Progress & Freedom Fdn.’s Lack of Online Ad Market Knowledge…Maybe they should stop fundraising from Google and spend time better understanding the issues

The Progress and Freedom Foundation (PFF) is a classic example of a think-tank whose ideological worldview is so distorted, it can’t be relied on to truly provide an objective analysis. Its commentary, “Googling `Monopoly’ (Wall Street Journal, Aug 21, 2007. Sub. maybe required), fails to be an well-informed discussion of the issues raised by the FTC’s review of the proposed Google acquisition of Doubleclick. The commentary was co-authored by PFF’s acting president Thomas M. Lenard and Paul H. Ruben (a professor at Emory University and a PFF senior fellow). Both were FTC senior officials during the 1980’s. Clearly it was written to influence the FTC as that agency currently engages in a serious review of the proposed deal.

The piece urges that the FTC—and the public—dismiss concerns my Center for Digital Democracy and others have raised about issues critical to the future of content diversity, competition and privacy online. Really, PFF should be ashamed for issuing such a commentary without engaging in a more thorough, probing and honest discussion. But sadly, a great many think-tanks dependent on financing from the very companies they write about—Google funds PFF, btw, as do other online advertisers—run afoul of such intellectual problems regularly. (PFF should have disclosed its funding in the Journal piece, which it failed to do).

PFF’s first analytical problem is that it doesn’t really understand the online ad market. Online advertising consists of two principal parts: search advertising and third party display ads. Google wishes to take-over the segment of the market it currently doesn’t control (precisely at the point when the online market is converging the use of distinct data-related application sets, such as rich media and search). But instead of Google competing with Doubleclick and deploying salespersons ready to meet and greet their Fortune 1000 type clients it covets, it is simply buying what would be its most important competitor. When you have the largest search ad firm (in the world) acquiring the number one provider of rich media display advertising for the largest corporate ad budgets, you create an even more powerful online ad gatekeeper. Perhaps PFF should spend less time schmoozing with their supporters, such as at their recent tony Aspen retreat, and review the literature.

Two, PFF completely misunderstands the privacy issues related to online advertising, as incredible—and sad for personal freedom in the digital age—as it sounds. We are talking about unprecedented, moment-by-moment, collection of a vast store of personal information. Used to create profiles that are then developed in a lightening flash into powerful marketing messages that follow individual users website to website. Google and so many other major online advertisers don’t want a meaningful privacy policy where data can’t be collected at all without express prior and informed consent from users; where the use of such data is truly limited to specific transactions approved by the individual. In the absence of privacy protections, consumers will be manipulated by the online ad ecosystem. Once again, PFF officials should spend more time analyzing the literature.

Finally, Mr. Lenard and Prof. Rubin should immediately ask the Journal to run a disclosure that Google—the subject of their commentary, funds Progress and Freedom Foundation. They should make a public apology that they didn’t disclose such a connection. Then, they can—in the spirit of pending `back to school’ time—go and hit the books so they can be truly informed about the subjects they tackle.

PS:  We see that Google was also a sponsor of PFF’s recent Aspen event. Don’t they recognize that failure to disclose is a sin–even by Washington “inside the Beltway” lobbying standards!

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