FCC Adopts 'Opt In' Privacy Norms: ISPs to Bear the Brunt?

In a major setback to Internet Service Providers (ISPs) like Verizon Communication Inc. VZ and AT&T Inc. T , the Federal Communications Commission (FCC) has voted in favor of the 'Opt In' consumer privacy policy. The new norm requires every ISP to get consumer consent to collect data for advertising activities.

The Impact of the Ruling on ISPs

Since ISPs have direct access to user database, they used to sell the data to digital marketing firms for targeted advertising. This brought in considerable amount of revenues for the ISPs. Notably, the digital advertisement market is an exponentially growing space and ISPs have been increasingly investing resources to cash in on the bountiful opportunities in this space. However, the new 'Opt In' directive stipulates that before sharing any user data for advertising, the ISP should notify its customers. This is certainly going to mar ISPs prospects ín this business.

What Does this Mean for Internet Firms?

It is important to note that ISPs like Verizon, AT&T, T-Mobile US Inc. TMUS and Comcast Corp. CMCSA are governed by FCC rules. Meanwhile, Internet firms such as Facebook Inc. FB , Twitter Inc. TWTR and Alphabet Inc. GOOG come under the Federal Trade Commission (FTC) regulations. Presently, there are no rules governing data disclosure by Internet firms. As a result, the 'Opt In' ruling will be an advantage for Internet firms. However, the FCC has assured the ISPs that it will try to harmonize the regulations with the FTC.

Some ISPs like Verizon and AT&T has been increasingly focusing on the digital advertising market. Notably, Verizon agreed to acquire Yahoo! Inc. YHOO while AT&T announced plans to purchase Time Warner Inc. TWX to boost its video content portfolio which generates high revenues from digital advertising.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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