned a little bit earlier about the 1213 icons and I know that the Digital Advertising Alliance launched 1214 last month an industry-wide initiative including a political ad 1215 icon for consumers 1216 1217 1218 1219 Are you aware of any political ads currently branded with that new icon Ms Glasser I don't but I just haven't seen them myself I am sure I will start seeing them after this conversation because 1220 it always comes up after you talk about it 1221 seen them yet But I have not myself 1222 Mr Upton 1223 Mr Zaneis can you explain how the third-party validation 1224 1225 1226 1227 Great processes exist and how they work Mr Zaneis Third-party validation as far as our certifications are concerned Thanks for asking the question You know any certification program is only as strong as 1228 the validation process behind it So we work with a number of 1229 independent audit firms and the majority of our members actually NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 62 1230 go through a third-party audit which is very significant and 1231 they literally are on the site kicking the tires looking under 1232 the hood to make sure that the companies are complying with our 1233 standards and I will take it one step further because if you 1234 go up the supply chain a little bit a lot of our efforts to fight 1235 criminal activity are supported by really niche technically 1236 sophisticated companies -- what we call vendor companies -- an 1237 anti-fraud vendor for example -- which they also go through an 1238 independent accreditation from the Media Ratings Council 1239 they may go with EY or somebody like that and go through a very 1240 extensive certification process 1241 It's really key to raise the bar 1242 Mr Upton 1243 Well I just want to say as a native Michigander I really appreciate your testimony 1244 Mr Zaneis 1245 Mr Latta So I appreciate it Thank you Thank you The gentleman yields back and the chair now 1246 recognizes the gentlelady -- oh I am sorry I think Mr Green 1247 just walked in 1248 Mr Green is recognized for five minutes 1249 Mr Green I want to thank the chairman and the ranking 1250 member for holding this hearing The two biggest online privacy 1251 scandals in the past year has come through this subcommittee -NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 63 1252 the Equifax breach and the Facebook Cambridge Analytica issue 1253 -- and I hope we can soon see some legislation on the books to 1254 protect Americans online 1255 Mr Brookman we know that small businesses as well as larger 1256 corporations sometimes benefit from consumer data since it allows 1257 them to show their ads to customers who are mostly likely to want 1258 their product 1259 Do you know -- do we know how common it is for small to 1260 medium-sized businesses to use tracking technology as compared 1261 to larger businesses 1262 Mr Brookman I don't have that information But I will 1263 grant the point -- that it's small businesses large businesses 1264 Lots of companies rely -- use behavioral targeting ad tracking 1265 1266 to reach their customers I will also concede Dr Beales' point that in some cases 1267 those ads may be more valuable I do think the vast majority 1268 of ads are not in fact behavioral and I do know that leading 1269 publisher trade associations like Digital Content Next -- they 1270 used to be the Online Publishers Alliance -- have been one of 1271 the more aggressive forces calling for actually privacy 1272 protection 1273 I mean even though those companies use targeting they think Even though -- and we are a member too right -- NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 64 1274 it would be better for the ad ecosystem if there were some more 1275 protections in place 1276 It would be partly just for confidence in the ecosystem 1277 partly because a lot of the excess consumer surplus is just flowing 1278 to companies to Facebook and to Google and also because I mean 1279 they're seeing companies or users deploy ad blockers because the 1280 self-regulatory efforts that have happened so far haven't been 1281 sufficient to address a lot of these concerns 1282 Mr Green Okay Any -- do you have any thoughts on whether 1283 there are any way for any potential online privacy law at the 1284 federal level to balance potential benefits to businesses along 1285 with better consumer privacy 1286 Mr Brookman Yes absolutely 1287 I mean it's a thing that I've worked on for a number of 1288 years The United States is kind of an outlier around the world 1289 and most countries have some sort of basic privacy laws on the 1290 books to give folks control 1291 United States is one of the rare exceptions so they don't 1292 The default law is just don't lie to folks which has not been 1293 sufficient to really safeguard privacy 1294 So yeah having something on the books that provides better 1295 information -- again I don't want all the onus to be on consumers NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 65 1296 to try to figure out you know every single thing so I think 1297 you know a lot of this out of context data collection data usage 1298 may be you know should be prohibited in some cases right 1299 At the very least though there should be some more -- at 1300 least a stronger ability to say no right 1301 -- you know they feel like they want control 1302 they're being monitored 1303 don't have the information or ability to do so today 1304 Mr Green A lot of folks just They feel like They wish they could do more They Well and after our hearing with Facebook we 1305 realized that you know somewhere along the way you can't 1306 accumulate this data without marketing it and that's the reason 1307 But like you said and I hear you know the balance of the 1308 consumer privacy I really want to get permission for it I don't 1309 want them taking it from me without the -- without knowing 1310 Can you discuss ways to balance the consumer privacy which 1311 polling shows is extremely the high priority for Americans with 1312 any benefit that may sometime come from these ads 1313 1314 1315 1316 1317 Mr Brookman Yes information about me I mean Facebook has a lot of They have -- like they know where I live They can serve me plenty of targeted ads What I object to is them watching every place I do online you know in order to monitor me in ways I don't expect NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 66 1318 They started doing that back in 2011 or so when they started 1319 rolling out like buttons and people would see a like button -- 1320 oh I can press this