Thank you for the opportunity to appear before the international grand committee. I am the CEO of the U.S.-based trade association Digital Content Next, and I appreciate the opportunity to speak on behalf of high-quality digital publishers.
We represent about 80 publishers globally. Many of them have offices in your home countries. They include the New York Times, the Wall Street Journal, the Financial Times, the BBC, the Guardian, Axel Springer. There are nearly 80 members. To be clear, our members do not include any social media, search engine or ad tech companies. That may be part of why I'm here.
DCN has prioritized shining a light on issues that erode trust in the digital marketplace, including a troubling data ecosystem that has developed with very few legitimate constraints on the collection and use of data about consumers. As a result, personal data is now valued more highly than context, consumer expectations, copyright and even facts themselves.
As policy-makers around the world scrutinize these practices, we urge you, along with industry stakeholders, to take action. We believe it is vital that policy-makers begin to connect the dots between the three topics of your inquiry: data privacy, platform dominance and societal impact.
Today, personal data is frequently collected by unknown third parties without consumer knowledge or control. That data is then used to target consumers across the web as cheaply as possible. This dynamic creates incentives for bad actors, particularly on unmanaged platforms like social media which rely on user-generated content mostly with no liability, where the site owners are paid on the click whether it is from an actual person or a bot, on trusted information or on disinformation.
We are optimistic about regulations like the GDPR in the EU which, properly enforced—that's important, properly enforced—contain narrow purpose limitations to ensure companies do not use data for secondary uses. We recommend exploring whether large tech platforms that are able to collect data across millions of websites, devices and apps should even be allowed to use this data for secondary purposes.
As an example of critically important action, we applaud the decision of the German cartel office to limit Facebook's ability to collect and use data across its apps and across the web. It's a very important decision.
The opaque data-driven ecosystem has strongly benefited intermediaries, primarily Google, and harmed publishers and advertisers. These intermediaries have unique leverage as gatekeepers and miners of our personal data. As a result, issues have surfaced including bot fraud, malware, ad blockers, clickbait, privacy violations and now disinformation, all over the past decade. However, importantly these are all symptoms. Make no mistake, the root cause is unbridled data collection at the most personal level imagined.
It is important to understand the power of these two companies. Four years ago, DCN did the original financial analysis labelling Google and Facebook the duopoly of digital advertising. The numbers are startling. In a $150-billion-plus digital ad market across North America and the E.U., 85% to 90% of the incremental growth is going to just these two companies. As we dug deeper, we connected the revenue concentration to the ability of these two companies to collect data in a way that no one else can. This means both companies know much of your browsing history and your location history. Data is the source of their power. The emergence of this duopoly has created a misalignment between those who create the content and the those who profit from it.
Finally, these data practices coupled with the dominance, without accountability, of these two companies is indeed impacting society. The scandal involving Facebook and Cambridge Analytica underscores the current dysfunctional dynamic. Under the guise of research, GSR collected data on tens of millions of Facebook users. As we now know, Facebook did next to nothing to ensure that GSR kept a close hold on our data. This data was ultimately sold to Cambridge Analytica and it was used for a completely different purpose: to target political ads and messages, including the 2016 U.S. election.
With the power Facebook has over our information ecosystem, our lives and democratic systems, it is vital to know whether we can trust the company. Many of its practices prior to reports of the Cambridge Analytica scandal clearly warrant significant distrust.
Although there has been a well-documented and exhausting trail of apologies, it's important to note that there has been little or no change in the leadership or governance of Facebook, Inc. In fact, the company has repeatedly refused to have its CEO offer evidence to pressing international governments wanting to ask smart questions, leaving lawmakers with many unanswered questions.
Equally troubling, other than verbal promises from Facebook, it's not clear what will prevent this from happening again. We believe there should be a deeper probe, as there is still much to learn about what happened and how much Facebook knew about the scandal before it became public. Facebook should be required to have an independent audit of its user account practices and its decisions to preserve or purge real and fake accounts over the past decade. We urge you to make this request.
To wrap up, it is critical to shed light on these issues to understand what steps must be taken to improve data protection, including providing consumers with greater transparency and choice over their personal data when using practices that go outside of the normal expectations of consumers. Policy-makers globally must hold digital platforms accountable for helping to build a healthy marketplace, restoring consumer trust and restoring competition.
Thank you for your time. I appreciate the opportunity to discuss these issues with you today.
