Former Ambassador and Deputy Assistant Secretary Daniel Sepulveda joins us to talk about Privacy, CCPA, GDPR, and the fundamental right to control our own data. Listen now!
Former Ambassador and Deputy Assistant Secretary Daniel Sepulveda joins us to talk about Privacy, CCPA, GDPR, and the fundamental right to control our own data. Listen now!
Brian: [00:01:19] Welcome to Future Commerce the podcast about cutting edge and next generation commerce. I am Brian. And today I have a repeat guest with us back to provide us with an update on future policy. That is Danny Sepulveda. Welcome again Danny.
Danny: [00:01:36] Thank you so much.
Brian: [00:01:37] Always a pleasure to have you on the show. We love hearing your insights on what's going on in Washington, and updates on how what's happening the political realm is affecting us here in the business and commerce world. And to be fair, you have a really cool job right now. Maybe you could tell us a little bit about what you've been doing over the past year.
Danny: [00:01:59] Sure. So a little over a year ago I joined a company called Media Math, and we are a demand side platform and data management platform software as a service company. Our clients are the world's biggest brands. The marketing departments of the world's biggest brands as well as the world's biggest advertising agencies. And they use our service to participate in real time bidding and make sure that they are paying an appropriate price to reach the right person at the right time across all digital platforms. Everything from digital out of home, to over the top television, to display on on the web etc.. It's a blast, so it's an awesome company. It's a really... I've learned so much, and I've just really enjoyed it.
Brian: [00:02:46] That's so cool. How has that transition been from being in sort of the public and political sector and moving into the business around private realm?
Danny: [00:03:01] I can only speak to this one experience which is mine, and to some degree I think that the advertising and marketing sector itself is a creative sector, and technology is a creative sector, so one of the interesting things was moving from government which is very very hierarchical and very strict about process and roles and operations to a much looser environment. So like for example, I rarely wear a suit anymore. That's just not something I do, and I use my wore suit every day for 20 years of my life.
Brian: [00:03:30] That's amazing. I love that. Are you wearing.. What are you wearing now? I'm kind of curious because Phillip and I've recently noticed that we've seen quite a trend away from suits in general. The business world used to be full of suits, and now it's not. As much as it used to be. It's a huge move towards athleisure and sort of you know you know interesting footwear. Have you started becoming a sneaker head at all or anything like that?
Danny: [00:04:04] Yeah I'm still a business casual guy. So like I still wear a blazer every day. But it's not a suit, you know.
Brian: [00:04:12] Right. Right right right.
Danny: [00:04:12] And I'll wear my nice jeans, but jeans. I wear jeans sometimes to work and that's like in the Senate or at the State Department. That would have been just literally unheard of.
Brian: [00:04:21] I wonder when that will change. Do you... I mean what do you think about that? Will that ever change? Will someone show up to the Senate in high end pair of denim at some point?
Danny: [00:04:33] No, definitely not on the Senate floor. There's a reverence for institutions that, you know, you wear a suit just out of respect for the institution more than anything else.
Brian: [00:04:46] Yeah absolutely I get it. I totally get it the formality of it.
Danny: [00:04:50] I mean I do it every day you get used to it. I didn't used to think about it it was just how you dress for work. But I only raised this to say that an environment in which you don't wear a suit and in which that is creative allows you to really kind of make the job what you want it to be. We all have things we have to do that are associated with our job title at our company, obviously, and roles and responsibilities within that. But the flexibility to try things and work with partners and other divisions has led me to be able to learn about things that I had never really known anything about. Like, "How do you do financials on a quarterly budget?" That's just not a government question. We just. It wasn't for me. Like how do you do a product launch? And there are some overlaps on stuff like that because essentially launching a presidential campaign or working for Senator, you are constantly launching initiatives of ideas and in advocacy to try to get things done. Right? So there's some overlap on that, but the working with engineers has been brand new to me. That kind of thing. But it's been super cool, and I've learned so much.
Brian: [00:06:08] Nice. I love that. I love that. That's really cool. Really interesting to hear a little bit about your experience there. So let's dive into the meat a little bit here. I would love to hear... I know you're highly involved in what's happening across the US and also throughout the world in terms of privacy and security data and how corporations are being used, and in fact I would almost call how corporations are using data the maybe most important topic of our micro generation.
Danny: [00:06:44] No I agree. It's just that there's so much data moving through the ecosystem with so many different touch points where it can be accessed or acquired and all of that commercial data even... I limit my conversations in my work to Data and Commerce, but all of that data is obviously held somewhere and accessible to governments for their own purposes. Right?
Brian: [00:07:13] Right.