I can click like 1321 What it didn't realize is that meant Facebook was watching 1322 them whether they clicked the button or not right 1323 the sort of thing I think folks object to 1324 thing I think -- that's all that members are objecting to when 1325 -- during the Cambridge Analytica hearings 1326 And so that's That's the sort of That's the sort of thing I think consumers like don't 1327 expect and that there should be stronger rules in place for whereas 1328 today there really aren't 1329 Mr Green Well I even have a staff member who said he 1330 was planning to get married so he was looking for wedding rings 1331 and all of a sudden he saw these adds all pop up on his handheld 1332 So I mean it's a problem but how do we deal with it 1333 you were at the FTC you worked on a commissions cross-device 1334 tracking report 1335 companies following people across these multiple platforms 1336 While Can you tell us some of your concerns about Mr Brookman Yes absolutely So I think it's just 1337 unexpected in ways that folks you know don't necessarily think 1338 that just because I am on my phone I will suddenly -- if I am 1339 searching for wedding ring on my phone suddenly on my desktop NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 67 1340 computer which by the way I share with my live-in girlfriend 1341 suddenly she starts seeing pop-up ads over there for the wedding 1342 rings I was looking at 1343 1344 I think a lot of folks don't necessarily expect that and I think they -- 1345 Ms Schakowsky You better get married 1346 Laughter 1347 Mr Brookman 1348 But I think I mean the information is used in ways that Exactly It's a lot of pressure 1349 are surprising 1350 but now if you go a publisher you type in -- if you log in on 1351 you know Justin at Gmail you know that website might then spew 1352 out to a bunch of ad networks hey that's Justin right 1353 so they are now tracking by real name in ways that they hadn't 1354 done before 1355 So online tracking used to be fairly anonymous And And so I think these are the sorts of things that are 1356 unexpected and I think when people know about them they're up 1357 in arms 1358 limitations or at least controls around 1359 They're controversial and they wish there were more Mr Green Mr Chairman just briefly I heard that if I 1360 have a smart TV and I have my handheld my iPhone they can actually 1361 know what they're doing and together is there any solution there NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 68 1362 Should we just turn it off 1363 Mr Brookman 1364 Mr Green 1365 I really don't like the appliances talking about me 1366 Laughter 1367 Mr Brookman 1368 1369 Yes it's tricky It's a big conspiracy and I wish they would knock it off You know things like -- most of these companies do offer 1370 like opt out 1371 to find So there are controls but they're kind of hard 1372 And so I mean one thing we try to do in Consumer Reports 1373 is like say hey if you want to knock this off you know here's 1374 how to do it 1375 It's just like a lot of labor right I mean we all have 1376 -- we all got a lot going on 1377 like half an hour configuring our smart TV to like not talk 1378 to the toaster right 1379 1380 We don't want to have to spend I mean there should be some things that by default just don't happen 1381 Mr Green Thank you Mr Chairman 1382 Mr Latta The gentleman's time has expired and yields 1383 back and the chair now recognizes the gentleman from New Jersey NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 69 1384 for five minutes 1385 Mr Lance 1386 I want the panel to know I've been happily married for a 1387 1388 Thank you Mr Chairman generation and none of these matters pop up on my computer This subcommittee had Mr Zuckerberg testify before us two 1389 months ago 1390 week revealed that Facebook has data assuring partnerships with 1391 many device makers including Chinese firms that U S 1392 intelligence agencies have labelled national security threats 1393 As others on the panel have indicated reports last Following these reports I sent Mr Zuckerberg a letter 1394 indicating my continued frustration with Facebook's handling of 1395 users' data 1396 I reiterated a statement I made at our April hearing that 1397 I believe Facebook may have violated its 2011 consent agreement 1398 with the Federal Trade Commission 1399 I believe Facebook's issues are interrelated with the 1400 subject of this hearing digital advertising as the company makes 1401 the vast majority of its profits from advertising reporting $40 1402 billion in revenue from advertising alone in 2017 1403 Another issue I am concerned about is the increase in fake 1404 news advertisements and foreign interference in our electoral 1405 process NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 70 1406 I am one of the co-sponsors of the bipartisan Honest Ads 1407 Act which enhances disclosure requirements and transparency for 1408 online political advertisements 1409 1410 I was pleased that Facebook pledged its support to the bill and I thank the panel for being with us this morning 1411 To the panel in general from your expertise how do 1412 companies balance the need to protect privacy while also offering 1413 the most effective advertising platforms to their clients 1414 Ms Glasser 1415 Ms Glasser Thank you I -- there is a lot of things that 1416 we do before we engage with a company for advertising or analytic 1417 services 1418 To us it's of paramount importance to make sure that we 1419 are working with companies who behave appropriately and who do 1420 the right thing 1421 caught up in things like misuse of data or data collecting -- 1422 being collected improperly you know that's a clear black mark 1423 on us 1424 It's our reputation on the line and if we get At the same time we can't obviously control other companies 1425 However we have some expensive due diligence that we put in 1426 place whether it starts with reading a company's privacy policy 1427 ensuring they offer opt-out ensuring they're actually describing NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 71 1428 how their services work if they just describe data collection 1429 on their own website that doesn't necessarily get us where we 1430 need to be because consumers are using their services and their 1431 platforms and not necessarily their website 1432 So we go through some extensive efforts to make sure that 1433 the companies we are working with are at least taking an effort 1434 to do the right thing whether it's members of industry 1435 associations such as TAG