Regulation Escalation

The Feds are swirling around the tech giants, YouTube is the latest company to try and harness the retail media frenzy, and the ad tech sector remains red hot.

There’s lots to unpack so let’s get into it.

Taking on the Algorithm

We’ve long been talking about the three macro forces changing digital advertising this year — cookies, mobile IDs and regulation.

Truthfully, outside of California, it’s been a bit quiet on the regulatory front in the US. But that may be changing quickly.

A bipartisan group of lawmakers is aiming to take on Big Tech not by going after their use of consumer data, but the new Big Bad of the moment: the algorithm. In this case, legislators from both parties want to force social media companies to provide alternative versions of their services that don’t employ algorithms. The proposed bill is called the Filter Bubble Transparency Act, reported Axios. One big question is: could that even work?  Are these platforms so massive that they can’t function without an algorithm?

It’s interesting to watch DC try to figure out how to respond to the revelations from Facebook whistleblower Frances Haugen, given elected officials’ understandably limited understanding of tech. We’d bet on the FTC’s lawsuits having a much bigger impact on these companies’ operations than this proposal. What’s really interesting is that despite all the talk over the past few years about a potential national privacy law — sort of a US answer to the EU’s GDPR —  nothing of the sort seems to be on the horizon.

However, it does seem pretty clear that the collective threat of regulation, whatever form it takes, is prompting action. Case in point: Facebook announced it will no longer allow advertisers to target groups of people based on sensitive criteria, such as health, religion or sexualtiy, The New York Times reported.

Meanwhile, Reuters has the scoop that a group of Senators is proposing laws that would make it harder for tech companies to swallow up startups in cases that are deemed antitrust violations. If this sounds familiar, it’s because the House is also working on a similar bill. In either case, it feels too little too late, given that Facebook and Google have already made acquisitions (Instagram, Whatsapp, YouTube) that would surely never be allowed in today’s climate, but have already fueled these firms’ dominance.

Attention YouTube Shoppers

Next week, YouTube starts hosting a weekly live shopping event called Holiday Stream and Shop, as the Alphabet-owned video site looks to tap into the live shopping craze. Another goal of this initiative? The company is trying to get people to stop watching product videos and then leaving YouTube to shop elsewhere, reported Bloomberg. It’s an interesting play, given that Google has a deep pool of first-party data and hordes of influencers who tout various products. (Plus retail media couldn’t be hotter, and while YouTube itself is a monster intent-generator, it’s not typically where people close the deal.)

Meanwhile, live shopping seems to have serious legs. American Express Ventures is putting capital into Firework, a startup that helps merchants produce shopping related videos and live events, reports AdExchanger.

Longer term, this all appears to set up a larger battle for ecommerce ad budgets — are they going to be stuck on shopping-centric properties, or is social shopping set to become a massive conversion engine?

Open Season

Despite privacy/targeting headwinds, the ad tech sector continues to impress. The Trade Desk reported impressive earnings driven by CTV, topping analyst expectations and sending its stock soaring, reported Marketwatch. A day later DoubleVerify announced a $150 million deal to acquire OpenSlate, according to The Wall Street Journal. The deal creates a brand safety powerhouse that covers the open web and now much of the web video space (OpenSlate helps brands monitor their ad placements on YouTube, TikTok, Facebook, etc.) Lastly the private equity firm STG is snatching up the creative automation company Celtra for $190 million, per Business Insider.  While this activity is not necessarily all interrelated (creative automation isn’t linked to brand safety, per se), it’s noteworthy considering that a few years ago Wall Street considered the entire category DOA.

Anyway, that’s a lot to digest. Take your time, and we’ll see you next week.

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