Danny: [00:07:13] So that creates a whole different set of issues. But just even within the space of data within commerce we are really grappling around the world, and most recently in the United States because of the California law, with what problem are we trying to solve and how does the policy proposals that have come to the floor and how do they propose to solve them. And it's just been it's just been so interesting to see it from, not a policymakers perspective, but from a [00:07:43] practitioner's [00:07:43] perspective to see.
Danny: [00:07:45] I mean, now I know... I know what data my company has access to. I know how we enable it to flow through the ecosystem. And I've come to understand the ecosystem itself fairly well. So... and there is a lot of overlapping issues. You turn the dial on previously a law in one direction, and you may end up concentrating markets by accident the other way.
Brian: [00:08:10] Right.
Danny: [00:08:11] And so it's super super interesting.
Brian: [00:08:13] So you mentioned the California law. I know that's had a huge effect here in the US, since it is one of our states, one of our big states that's had a huge effect on the rest of the country. How have you seen that sort of play out in other state governments? Are you seeing a new legislation being introduced into state governments or at a federal level?
Danny: [00:08:41] Yeah. You're seeing Illinois and New Jersey are likely to have introduced and are likely to pass laws in the relatively near future that are will be very similar to California. An interesting thing happened in Washington State, home of both Amazon and Microsoft...
Brian: [00:08:56] And me.
Danny: [00:08:56] And you. ...where the Washington State Legislature took up a bill and then it died. And that bill died because those on the left, who love the California bill, thought it was much weaker than the California bill, particularly because it didn't have a private right of action in it. And those on the right, or on the business side of it, thought that it was more restrictive than was necessary and would do damage to their businesses. So it ended up being a compromise solution. And what they found out was there is no support for compromise.
Brian: [00:09:37] Reflective of our current political state maybe. In Washington, or in the capital. That actually really makes me sad in so many ways because I feel like there's such opportunity to compromise on something like this. Do you see that happening in other states as well where these other bills... I think you mentioned New Jersey is one of them, are under the same kind of scrutiny or facing the same sort of trouble from both angles?
Danny: [00:10:05] Yeah I think the real challenge is that, as you know California doesn't come into effect until next year, and there are still an immense amount of regulation being written to interpret the law and businesses won't really know what their obligations are until the regulations are finalized. So take for example, the definition of what you are as a company. Are you a business? Are you a service provider? Or are you a third party? Those are the three things you can be under the California law. And it defines a business as the company collecting data in the first instance and using it in the second instance for whatever service they're providing. So, I'm not sure if you know how real time bidding in advertising works, but the web site in question sends information about a user through a cookie. The website doesn't actually do it, the cookie does it... into a real time bidding or a supply side exchange that aggregates inventory and then it goes into an auction. Right? And it's essentially a pseudonymous number that is associated with attributes. Male, between ages blah blah blah blah blah blah... Likely income between blah blah blah blah blah blah.... So a couple of different points of that. Right?
Danny: [00:11:32] And then thousands of companies bid on that. The question then becomes, is the company that place that cookie a business or a third party? And if it's a... then all sorts of obligations flow from how you answer that question.
Brian: [00:11:49] Right.
Danny: [00:11:50] And at this point it's still a debate. People don't know. And it's a super interesting challenge, but I think both the GDPR... And look, how did California happen? There's a gentleman named, Alistar McTaggart, who was a real estate guy, decided that he wanted a privacy law, and so he financed a call for a referendum that would have laid it out through a vote. The people of California would have voted on that referendum, and if he had passed he would've become law. And it was even, by his own admission now, not particularly well constructed, but it was very very popular. And so, in exchange for giving up on the referendum, the, basically the industry, talked to the state legislature, and the state legislature went ahead and passed something very similar to the referendum, which is now the California law. And it's a little bit better with a commitment to making it stronger or better as they they moved through it because it was written in, literally in one week, in seven days. Right. You can't write anything complex in that period of time. So they've had to go back and look at it and are in the process of going back and looking at it and see where they can make changes. But I think that the fundamental architecture of both GDPR and CCPA is based on the premise that the most important thing in a privacy regime is choice. A. And B, that the the biggest, the best thing you can do for consumers, is to give them the ability to deny access to their information to third parties.
Danny: [00:13:39] And I think that both of those are flawed. I think that both of those premises for what makes up a strong privacy regime are flawed for a variety of reasons, not least of which is that there are good third parties and there are bad their parties and there are good first parties and they're bad at first parties. So protecting people from having their information accessed by a third party... What I think matters is is how that company, any company whether your first party third party or something in between, uses that information or distributes it, right? We should have a board of conduct around what is appropriate or inappropriate to do with people's information.