or the NAI and DAA it provides a level 1436 of comfort to know that they too recognize a lot of the issues 1437 and that they too are obliged to put certain protections in place 1438 Mr Lance 1439 Mr Zaneis Thank you Yes Others on the panel I think Ms Glasser nailed it as far as 1440 every company really has to take privacy very seriously because 1441 it impacts their reputation in his market and it's a very fluid 1442 market 1443 of your competitors with one click 1444 It's a very diverse market and consumers can go to any In my experience it's been companies -- early adopters in 1445 self-regulatory programs -- it's a good signal that they care 1446 about it and in working it helps establish both the Digital 1447 Advertising Alliance almost a decade ago and now TAG three years 1448 ago 1449 participant Facebook has always been an early adopter and a good NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 72 1450 Mr Lance Mr Brookman 1451 Mr Brookman Yes I mean I will ultimately grant that 1452 you know I have friends that -- who work at privacy companies 1453 and they do a lot 1454 I just think that the balance is off -- that there's always 1455 this wide-eyed enthusiasm that big data will save everything while 1456 folks tend to be very dismissive that things might go wrong 1457 And I think you know the consequences if they go wrong 1458 there really isn't enough risk There's not any -- Ranking Member 1459 Schakowsky talked about how the Federal Trade Commission -- you 1460 know even if a company does violate the fairly week laws that 1461 we have can't get penalties in most of the cases 1462 limited staff to police -- like again all these things that 1463 again leading academic experts can't even figure out They have a 1464 When I was at the FTC you know I worked in their division 1465 their office of technology research and investigations designed 1466 to try to help bring more tech expertise to the FTC 1467 understaffed 1468 reason to try to safeguard privacy in the existing legal 1469 framework 1470 1471 Mr Lance But we were And so I think you know there's just not enough Thank you My time has expired but I look forward to working with all of the distinguished panel members NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 73 1472 Thank you very much Mr Chairman 1473 Mr Latta Thank you The gentleman's time has expired 1474 and the chair now recognizes the gentlelady from Michigan for 1475 five minutes 1476 Mrs Dingell 1477 I am not calm like anybody here 1478 1479 1480 this morning Thank you Mr Chairman I listened to all of you I've listened to my colleague Ms Schakowsky I don't have an Alexa in my house I don't want anybody listening 1481 We've seen examples of people knowing that we are being 1482 listened to and you know in the past we've been told to just 1483 trust companies that hold our personal information and that our 1484 information was used in a transparent process 1485 We obviously now know that that's not the case and I think 1486 quite frankly the trust is wearing thing 1487 consumers are kind of worried about it but what can you do about 1488 it 1489 1490 1491 You say well Consumers don't understand how much that data is being used and how it can be used Dr Beales I didn't sleep last night I was up all night 1492 for two reasons One I pulled out my paper from my graduate 1493 school on public good and I think that what we are talking about NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 74 1494 today in the internet is not a public good and I am going to write 1495 a paper 1496 1497 I was up until 3 00 a m and you're going to be the first copy to get a -- first person to get a copy of it 1498 And two Michael Chertoff has a new book out on privacy and 1499 was talking about how the Chinese are using all of this data to 1500 actually -- we think it's innocent 1501 The Chinese are looking at who does these searches and 1502 compiling them and grading them and how people get jobs et 1503 cetera and that's what's happening here 1504 How do we know that this data viewed alone thousands of 1505 data points collected on each of us don't paint a picture other 1506 than our you know our interests curiosities or preferences 1507 But when they're combined together they create a vivid 1508 mosaic of both our online and offline who we are and we don't 1509 know who that's being shared with and trust me I don't trust 1510 you to say it's not being shared with lots of people 1511 It should raise concerns for consumers We've got laws that 1512 protect people at work on the streets and in their homes and 1513 with the lines continually blurring between online and offline 1514 I think we have to address these issues and we need to be 1515 doing a lot more to protect consumers and educate them They think NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 75 1516 there's nothing they can do and what does it matter -- it could 1517 matter a lot 1518 So Dr Beales and Ms Glasser what are the market 1519 incentives for companies to not collect as much information as 1520 possible There are none I would like to say that 1521 Mr Beales I think -- I mean collecting information has 1522 some cost 1523 to be to collect more of it and we'll see whether it is good 1524 for something 1525 It's usually not very big and so the incentive tends There's an incentive not to collect I think information 1526 -- that people are going to be reluctant to give you 1527 if you do survey research you always ask questions about income 1528 at the end because a lot of people will stop answering question 1529 when you ask that question and you don't want to lose the data 1530 I mean There's not a lot of incentive 1531 Ms Glasser 1532 Ms Glasser Sure I think that there is definitely a lot 1533 of -- a lot of reasons why companies would want to limit the data 1534 that they're collecting first of all for legal reasons right 1535 I mean it depends on which sector you're in and as we all know 1536 there are different sectoral logs here in the U S that protect 1537 different types of information particularly CAPA NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 76 1538 Now I don't want to collect personally identifiable 1539 information by children which includes cookies and personal 1540 identifiers 1541 Same thing goes for health care or finance I as a company 1542 have a vested interest to limit the data on collecting for several 1543 reasons 1544 I don't want to risk a lawsuit I don't want to risk 1545 enforcement by the FTC not even from a legal perspective -- of 1546 course that's terrible