How Lina Khan’s FTC changed the advertising industry

The clock is ticking on Lina Khan’s future at the Federal Trade Commission.

As chair of the FTC, Khan has won praise from the likes of Elizabeth Warren, VP-elect JD Vance, and Florida Rep. Matt Gaetz for the pressure the FTC applied to Big Tech. She’s also picked up her fair share of detractors, including Elon Musk, who recently tweeted that “she will be fired soon.” It’s likely that, after President-elect Donald Trump takes office, he will replace her with a more business-friendly regulator.

Though her time at the agency will perhaps be best remembered for an increased focus on prosecuting antitrust cases, Khan’s FTC has also brought rare federal scrutiny to the advertising industry, waging a campaign aimed at curtailing commonplace industry data-collection practices and drawing the ire of advertisers and Big Tech alike.

Since her appointment in 2021—in what Politico described at the time as a “huge win for progressives”—Khan’s FTC has sued more than half a dozen companies for allegedly sharing customer data, warned companies about the “hidden impacts” of advertising tools like third-party tracking pixels, and attempted to establish new guidelines around how sensitive customer location data should be shared and sold. Under her leadership, the FTC’s willingness to get into the weeds of the digital advertising ecosystem is without precedent for an industry that, in the absence of federal data privacy protections, remains largely unregulated and left to self-govern.

Perhaps most crucially, Khan’s FTC became a tool for the Biden administration to address some potential impacts of the overturning of Roe v. Wade by cracking down on companies that it claims have played fast and loose with consumers’ personal data, something even some of Khan’s critics have applauded.

The full impact of Khan’s legacy remains to be seen, but whatever her future at the agency, the advertising industry has acknowledged that, due in part to Khan’s influence, the days of unbridled data collection may be squarely behind it.

“This is an FTC that, under her tenure, has really gotten into the weeds about how data is collected, how it’s being shared,” Alison Pepper, EVP of government relations and sustainability at the American Association of Advertising Agencies (4A’s), told Marketing Brew. “They’re thinking about consumer harm in a way that previous FTCs weren’t.”

“Commercial surveillance”

Perhaps nothing distilled the Khan FTC’s view on advertisers more than a notice of proposed rulemaking published in August 2022, which would aim to curb “the business of collecting, analyzing, and profiting from information about people.” In plain language, the proposal asks, “to what extent, if at all, should the commission limit companies…from owning or operating a business that engages in any specific commercial surveillance practices like personalized or targeted advertising?”

Almost immediately, the advertising industry and its lobbyists pushed back. In comments submitted to the agency, the 4A’s called the FTC’s use of the term “commercial surveillance” to describe “what appears to be a broad spectrum of data practices” both “misleading” and “problematic.” The Association of National Advertisers (ANAs) wrote that “such a negative framing of advertising and data practices” proved the FTC was “keenly fixated” on limiting how advertisers use data. And the Interactive Advertising Bureau (IAB) argued in its written comments that the FTC doesn’t have the authority to regulate the industry this way. The IAB had not responded to multiple requests for comment at publication time. The ANA declined to comment.

The FTC, though, did not slow down. This fall, it accused streaming platforms and social media companies of “vast surveillance” through practices that many in the industry would likely view as relatively rote.

The FTC’s “rhetoric” under Khan’s leadership has “certainly pissed off a lot of people in the business community,” Alan Chapell, president of Chapell & Associates, a firm that specializes in digital media and advertising technology, said. Chapell is also the board chair of the Network Advertising Initiative, a trade group for digital advertisers. He argued that using terms like “commercial surveillance” isn’t “an honest way of framing what’s taking place.”

Terence Kawaja, founder and CEO of the digital advertising investment bank Luma Partners, described Khan as a “zealot” for describing “audience-based media buying as a nefarious thing,” he said.

“We conflated bad things that violate privacy with perfectly fine things that track the anonymous proclivities of an anonymous user,” Kawaja told Marketing Brew. “I’m sorry, that’s not the same.”

Some advertisers have argued that their role in the digital advertising ecosystem isn’t to determine how data should be collected, but rather use what’s available to them.

“We take the perspective of arms dealers here—we just have weapons, we’re not involved in the conflict, or why people buy the weapons that we sell. We’re just focused on the weapons,” Ana Milicevic, a digital advertising consultant and founder of Sparrow Advisers, told Marketing Brew. “That might be a gruesome analogy, but it’s pretty apt,” she said, adding that she would like to see regulators introduce more consumer protections.

Ad tech in the spotlight

The overturning of Roe v. Wade in June of 2022 thrust digital advertising and its often unconstrained user tracking into the spotlight when it became clear that location data, often collected on consumers unknowingly through mobile apps, could be used to track and potentially prosecute those seeking abortions or related health services.

Spurred by an executive order, the FTC made headlines, bringing actions against companies it accused of sharing healthcare data, potentially to the detriment of consumers.

The FTC fined and settled with the prescription-drug discount company GoodRx and the telehealth company BetterHelp for allegedly sharing customers’ “sensitive health data.” Alongside the Department of Health and Human Services (HHS), it warned hospital and telehealth providers about the data they were collecting and sharing with companies, including Meta, through tracking pixels. It also sued the data brokers X-Mode, InMarket, and Kochava for selling location data that it said could be used to track individuals to locations like healthcare facilities.

The FTC’s emphasis on the everyday tools of advertising, like tracking pixels, is particularly noteworthy, said Arielle Garcia, former chief privacy and responsibility officer of UM Worldwide, who now serves as director of intelligence at industry watchdog nonprofit Check My Ads. It’s the tools rather than just “a few bad actors” that were under the microscope, Garcia said.

“There was no more plausible deniability—everyone needs to be paying attention; this does apply to us,” she told Marketing Brew.

Even some of Khan’s ad industry critics, including Kawaja and Chapell, have applauded the focus on curbing the use of sensitive healthcare-related location data.

“I think Lina Khan has successfully forced the industry to recalibrate what they view as sensitive health data, and I think that’s probably a good thing,” Chapell said.

What sticks?

Though the commission has stumped on consumer privacy, publishing numerous blog posts aimed at educating consumers and cautioning tech companies to toe the privacy line, Khan’s work remains unfinished—and her legacy stands to be cut short if Trump opts to remove her from her post, which agency watchers view as an inevitability.

Though the FTC announced settlements with two of the three data brokers brought actions against, the Kochava case, which could have major implications for how location data is shared and sold, is still making its way through the courts. Charles Manning, the founder and CEO of Kochava, declined to comment for this story. The proposed commercial surveillance rule the industry dreaded, meanwhile, has yet to be finalized. The FTC told us that it has no update on the status of the proposal.

Khan’s impact, though, is being felt in the contracts between advertisers and the rest of the ad-tech ecosystem, Pepper said. “Advertisers want more assurance about what their partners are doing with data; there’s a lot more due diligence,” she said. “You’re seeing much more up-front, factual terms about how data is being treated.”

In particular, defining terms like “sensitive” data should have a lasting impact, Garcia added. Following the Dobbs decision, the NAI established voluntary standards around precise location data, including places of worship, rape crisis centers, and specific medical facilities.

And even if Khan goes, those effects could be permanent, Garcia said: “The toothpaste isn’t going back in the tube.”