Brian: [00:14:18] Right.
Danny: [00:14:19] Because otherwise what you've really done is just... People aren't going to share less information. We're gonna continue being a digitally driven, data driven society. It'll just raise the value of first party pools of data dramatically. So what does that mean? Well there are only three actors with truly globally scale first party data.
Brian: [00:14:43] Right. Right.
Danny: [00:14:46] And you know if you want to monetize your service as a web site, and you want to access advertising to do that, those will be the three parties through which you'll be able to do it. So you know I think one of the scary things about this is is that in the name of privacy, the Internet which was originally created as an open platform for the democratization of both discourse and commerce becomes such dramatically concentrated. You... your gateway.... There's two functions, two things happening at the same time here, right? You as a user want to be able to access the Internet and all the services it provides, and then advertisers want to be able to access you. Right? Those are the two sides of the market. And so to get to those sites you already go through a fairly concentrated platform, which is search, and then for the marketers to get to you, they also go through a relatively concentrated path, which we provide an alternate path but for many of them it's Google and Facebook at this point. And Amazon, which is a relatively recent comer to the advertising game. But in just the last three or four years has become the third most prominent advertiser in the game.
Brian: [00:16:21] Yeah. That's huge. I think you're right. And it's actually, it will be interesting. I think there are going to be other players that sort of enter the space. You look at Wal-Mart. They just made an acquisition in that area to bolster theirs. And you see some other up and comers on the horizon, but primarily there's just really those three parties. You're right. And so do we want to put more power in their hands?
Danny: [00:16:48] I don't think so. And so that's why I think we need to revisit some of our underlying assumptions here and really focus on market, how big how companies behave with people's information, rather than focus so much on the process of the acquisition of that information. Because when you focus on the process of the acquisition of the information you use the predetermined assumption that you should trust only the companies you know then they you concentrate them.
Brian: [00:17:20] I think also, from a really practical standpoint, how have users really benefited from GDPR or action taken by companies on GDPR? Right now when you go to a website you that's that's quote unquote GDPR compliant, you often have to click "I accept that I'm using cookies on the site." And if you don't accept that, you can't really use the site.
Danny: [00:17:51] Yeah I mean different people are doing it different ways. So like if you go to the Washington Post in Europe it gives you options, it says OK so for free you can access this site if you let us use behavioral advertising. Or if you only let us use contextual advertising, but not personalized advertising, then it's a different price. And if you don't let us use any of those then this is the full subscription price.
Brian: [00:18:19] So effectively we've created a payment barrier to not being used for your data.
Danny: [00:18:28] Right. Right. Yes. I mean ultimately you're currently paying for services with your data. So the question then becomes, can you force... Or is the GDPR, or California even, going to force companies to establish an alternative price using regular currency? Right.
Brian: [00:18:50] Exactly. Yeah, I know it's a good question. So we kind of saw how the outflow of GDPR and how a lot of businesses did respond in some way to it. Do you see businesses right now prepping up for when California goes into into action?
Danny: [00:19:11] I do. It's a little bit similar to what happened with GDPR. I think you're going to see kind of people become more and more focused on it the closer and closer the effective date becomes. But I can tell you that our industry is very focused on it. Our trade associations, which include you know the Association of National Advertisers, the Interactive Advertising Bureau, the National Advertising Initiative, the Digital Advertising Association... They all have working projects to try to find an industry wide mechanism for compliance and also to educate their members about what the law is and what it means for them. But because there's still, one, there are still amendments being proposed to the law to change it, and two, because the regulations have not been finalized. It isn't... You can't really know today exactly what you need to do to comply with California law. You can establish a set of if/thens and have plans given multiple potential regulatory outcomes. And that's what we're doing. I think that's what a lot of other companies are doing because you don't have a choice not to comply, right? That's not an option. Right. And it's 35 million people, it's functionally the law of the land. You're not going to not do business in California. Everybody's going to have to comply.
Brian: [00:20:34] Right. Exactly. That's how I see it, as well. And effectively whatever California does, so the country does. And actually in many ways there's a lot of states that sort of have that same sway. I mean California is the most obvious version of that. But as other states potentially pass more of these laws we could see even stricter enforcements happen and effectively again... For certain states they could pass a law and effectively, if you didn't comply with that law you would be losing out on a huge market that would make it not worth it.
Brian: [00:21:11] So like if New York goes and passes something in a similar vein, but it's even higher levels of regulation... I see that happening potentially at some point.
Danny: [00:21:25] Like people trying to one up each other?
