In the second of this two-part blogpost, Sam Gilbert discusses the implications of policies which seek to restrict or ban business models based on targeted digital advertising. Such policies, he argues, can be expected to have regressive effects when applied to tech giants such as Meta.
In the first post of this series, I showed that funding social media and other digital services through surveillance advertising benefits users in the Global South economically. So what are the implications for public policy?
If online surveillance advertising was to be banned by the European Union (EU) and/or the US government, Meta’s business model would have to change. As data-driven targeting is one of the main reasons advertisers are willing to pay more for inventory on Facebook and Instagram than for other media, it seems unlikely that Meta’s shareholders would be content with a move to contextual or untargeted digital advertising, given the detrimental impact that would have on the company’s revenue and margin. A more likely outcome would be that Meta would extend the subscription offering that it launched in the EU, European Economic Area (EEA) and Switzerland in November 2023 to comply with European data regulations, with users required to pay fees for access to services.
Different fee models would have different implications for users in the Global South. A flat fee equivalent to the €120-€156 per annum currently charged for the subscription option in Europe would see hundreds of millions of users priced out of Meta’s platforms. Even a seemingly modest annual subscription price of $43.60 – the amount required per user to match Meta’s 2021 revenues – would be 32 times more expensive for the average Indian user than for the average American user.
Meta could, of course, decide to vary its subscription pricing by country. While this would mitigate the adverse effects on users in the Global South, the geographic profile of Netflix usage – where annual costs for online video streaming services range widely from $37 in Pakistan to $243 in Switzerland – suggests it would come nowhere near to offsetting them (see Chart 1). Instead, Facebook and Instagram would become – like Netflix – platforms for the affluent.
Chart 1: Comparison of Netflix and Meta user bases by world region
Another possibility is that lawmakers stop short of an outright ban but require instead that platforms using surveillance advertising adopt a so-called “freemium” model, giving all users the option of paying to opt out of seeing advertising and the associated online surveillance. In this scenario, Meta would probably continue to provide core features of its services for free, while limiting other features to paid-for, premium, ad-free versions of its apps – much as X (formerly known as Twitter) has done under Elon Musk’s ownership. If the subscription revenues from the premium service cross-subsidized the free services, some of the current redistributive beneficial consequences for users in the Global South would be preserved. However, the introduction of differentials between the free and paid-for services would make the “freemium” model less egalitarian than the current model, reinscribing existing global economic inequalities.
Is there anything else we need to bring into our moral calculation? We will have to bracket discussion of whether or not social networking services like those that Meta provides – independent of the business model that supports them – are a net good for global society. Let it suffice to say that there is plenty of scholarship demonstrating that the services can be good, including for users in the Global South, and that as there are no serious policy proposals to prohibit them, they must generally be accepted as being at least morally neutral. We should, however, acknowledge that any infringement of individual rights and freedoms from surveillance advertising business models also affects users in the Global South, meaning that they too would benefit from policies which limited online surveillance practices – arguably to a greater extent than users in the Global North, since there are more of them.
In the end, then, we should weigh the expanded freedoms all users would gain from greater restrictions on surveillance advertising against the tens of billions of dollars redistributed to the Global South each year as an accidental by-product of these business models. My own view, Good Data, is that surveillance advertising does not compromise human freedoms in serious ways – it follows that the scope for expanding freedoms by banning it is therefore quite limited, and likely insufficient to offset the economic downsides it would entail for the Global South.
However, I acknowledge that I am in the minority on this point, and I do not expect those who see surveillance advertising as detrimental to human freedom to change their minds. What I would hope is that as legislation designed to constrain these business models is developed in the EU and elsewhere in the Global North, policymakers will consider the potential for it to have regressive outcomes, and refine their proposals accordingly – in particular by stopping short of an outright ban. Online surveillance advertising is not all promise for the Global South, but neither is it all peril.
Read the first part of this blog: “Good Surveillance?” Tech funded with targeted ads isn’t all peril for the Global South
Acknowledgements
The author thanks Dr Maha Rafi Atal, Professor Lisa Ann Richey, Sofie Elbæk Henriksen and participants in the workshop “Commodifying Compassion in the Digital Age” at Copenhagen Business School for helpful comments and discussion during the development of this work.
The views and opinions expressed in this post are those of the author(s) and not necessarily those of the Bennett Institute for Public Policy.