but -- I mean depending on whose side 1547 you are but also because I don't want the press and I don't want 1548 people to know that I got caught doing something I shouldn't have 1549 been doing 1550 I think the other reason is if I am collecting all of this 1551 data that I don't necessarily need I run the risk of collecting 1552 bad data and when I am collecting bad data and it comes to be 1553 found out that it's bad data then I have to go and purge all 1554 of my data that might be connected to that bad data and that comes 1555 at a tremendous cost to my company literally in money what it 1556 costs to have engineers and people go through the systems and 1557 do that 1558 could slow down business because we have to now remove this entire 1559 data set It also comes at a reputational cost as well and it NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 77 1560 1561 1562 So for me and for our company there's clearly a vested interest to collect only what's needed Mrs Dingell So I am almost out of time 1563 to do more questions for the record 1564 another example 1565 1566 But I will give you all I was prepping for a committee hearing They call me Dr Google So I am going I stay up nights But was doing opioid research and by 1567 the next morning was getting drug rehabilitation centers to check 1568 myself into and I didn't want anybody to think that I was a drug 1569 user 1570 But that's the kind of data that's being collected and then 1571 a potential employer can buy that from somebody 1572 think about it 1573 Thank you 1574 Mr Latta 1575 1576 People don't I hope we can get them to The gentlelady's time has expired and the chair now recognizes the gentleman from Kentucky for five minutes Mr Guthrie Thanks a lot and thanks for being here And 1577 this is serious and really trying to figure out where we draw 1578 the line in public policy in this 1579 I've said before that you know I am from Kentucky 1580 college basketball 1581 minutes you get a TV time out The most frustrating thing is every four NEAL R GROSS 202 234-4433 I love COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 78 1582 But I get to watch it for free because I got to watch the 1583 ad 1584 people Mr Brookman said people don't want to trade free content 1585 for the violation of privacy 1586 And so -- and we are talking about free content I think And what will be interesting in some of these apps would 1587 have a subscription so you can subscribe and you get no ads 1588 whatsoever and see what people choose 1589 to see where people move forward with that That would be interesting 1590 But and I was in Ms Schakowsky's district trying to figure 1591 out how to get around Monday -- trying to get around traffic to 1592 get from Sheridan Road to Lake Shore Drive 1593 And the app I was using popped up an ad right when in needed 1594 to make a critical turn 1595 in frustrating -- but I was in your wonderful district 1596 ever trying to get me lost so I would stay in Chicago 1597 So that was -- so there's a difference Great city by the way Might And so we are trying to figure out 1598 what's like just nuisance and stuff you have to fool with and 1599 pop-ups and then really what gets into what some of the things 1600 that Mr Brookman has talked about and where we need to draw a 1601 line 1602 So just kind of the process of this So Ms Glasser first 1603 so how do the -- these target audiences are created by additional NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 79 1604 1605 ad companies I mean just kind of how is that -- I think we've kind of 1606 gotten into it They look at all the different ways that you 1607 move forward 1608 from a digital ad company is created for -- generically for 1609 somebody who's wanting to create an audience Can you kind of describe how a target audience 1610 Ms Glasser Sure I would be happy to 1611 So basically what happens is we talk about intra space 1612 advertising 1613 build these profiles and target audiences and what we do then 1614 is we actually will see what websites you have gone to over the 1615 course of time 1616 1617 Typically we'll used intra space advertising to So maybe one day you're visiting MapQuest to get directions Another day you're on a gardening website Then you're on the 1618 New York Times and then you're looking to buy dog food and 1619 algorithmically and using modelling and science they are able 1620 to sort of piece these things together and you know put you 1621 in a certain age range -- say you're male you live in Kentucky 1622 and you have an interest in gardening and dogs Simple enough 1623 right 1624 1625 That's basically an interest category We then provide that data to other partners for them to target the specific audiences NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 80 1626 but we'll use the data collected over different websites over 1627 time to build up these profiles and to get a sense of the different 1628 interests so that we can build these -- 1629 Mr Guthrie And then you build up ads that I want to see 1630 That's the kind of the things instead of generic like when 1631 I do the basketball whatever comes on I got to watch but ads I 1632 want to see 1633 1634 1635 So I don't have an issue with that but just trying to figure out where we draw the line So Professor Beales you talk about or it's been suggested 1636 that online advertising market can operate like an financial 1637 exchange where people bid on the ads and people -- I heard you 1638 talk about that earlier today 1639 1640 How does that work I mean how does that kind of -- I didn't realize that happened 1641 Mr Beales 1642 Mr Guthrie Yes there's an -Usually like here's a group of dog lovers 1643 from Kentucky so here's an ad that -- and so somebody will bid 1644 on to get the ad -- 1645 Mr Beales Well you go to a website and the website will 1646 say here's an ad -- here's the limited information that website 1647 has other than you're on that website That may be all it knows NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 81 1648 but it may be part of the network that knows something more 1649 It passes that information to the ad exchange which passes 1650 it on to potential bidders which are typically advertisers or 1651 advertising agencies who have other information about you 1652 1653 Mr Guthrie Well I will go to the -- going to a website and boom all this starts taking place instantaneously 1654 Mr Beales Yes Absolutely Absolutely 1655 There's a fascinating video that I think is 70 milliseconds 1656 or something like that which is about how long