Brian: [00:21:26] Exactly. Yeah.
Danny: [00:21:26] The bigger challenge would be if you have laws in conflict, and then you kind of have to decide either which state am I going to break the law in? Or really tailor produce Web services by state, which is insane. I mean it's got to be insane. You would break the economies of scale of the Internet, you know?
Brian: [00:21:45] Well you're kind of looking at what is going on with tax law right now with the whole Wayfair vs South Dakota bit that happened. And now there are a series of companies, one of them being our sponsor Vertex, which is dedicated to helping businesses be able to address that. This is though I think, at a similar scale or maybe even larger scale in terms of how to navigate this... it could get even more challenging. But do you think there might be an opportunity for a new industry here of helping businesses follow that difference sets of regulation, not just in the US but worldwide?
Danny: [00:22:28] Oh there's that. I mean there is already is sort of a business of compliance. There are multiple companies that exist solely for purposes of helping companies stay within compliance with the GDPR alone. So you kind of expect that to occur at the CCPA level, as well, California bill level, as well. But what I think this does actually, is it creates an opportunity for the federal government and the Congress to construct a national, at a minimum obviously a national law, so that you still have the economies of scale of a single country and some degree of certainty of operation across state lines. And there in, in fairness, the the Internet and the digital economy, over the top television... all of it... is interstate commerce. There isn't an Internet for California. Right? So you know, the the broader we can make the solution the better. And again, you know, I think law is reactive. Right? So the California referendum created the political space to allow for the California law, and the California law was better than a California referendum. And I think that the California law has now created political space for industry to come to the table with federal legislators who have been trying to work on a privacy law for many years, but haven't really been able to to win a cooperative joint problem solving approach to the challenge from industry because industry had nothing to lose from it not succeeding. Now industry has something very significant to lose which is havng to live with California.
Brian: [00:25:57] Let's go back to the users for a second as we move towards a world where the Internet privacy becomes more regulated. How data is being used is more regulated. Phillip and I recently, a few episodes back I think it's near the end of last year, we talked about how data control is actually something that... Or learning how to manage your data is actually a life skill. Coming up in the years ahead. And actually, Phillip went so far as to say that being able to control your data should actually be a fundamental human right. Do you see anyone out there in the political space that is taking a stance at that level?
Danny: [00:26:45] I don't know what that would mean in if you were to effectuate it right. I think control is, to some degree, a mirage in large part because of the way that data flows, so you have to think about all the data that is living today, right now in existing data systems, databases around, the world those aren't going to be expunged. Right? I think the idea that an individual is going to be able to control their data throughout the commercial ecosystem is just structurally impossible. And if you accept that that's structurally impossible then you have to look to a definition of privacy that makes it as close to possible as possible and makes sure that the distribution of information and its use do not expose human beings to greater risk or harm than the society is willing to accept.
Brian: [00:27:45] Wow what I hear you saying is that we've let the genie out of the bottle. There's no going back at this point.
Danny: [00:27:52] I mean it's a little bit like when you went from the agrarian economy to an industrial economy. We aren't going to go back to farms. Cities were created and they require new laws and norms of behavior and ways for humans to deal with each other, and sort of the digital world is the next transformation in that. And it requires a different management system than the physical world.
Brian: [00:28:18] It seems like this is something that... I feel like there is an industry out there for users, as well, where it's like, "You need help learning how to manage and control your data. You need the ability to see when and where it's being used, and you need to figure out how you can leverage your data. Leverage it and not let it be misused." It seems to me that there should be businesses already out there that can assist with this that are being beyond just like, you know, "Make sure that your social security number is not on the dark web.".
Danny: [00:28:58] There are companies doing that. I mean I think what you're calling for is for individuals to have sort of an equity stake in how their data is used.
Brian: [00:29:06] Exactly.
Danny: [00:29:07] And so could you do it the way that sort of credit cards work? Could you have some sort of refund at the end of the year or some special discounts apply to services because you choose to allow this particular company to manage your data in your presentation to the world? There are companies thinking about doing that right now. There's a startup that we invested in, called Brightpool, that is working on that, so there are a lot of ideas around that space. And the fundamental underlying question is are you getting a fair value exchange for your information?
Brian: [00:29:43] Right. Exactly.
Danny: [00:29:45] And today that value exchange manifests itself in either free or subsidized services. And if you don't... and I think it's a fair question to ask whether or not those free or subsidized services are providing a value commensurate with what they're taking, depending on the information in the individual. And we have a mechanism to provide for transparency in that transaction and possibly an alternative mechanism.
