finnCap Tech Chat | Checking the conditions

Apr 24, 2020 / News

Michael Hill, Research Analyst

A lot of us are now needing to cut hair as a month of lockdown is taking its toll. Unbelievably, if you trust your dexterity, you can now get a virtual haircut with an actual barber/hairdresser guiding you through what to do on a video call for a price that’s similar to what you’d normally pay.

This, like many things in this strange new world, can be done through Zoom, which has seen its daily users grow from 10m in December, to 300m now. With all of this videoconferencing, it’s worth remembering that everything you say can now be transcribed into data that can then be processed by AI, as the scarily impressive ability of apps like Teams subtitling your calls in real-time demonstrates. This makes it increasingly important to be aware of the privacy policies for these services: as Zoom’s usage surged reporters found that Zoom had given itself the right to collect and store personal data on any content (including chats and transcribed calls), and then share it with third parties including advertisers. While Zoom has since moved quickly to update its privacy policy and make clear that it isn’t sharing your data with third parties, it highlights the volume of our personal data that we would otherwise readily give up to digital platforms and services.

This reflects that terms and conditions are often long, dense texts. An analysis of 150 privacy policies by the NY Times found that most are more complex than Dickens’ Great Expectations or Stephen Hawking’s A Brief History of Time, and some are even more complex than Kant’s Critique of Pure Reason. This puts the majority of privacy policies beyond the comprehension of many adults even if you do spend the required time reading the document. And, if you do read and understand the document and find that you disagree with the terms and conditions, network effects mean that you then won’t be able to use the service that all of your friends are using. As a recent CMA report highlights, this means that most people don’t read terms, just accept them, and then don’t change the defaults.

It is unsurprising to see that this, and many other questions related to the dominance of some digital platforms, are currently being investigated by numerous governments and regulators including in the US, UK, and EU. What could follow is greater regulation of digital platforms in a range of areas in the 2020s, and this could create opportunities for smaller TMT companies, such as in digital advertising.  As the UK’s CMA highlight in their recent review, Facebook has a c50% share of digital video advertising, while Google’s market shares of various areas of ad tech range from 40% to over 90% (on top of its 90% share of search advertising). This has led the CMA to state that Google has market power in various areas of digital advertising, and the CMA is evaluating the development of a pro-competitive regulatory regime to regulate the activities of online platforms funded by digital advertising.

Tremor is a potential beneficiary of this action. It operates its integrated programmatic advertising platform in the open market, where it enables its publisher clients to automatically sell their advertising inventory to advertisers looking to target campaigns in the fraction of a second between a consumer selecting to view a website or other content, and that content loading. Pro-competitive advertising regulation could consequently create opportunities for Tremor to grow its share and strengthen its platform in its core focus on Video and Connected TV advertising.

Privacy is not in contention for Tremor because it does not collect data from consumers itself, and instead pays for data from data partners that comply with the relevant guidelines and regulation. This is in contrast to companies like Google and Facebook that operate ‘walled gardens’, where the data that they collect from your use of their services enables them to target adverts in their closed, vertically integrated ecosystems. It is consequently vital to distinguish between privacy and competition here -  if we do aim to improve privacy by limiting the number of third parties that can use your data (while not changing the amount that we share with first parties like Google and Facebook), the results can be anti-competitive and detriment consumers.

Instead, the privacy issues related to digital advertising can be addressed by giving consumers greater control over their data and who can access it. Kape is currently experiencing strong demand in this area as awareness of digital privacy is increasing. Its VPNs CyberGhost and ZenMate enable consumers to stop unwanted parties from using your IP address to track your online activity, while at the same time providing greater security to your browsing activities. With the acquisition of PIA, Kape has also now substantially scaled and strengthened its platform, and is launching its product dashboard later this year. We expect that this will enable Kape to accelerate growth by increasing product penetration of the range of digital privacy and cybersecurity products it offers from one central consumer interface. At the same time, this strong platform is also attractive for target companies looking to grow their subscriber base, and we expect that this will enable Kape to further strengthen its portfolio through complementary, accretive acquisitions.

Taking a step back, what we can hopefully see emerge in the 2020s is a combination of the above – enabling consumers’ tight control over what and who they share their data with, to directly benefit them. For example in targeted advertising, you could enter into a Personal Information Management (PIM) platform that you’re looking to buy a new car and then receive targeted adverts, promotions, and/or discounts only from the car companies that you’re interested in. You’d then as a consumer be directly compensated by the PIM for providing the data that you’d like to share, and benefit from the targeted advertising and promotions. This could change our engagement with privacy and advertising, and with c£5bn of digital advertising spend each year in the UK already, a cut of that spread between 60m people could easily fund at least one virtual haircut per year for all.

Happy Friday.