it takes to 1657 actually serve the ad 1658 Different advertisers bid You know I've got this great 1659 dog food that I know you're really going to like so I will bid 1660 a lot for your exposure 1661 dog food ad I win the auction and the you get the 1662 But there may be dozens and dozens of advertisers that bid 1663 for that particular availability each of who has a little bit 1664 information about what -- about you about what you might be 1665 interested in and the one who thinks you're most valuable is 1666 the one -- 1667 Mr Guthrie And obviously the more information I have 1668 the more valuable I become to that -- whoever's bidding 1669 obviously The more they know my likes the more they're going NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 82 1670 to bid on what I -- and so therefore to get me on somebody's 1671 website they're going to provide better content 1672 So I will use their -- so they kind of -- it works that way 1673 but it just gets into the -- but they have to have so much 1674 information on you so that -- are there things that you think 1675 need to be protected in that or people just need to know going 1676 in and that it's an open process 1677 1678 1679 Mr Beales Well I think it's a more going in -- a known going in and I think it's more think about -Mr Guthrie The thing is if everybody's a good actor we 1680 are -- I mean the problem is the bad actor If everybody's a 1681 good actor then it makes me more valuable to that advertising 1682 1683 It makes somebody want me on their website They're going 1684 to provide better content that I will then enjoy using 1685 why I go there 1686 the bad actors in that 1687 That's And so it all works But how do you protect against Mr Beales I think you got to think about what I means 1688 to be a bad actor and then try to restrict that particular conduct 1689 It's not that -- it's not that a lot of people know something 1690 about you from your various online behavior 1691 It's what bad do we think might happen I mean NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 83 1692 Congresswoman Dingell's example of what China's doing -- I mean 1693 the problem there is the government has got that data and to 1694 the extent that that's a problem that's a problem we can address 1695 directly by making it harder for the government to get that data 1696 But it's what are -- and I think we need to ask what are 1697 the bad actors doing with that information that could be harmful 1698 because we need to try to address the bad things that could happen 1699 to consumers 1700 1701 1702 1703 1704 1705 1706 But it's not the information collection that itself is the bad thing The bad thing is what somebody does with that Mr Guthrie Okay Thanks I am out of time I yield back Mr Latta The gentleman's time has expired and the chair now recognizes the gentleman from California for five minutes Mr Cardenas Thank you Mr Chairman also Ranking Member 1707 Schakowsky for having this hearing and I would like to thank 1708 the panellists for answering our questions and helping us make 1709 sense of all of this and there's a lot of all of this involved 1710 here 1711 element 1712 1713 It's very very new to the human psyche and the human You know this is on the heels of the Facebook scandal and the hearings that we've had here But at the same time I think NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 84 1714 that it's important to note that that's just the tip of the 1715 iceberg 1716 There's a lot going on out there and a lot that we don't 1717 hear about and I think that Mrs Dingell brought up some good 1718 points about just getting online and all of a sudden the next 1719 day you know you get certain pop-ups and like she said who 1720 knows in the future if people are going to use that against someone 1721 saying hey are you really an opioid addict because we got some 1722 information on you and you spent a heck of a lot of time looking 1723 at this stuff 1724 But then again she's just doing research but at the same 1725 time people are going to use that data as they wish and what 1726 is unfortunate is that we have a lot of small businesses out there 1727 who are benefiting from this who are able to compete now in an 1728 environment like never before with larger businesses that are 1729 creating jobs 1730 In my district alone for example it's come to my attention 1731 that thousands of jobs have been created just in my district alone 1732 because of this new technology and these new efforts 1733 And when it comes to the economic boon as well there is 1734 economic pluses When you talk about thousands of jobs you're 1735 talking about hundreds of millions of dollars of money that's NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 85 1736 1737 coming into my community So there is positive to all this as well But where is the 1738 balance And in that comes my first question is what data is 1739 collected from consumers and also what kind of data do companies 1740 pay for the most and what information about consumers is most 1741 valuable to them 1742 If anybody can give me some perspective on that 1743 Ms Glasser 1744 Mr Cardenas 1745 Ms Glasser I would be happy to try Sure Thank you I think the answer is really it depends I 1746 think it depends on what your end goal is as far as what data 1747 will be most valuable 1748 I think it also depends on who you're trying to reach and 1749 what type of company you are 1750 up here -- I can't speak for everyone else -- are true believers 1751 in data minimization transparency and principles along those 1752 lines 1753 Again I think all of us at least So as far as data minimization you only collect what you 1754 need and that would not typically fall into the area of egregious 1755 practices 1756 Mr Cardenas 1757 Mr Zaneis Anybody else Yes I would be happy to answer that and it NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 86 1758 relates very well to Congressman Guthrie's question just a second 1759 ago 1760 Obviously some of your web browsing behavior is going to 1761 be collected and so if you go to another website and we are talking 1762 about the real-time bidding somebody then thinks since you want 1763 to buy dog food may think that you're worth you know 20 cents 1764 for that impression -- somebody then knows that you just went 1765 to a -- to autodealer com or something like that -- may think 1766 you're worth $20 1767 valuable 1768 And so that kind of information is very But I also want to make sure we don't lose focus and get 1769 too myopic just on advertising