Looks like the digital advertising and marketing sectors are in for a reckoning. How that will affect merchants’ online promotional activity hangs in the balance.
That’s the scoop as 2020 opens, with privacy skirmishes turning to full-scale war on browser cookies. As we know, mostly anonymous corporations have been collecting consumer data online for years, usually without explicit permission, selling it or using it for ad retargeting and personalization. People tend to find that creepy. Then, there are the huge data breaches that just keep happening, increasingly to companies with high levels of consumer trust.
This whole field of players now faces a growing throng of government entities pushing for consumer privacy clampdowns. That’s a bad moon rising for some Big Data operators.
In the middle are the consumers whose data fuels eCommerce, social media and basically the entire internet as we know it. The Merchants’ Guide to Navigating Global Payments Regulations, powered by Ekata, dives deep into this complex and unsettled topic, from possible abrupt retail impacts to long-term open banking repercussions.
Together in a Privacy Sandbox
The General Data Protection Regulation (GDPR) turns two in May, and just like a toddler, it’s messing things up (for some). The European Union (EU) has levied $126 million USD in fines in that brief time, the biggest against Google at $57 million. That sum is more like a friendly reminder to Google, which did $40 billion in revenue in Q3 2019. But Google makes most of its money through ads, so the GDPR slap did not go unnoticed by parent company Alphabet.
Somewhat in spin control mode, Google caused a collective gasp when it announced that its Chrome browser – No. 1 in the world – would stop allowing third-party cookies by 2022. And what does the world look like without cookies? No one is sure, but publishers and marketers may not like it, according to one Google blog post, leaving the web giant and others to propose “privacy sandboxes” to save the ad-supported internet without stalking consumers.
The latest Merchants’ Guide to Navigating Global Payments Regulations also contains insights about how the privacy wars in Europe and the U.S. are affecting the adoption of open banking. For example, the Monetary Authority of Singapore is granting five licenses to FinTechs in an effort to drive innovation in a banking market still tightly controlled by legacy institutions.
Similar efforts are underway from Australia to India to China as regulators try to spur growth while limiting forms of cyber-intrusion. It won’t be easy, and some players see it as ultimately handing even more market-making power to Google, Apple and Facebook.
Merchants Waiting It Out
It will be an interesting year or two as world governments take on the web’s mightiest to see what the rules will be and punish those who ignore the new regulations. Meanwhile, merchants want to know what they can and can’t do with their valuable first party.
As the report states, “GDPR and PSD2 have significantly shifted how EU banks and businesses exchange online funds and consumer data. The pace of that change and its ensuing costs have meant financial entities, as well as merchants – which also varied based on their countries of origin in Europe – responded quicker than others.” With regulators showing their fangs in dozens of countries, U.S. retailers and eCommerce sellers are seeking more effective identity solutions to prevent a wave of “instant money” cybercrime while new rules get sorted out.