Making good on their promise to challenge the Federal Communications Commission's proposed privacy rule, a coalition of ad industry groups filed a petition formally requesting that the agency reconsider its order.
Passed in a 3-2 vote by the Commission in November, the new rule requires ISPs to obtain opt-in consent before sensitive data (defined to include browsing and app usage history) can be collected and used for ad targeting purposes.
Members of the industry immediately spoke out against the rule, arguing that it was bad for the economy, would stifle innovation, make it harder to deliver relevant and useful advertising messages, and cause confusion because the FCC's broad interpretation of sensitive data is at odds with existing standards.
Now the industry has taken the next step by filing a petition for reconsideration with the agency over its 'fundamentally flawed' order adopting the rule.
The Association of National Advertisers, American Association of Advertising Agencies, American Advertising Federation, Data & Marketing Association, Interactive Advertising Bureau, and Network Advertising Initiative told the FCC that it acted in an arbitrary and capricious manner inconsistent with congressional intent by relying on a general purpose statement of the Communications Act for its authority, that it failed to adopt less restrictive proposals, and that it did not provide sufficient time for interested parties to offer comments.
The FCC relied upon Section 222(a) of the Act, which is labeled a 'General Statement' and 'is clearly governed by the more detailed subsections that follow it,' the groups told the Commission. 'If, as the FCC now attempts to mandate, Section 222(a) were read to make all customer proprietary information confidential, the later and more specific statutory provisions clearly would be unnecessary,' a conclusion that runs counter to all methods of statutory interpretation.
Further, although the Commission based its authority to promulgate the rules on Section 222, it had not done so in the prior 18 years, the groups added.
As '[t]he creation, analysis, and transfer of consumer data for marketing purposes constitutes speech,' the rule raises First Amendment concerns, the ad industry cautioned the FCC. Non-misleading commercial speech regarding a lawful activity is protected under the First Amendment and requires the Commission to adopt regulations in a narrowly tailored manner that is no more restrictive of speech than necessary.
The Commission had a less restrictive, alternative proposal right in front of it, the groups said: the industry's own self-regulatory framework. The ecosystem has 'functioned well for years under an enforceable self-regulatory framework' developed by the Digital Advertising Alliance that 'offers consumers transparency about online data collection and a way to control the use of their online data by DAA members while allowing data-driven innovation to flourish.' Opt-in consent would also signal a change in the standard for advertising and marketing uses of data, which historically has relied on opt-out mechanisms.
Finally, the groups complained that the order was adopted less than a month after the Commission issued a four-page fact sheet 'outlining a drastic change in its approach' to the initial notice of proposed rulemaking. Interested parties were not given a reasonable amount of time or sufficient details to assess the modified proposal and provide comments, the industry argued.
Given all of these problems, the ANA, 4As, AAF, DMA, IAB, and NAI 'respectfully request that the FCC reconsider its decision to adopt the Order regarding the use and disclosure of data by broadband providers.'
To read the petition for reconsideration, click here.
Why it matters: The ad groups may have timed their petition perfectly. With the order's primary backer, FCC Chairman Tom Wheeler, set to exit the agency on January 20 as the administration changes hands, the industry may be successful in achieving an about-face by the Commission.