because this kind of information 1770 is collected for all sorts of purposes 1771 At TAG we collect from our member companies' IP addresses 1772 and we use them to fight fraud 1773 center IP list and it has 40 million IP addressed that generate 1774 fraudulent nonhuman traffic 1775 We have something called a data This is incredibly valuable tool to fight criminal activity 1776 globally and it only comes from companies So if companies are 1777 restricted from collecting that kind of information perhaps 1778 under GDR-like restrictions or the California privacy initiative 1779 that's going to harm law enforcement and industry's efforts to NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 87 1780 fight crime 1781 Mr Cardenas Yes go ahead 1782 Mr Brookman Yes So the question of you know what 1783 information is collected I mean I think my main thing would 1784 be that more and more information is collected from more and more 1785 devices in confusing and often in transparent ways 1786 So if I am with Congressman Guthrie watching a basketball 1787 game I think I am likely to expect some ads targeted to the content 1788 to what I am watching right 1789 and for beer and that's contextual and that's fine 1790 people appreciate that I am going to see ads for trucks I think 1791 What I might not expect is then for my ISP to then tie what 1792 I do on a connected computer right and maybe I am looking for 1793 wedding rings and suddenly I am watching the game and a big ad 1794 for wedding rings comes up based on what I did on a different 1795 device and watching the game with my girlfriend 1796 This is the thing I think people are confused by and it's 1797 increasingly capable rights I mean TV ads used to be not 1798 targeted to individuals 1799 and tie it to your behavior online or they can tie it to the email 1800 address that you give them and that's the sort of thing that 1801 I think people -- we are all kind of grappling with Increasingly they can do that right NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 88 1802 You know how do you put in place you know because it is 1803 valuable right 1804 a lot of money on the diamond ring right now 1805 1806 I mean yeah I suddenly need to pay -- spend But I think people still wish they had autonomy and control over the things they own 1807 Mr Cardenas Thank you My time has expired 1808 I yield back Thank you Mr Chairman 1809 Mr Latta 1810 1811 1812 I thank you very much The gentleman's time has expired The chair now recognizes the gentleman from Indiana for five minutes 1813 Mr Loebsack 1814 I guess this could be one of those things be careful what 1815 1816 Thank you Mr Chairman you wish for I remember 25 30 years ago you know people thought this 1817 would be great 1818 to our world but also there some down sides 1819 issue 1820 And it is It really is It's Transformational It's a serious And Mr Zaneis you point out it's not only about ads it's 1821 about national security It's about all kinds of law 1822 enforcement 1823 good balance here about what we do regulatory wise or And so that's why we have to really strike a very NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 89 1824 legislatively as it relates to this issue 1825 I also think do you -- does any -- do we think that there's 1826 a generational difference in concern over this 1827 some sons who are in their 20s and my son has an Alexa 1828 Because I have You know I went to this apartment and he had it I am 1829 like don't you -- they just don't seem to be concerned about 1830 it 1831 more education maybe of people who are now -- have never grown 1832 up with the internet Do you think that's a problem Do we need to -- do we need 1833 I mean anyone -- Mr Zaneis -- about why this is actually 1834 a legitimate serious question that it's just not about -- just 1835 not about turning on some jazz music which he did which was 1836 really cool 1837 You see what I am saying 1838 Mr Zaneis Absolutely and I will say that there are -- 1839 of course there are generational differences 1840 folks that are you know digital natives and folks are not 1841 I will say this Without a doubt Everybody cares about privacy and 1842 sometimes you hear folks say oh young people don't care about 1843 privacy 1844 1845 It's not that they don't care about privacy It's that they understand the trade-off a little bit better in order to get NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 90 1846 services and they are more willing to trade off certain privacy 1847 and data in order to receive the services that they are sort of 1848 entrenched in 1849 So there are studies 1850 Brookman has some great numbers 1851 that says either 90 plus percent of people are really concerned 1852 about privacy or you know 90 percent of people love the digital 1853 services they get and are willing to trade off Sure I will just say that I am sure Mr Anybody can show you a study 1854 Mr Loebsack I understand 1855 Briefly Mr Brookman because I've got several questions 1856 Mr Brookman I think -- I think young people actually do 1857 probably care about privacy just as much 1858 more tech savvy so they -- 1859 1860 1861 Mr Loebsack They tend to be a little Do you think they're just resigned to the fact that it's not going to happen Mr Brookman I actually don't because like for example 1862 you think about who uses ad blockers right 1863 millennials and younger people It tends to be 1864 Mr Loebsack Okay 1865 Mr Brookman They have the ability -- they feel they have 1866 1867 more control to take back their privacy I think Mr Loebsack This is a general question You know so NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 91 1868 I don't generally quote from the media but there was media person 1869 here in town that walked around town with a couple of smart phones 1870 One phone had all the things that was like on airplane 1871 mode all the wifi and Bluetooth was off and the other phone 1872 was hard turned off I mean it wasn't just -- you know they 1873 had it completely turned off 1874 Walked all around to different locations around D C -- this 1875 is actually very fascinating -- then went back to studio and then 1876 turned these phones back on and had a tech person be able to 1877 monitor what happened once they turned them back on 1878 And all this meta data from everywhere they had been on both 1879 devices by the way even the one that was hard turned off was 1880 -- showed up on the screen and was jettisoned out to the world 1881 And so location -- I think the location stuff is really 1882 important because they