In a rapidly evolving landscape of digital advertising, the practice known as real-time bidding (RTB) has come under increased scrutiny in California. Companies such as Trade Desk Inc. and Experian Data Corp. are facing class-action lawsuits alleging that their participation in RTB practices infringes on consumer privacy, violates California and federal wiretapping statutes, and results in unjust enrichment.
RTB functions by auctioning ad space on websites to interested advertisers in near real-time as users visit those sites. This sophisticated process involves several stakeholders, including publishers, advertisers, supply-side platforms (SSPs), demand-side platforms (DSPs), and ad exchanges. A critical element of this landscape is the handling and utilization of “bidstream data,” which informs advertisers on how to bid and target specific users. This data can encompass user device information, IP addresses, and even browsing history, enabling advertisers to tailor their strategies based on user interests and behavior.
The shift in legal focus from publishers to SSPs and DSPs marks a significant change in litigation strategy. Unlike publishers who were previously targeted for collecting user data, SSPs and DSPs are now under fire for how they leverage this data. The claim is that these platforms aggregate vast amounts of personal data to create in-depth “identity graphs,” ultimately aiding in more precise user profiling. The current suits argue that these practices result in financial gain at the expense of consumer privacy.
Should the plaintiffs succeed, the ramifications could be broad, affecting not only companies directly involved in the RTB process but also enterprises assisting such practices, even inadvertently. Companies might find themselves implicated not for direct wiretap actions but for their role in facilitating them. Consequently, it is imperative for businesses engaging in digital advertising to be fully aware of the intricacies of such transactions on their platforms, ensuring transparency and compliance with privacy laws to mitigate litigation risks.
The evolving legal landscape underscores the necessity for vigilance as it may profoundly affect how companies leverage digital advertising. Failure to adapt and comply may result in entanglement in costly legal disputes. More details on this ongoing legal development can be found in Bloomberg Law‘s latest report.