Regulatory Environment Is Challenging for Online Businesses and Social Media

The online industry continues to slowly move towards better protection of the privacy of consumers—sometimes voluntarily, and sometimes through regulation. The EU has enacted a “General Data Protection Regulation (GDPR)” that requires websites to alert consumers to the use of cookies (bits of code that record a website visitor’s actions). Many other aspects of a site’s use of consumer information are also tightly controlled by GDPR, with companies of all types required to take significant steps to protect consumers’ privacy and data security. One very conspicuous result is the cookies settings screen that users must face when they first visit a website. It may seem a waste of time to many consumers in the habit of clicking “accept cookies” or “accept only necessary cookies” so that they can continue using the site (their alternative is to click into a second screen that enables consumers to have greater control over cookies and tracking when on-site). Meanwhile, website operators can fairly state that they have notified consumers that cookies are used. Nonetheless, the fines for noncompliance can be steep.

In 2021, Google announced that it would stop utilizing technologies that are able to identify unique, individual users as they click from page to page online. Instead, Google is using tools that enable advertisers to target their ads without collecting information on users. Consumers are grouped with other people who have similar habits, placed into cohorts that can then be targeted by ads. That is, the advertiser can target large groups of people, but cannot identify individuals. The net result is that many advertisers are altering both their strategies and their budgets, sometimes to the extent of reducing budgets on sites like Google. Many are concerned that their ads are much less effective. Email advertising has also been somewhat regulated in recent years, with commercial senders now required to offer consumers the opportunity to easily opt out of receiving further emails. Starting in 2024, email blast senders are also required to provide more transparency as to the ownership of the IP addresses from which high-volume emails are originating.

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