had stopped at a park bench by the 1883 cathedral and went to a Starbuck's and all that and all that 1884 was known 1885 Do we know -- Consumer Reports would maybe answer this -- 1886 do we know -- was this a media -- was this just the media that 1887 did it or do we know that phones do this 1888 1889 Because it becomes a hardware issue right It's not a -- this is a national security thing because some of our -- we have NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 92 1890 you know hardware that's been imported from all around the world 1891 that's in some of our devices and our devices are made in other 1892 parts of the world 1893 I mean do we know that this can happen 1894 Mr Brookman So I've seen reports that Android phones 1895 when location services are turned on do collected a lot of 1896 information which I would personally find surprising -- collect 1897 barometric information seem to know what floor you're on and 1898 they guess whether you're on a train or on a bike or walking around 1899 -- in ways that I think that a lot of people would object to 1900 I don't know that they do that when the phone is hard turned 1901 off I think that would be bad if that were the case because 1902 it is an issue of security 1903 sensitive Location information is very 1904 I get Google uses location for like really useful things 1905 like Maps which I use all the time right and I believe they 1906 probably have some protections on the back end to anonymize it 1907 But I mean as a user like how do you know and it is 1908 disturbing when you do find out the raw feed that does get 1909 uploaded I don't know if it is quite as extensive as what you're 1910 talking about but it is extensive and surprising 1911 Mr Loebsack Yes I mean I just want to bring that point NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 93 1912 up that you know we are talking about apps and websites and 1913 everything 1914 about other than advertising we have to be concerned I think 1915 also about whether our hardware is that's in our devices and 1916 computers 1917 But for all the other reasons that Mr Zaneis talked You know we can turn everything -- they turned everything 1918 off and it didn't matter 1919 know because it was a media report but it's concerning 1920 I yield back 1921 Mr Latta 1922 1923 1924 And whether that's true or not I don't Thank you The gentleman's time has expired and yields back The chair now recognizes the gentlelady from California for five minutes 1925 Mrs Walters 1926 Mr Beales this first question -- it's a three-part 1927 question Thank you Mr Chairman It's actually for you 1928 What steps can be taken to enhance competition in the market 1929 for online advertising and what are some of the advantages and 1930 disadvantages of the way the market and the ad tech works today 1931 And are reports that Google and Facebook control 90 percent 1932 1933 of the market true Mr Beales Let me start at the end I don't really know NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 94 1934 what the markets shares are but I don't think 90 percent is 1935 remotely right 1936 1937 I would think it's more like 50 or 60 percent But that's a fairly well establishable number that is not hard to find out 1938 I think we don't know the -- and one of the interesting 1939 things about the online ecosystem is we don't know what's the 1940 most efficient way to organize this and people are trying lots 1941 of different things and it's changing on a very regular basis 1942 I mean the whole idea of ad exchanges is probably not 10 1943 years old yet as a way to -- as a way to distribute this content 1944 and people are finding out the pros and cons of different 1945 approaches and then trying alternatives because it's a very 1946 innovative space and that is the engine of competition 1947 What got Google and Facebook to where they are was better 1948 mousetraps if you will -- different mousetraps in each case -- 1949 and the competitive pressure in this market is in part from the 1950 third-party providers that don't have sign-in but do get some 1951 of the same information in indirect ways and it's really 1952 important to preserve that competition 1953 Mrs Walters Okay Ms Glasser as someone who went to 1954 law school and studied privacy do you believe that there's an 1955 adequate understanding or amount of training on data privacy by NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 95 1956 entrepreneurs engineers coders and et cetera who build these 1957 products 1958 Ms Glasser I can really only speak from some of my 1959 experience and what I've seen and I don't think that there's 1960 enough education 1961 I am very fortunate where I kind of fell into privacy by 1962 accident where I was a law student at night working full time 1963 so I had to take what was available to me and that was typically 1964 the privacy stuff because I guess no one else was interested in 1965 it 1966 But it turned out to be quite fruitful for me so I am grateful 1967 I've always said that I am a firm believer in education and even 1968 if it's education about privacy or how to code or how computers 1969 work I think education on how the internet literacy period is 1970 also extremely important whether it comes to children 1971 advertising you know how to help elderly people recognize scams 1972 or fraud 1973 1974 1975 Absolutely I don't think -- I don't think that we could do ourselves wrong if we encourage more education in this field Mrs Walters 1976 balance of my time 1977 Mr Latta Okay Thank you Thank you and I yield back the The gentlelady yields back NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 96 1978 1979 The chair now recognizes the gentleman from Florida for five minutes 1980 Mr Bilirakis Thank you Mr Chairman I appreciate it 1981 Professor Beales you mentioned in your testimony that 1982 advertising is particularly important to less advantaged groups 1983 particularly minorities and single parent households 1984 I am also curious as to your perspective on the senior 1985 population 1986 these particular groups 1987 How would regulation in the advertising space affect Mr Beales Well the -- what the academic research shows 1988 about the impact of advertising is there are some people who are 1989 better at either using information or have more time to use 1990 information and that's where those people who are good at 1991 information and have the time use information that's available 1992 from other sources and they're less dependent on advertising 1993 The people who don't have those advantages need the 1994 information in an easily digestible form and that's what 1995 advertising does is it boils it down to a very simple proposition 1996 of buy my serial and I don't know where the elderly would fit 1997 on that 1998 1999 On the one hand they got a lot of market experience and that would tend to mean they're not going to be all that dependent NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 97 2000 and on the other hand they also have a lot of time in many cases 2001 and can use other information sources in ways where they're less 2002 dependent on advertising 2003 2004 I don't know of anybody that's looked at that question specifically 2005 Mr Bilirakis Okay Fair enough 2006 You talk about the importance of transparency in digital 2007 advertising 2008 the importance of digital -- importance of transparency in digital 2009 advertising but suggest that a choice mechanism I snot always 2010 required 2011 This question is for Ms Glasser You talk about Yet one of the reasons we were holding this hearing is due 2012 to our constituents' concerns and the need to raise awareness 2013 about privacy 2014 Do you believe that the FTC has the tools it needs to 2015 effectively protect privacy and do you have suggestions for my 2016 constituents to prevent websites from collecting information 2017 about them 2018 Again personal information -- how do we protect personal 2019 information And then Mr Guthrie mentioned that particular 2020 example but also Mrs Dingell mentioned the example of the 2021 opioids NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 98 2022 Give me another example of a bad thing that can happen I 2023 think our constituents need to know 2024 Ms Glasser please So this question is for 2025 Ms Glasser 2026 requires and opt out 2027 I own a website and I want to know how the behavior of users is 2028 on my website specifically I want to know what features of my 2029 website users like to interact with 2030 I think -- that's correct So what I meant by that for example if I like to know what content they like to interact with and 2031 this helps me build a better website 2032 platform for users to come to 2033 Not every instance This helps me build a better And I am not necessarily using this data for advertising 2034 or marketing purposes It's really to help me understand the 2035 behavior of my business essentially and in those instances an 2036 opt-out is not always required 2037 However I do think that transparency is absolutely key to 2038 all of this whether you -- whether you're using tracking pixels 2039 for analytics or you're using it for more engaged advertising 2040 and more engaged data collection 2041 I think it's absolutely critical that these things are 2042 explained to the end user and the consumer so that they do 2043 understand okay I see a tracking pixel on this website but NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 99 2044 they're not using it for advertising -- it's being used for 2045 analytics -- I don't have to worry 2046 advertising I can expect to see the red shoes I am looking for 2047 show up on the next website I go to 2048 2049 2050 Or if it's being used for Only through our transparency can we even begin to expect consumers to understand what's happening Mr Bilirakis Again link this back for example Mrs 2051 Dingell's situation with the opioids doing her research -- and 2052 I commend her for it doing the research late at night because 2053 I do it too -- and then maybe years down the road they might 2054 link her personal information to possibly being a drug addict 2055 or what you 2056 Is that the case 2057 Ms Glasser 2058 Mr Bilirakis 2059 Ms Glasser Can that happen I mean anything is really possible right Yes It absolutely can happen But I think it's 2060 also important to point out that within the industry -- and we've 2061 talked a lot about responsible actors legitimate companies the 2062 self-regulatory groups -- there are restrictions on using that 2063 type of information for targeting and behavioral advertising 2064 The NAI for example has very specific provisions on whether 2065 you can use health-related data -- sensitive health-related data NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 100 2066 about sensitive categories -- thing like drug abuse drug 2067 addiction mental health issues cancer sexually transmitted 2068 diseases reproductive issues all of those things are really 2069 off limits unless you have opt-in consent which I don't know 2070 anybody who even actively goes after those types of segments just 2071 because of the sensitivity of it 2072 2073 And I think when we put ourselves in our consumer shoes none of us want to be targeted with those types of ads either 2074 2075 So again I think it comes back to some of the points that 2076 Dr Beales made and Mr Brookman made about making sure that 2077 you know we hold the bad actors accountable and we continue to 2078 push these standards forward and we continue to try to enforce 2079 these standards so that we are using the right type of data to 2080 target the right type of advertising -- the right type of people 2081 Mr Bucshon 2082 Thank you Mr Chairman 2083 2084 2085 2086 2087 All right Very good Thanks for holding the hearing as well Mr Latta Well thank you very much The gentleman's time has expired And seeing that there are no other members here wishing to ask questions I again want to thank our panel for being here NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com This is a preliminary unedited transcript The statements within may be inaccurate incomplete or misattributed to the speaker A link to the final official transcript will be posted on the Committee’s website as soon as it is available 101 2088 2089 today and presenting before us very very informative But before we do conclude I would like to include the 2090 following documents submitted for the record by unanimous 2091 consent 2092 documents from Interactive Advertising Bureau a blog post from 2093 MPAA and pursuant to committee rules I remind members that they 2094 have 10 business days to submit additional questions for the 2095 record 2096 10 business days upon receipt of the questions 2097 2098 two documents from Oxford BioChronometrics two I ask that the witnesses submit their responses within And without objection the subcommittee will stand adjourned 2099 Thank you very much 2100 Whereupon at 12 02 p m the committee was adjourned NEAL R GROSS 202 234-4433 COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE N W WASHINGTON D C 20005-3701 www nealrgross com