Brian: [00:30:13] You know especially as we collect more data points, and this is something that's happening at an almost exponential scale, I feel like. Where we're able to gather more and more data about people.
Brian: [00:30:27] I was just reading an article recently about pacemakers, and the level of data that we're gathering for pacemakers, which are cloud connected. I mean this data is going up into the web. You know, that's just an example. But there are more and more points of our data that are going to be leveraged by businesses. And I looked at... I was just reading the Nike innovation labs testing criteria, and the data points that they gather for improving their products. Those types of data plants are going to be easier and easier for individuals to gather in coming years with the rise of additional personal monitoring tools and so...
Danny: [00:31:16] In the Internet of things, right?
Brian: [00:31:19] In the Internet of things. Exactly.
Danny: [00:31:19] Which gets back to your question. Should it be a human right for people to control their information? Well, how are you going to interact with your shoe to tell it not to tell Nike that your sole is worn down? A, how are you going to do that? And why would you want to? What possible harm could come from Nike knowing that you need a new pair of shoes? Actually, that is exactly the kind of thing where I'm thinking the process by which that information is access and the use that it's put to... What matters is whether or not it is a beneficial use and whether or not the individual in question is treated with respect in the process.
Brian: [00:32:05] Of course that gets very grey very fast because who decides that? And when and how, right?
Danny: [00:32:15] But that's why we have a Congress. I mean that's why we construct the law. Well the law is how we as a society decide what is just an unjust right.
Brian: [00:32:23] Right. Yeah. That's true. There's also, I think there's also cultural norms.
Danny: [00:32:32] There are norms.
Brian: [00:32:36] Exactly. And so what is the norm in one country might not be a norm in another country. Which as the internet is can be...as data can be shared worldwide... All of a sudden you're looking at a whole new set of standards that you may have to deal with. I think it's interesting because it's not just a U.S. question.
Danny: [00:33:00] No not at all. Yeah the Internet is global. And I mean people, and people run global marketing campaigns all the time.
Brian: [00:33:06] Exactly. Yeah I know. And then also you mentioned data about, let's just let's go back to your example of a sole being worn down... That's like the the basic level, but what if Nike could actually determine your entire gait and make assumptions about how you walk and how your walk affects your health? And you know it just, it starts to spiral a little bit from there.
Danny: [00:33:36] That's a very very realistic scenario. So you... So what you just laid out is a sequence of data decisions and inferences that at some point cross a line from harmless, and in your interest, to potentially harmful depending on what is decided and how it's distributed. So if Nike then said, "All right I'm going to sell information to insurance companies about you." Then you've crossed the line. Right? And so those are the kinds of lines that we need to draw in the law to tell companies about what they can and cannot or should not do with people's information. What exposes people to potentially unfair risk.
Brian: [00:34:27] This is one thing that about the California law that I think is good in that I love putting in a clause there that says, "We're making a commitment to improve this." I think that's going to be absolutely essential for laws like this to be successful. It's not just a, it's not just a law for the here and now. It's a commitment to being reactive and to improve upon that law. I actually think that a lot of laws related to the Internet actually should be more like commitments to something like this. It's actually more of a resolution than it is a law. I'm not saying that there isn't law involved, but I think that those resolutions need to surpass any given regime or set of individuals on a government and need to continue on into the future. There's got to be a... I think... I guess what I'm getting at is, I liked that about the California law. I hope to see that actually be something that's implemented broader, as well.
Danny: [00:35:35] Yeah... We know what's coming, right? We know that 5G is coming. We know the Internet of Things is coming. We know that artificial intelligence is going to be embedded in the analysis of data in every sector. But we don't yet have rules for any of those things. And there are things that we haven't we haven't thought of yet. I mean just the other day I was reading about retailers putting up facial recognition cameras all over their stores to try to get a sense of how people are interacting with their goods in the physical world and getting a sense of the mood that they're in and all of those things in that process.
Brian: [00:36:14] Walgreens. Yeah.
Danny: [00:36:14] That's all new and interesting you know, and we need, I actually think we need expertise like engineering, scientific expertise, within our consumer protection agencies to be able to assess new data practices or new data uses as they occur and determine... you know is this is this OK? Or is it not OK?
Brian: [00:36:41] Yeah it's interesting. It's like... it's not just engineers but, it needs to be engineers who have like training and sort of, a certain level of...I don't know...
Danny: [00:36:56] Like humanities?
Brian: [00:36:57] Humanities. Yeah exactly. Yeah humanties or ethics. Exactly, it's ethical engineers. It's interesting. And I love that. Danny what else is going on in Washington right now that's interesting to you?
Danny: [00:37:12] Well you know, I'm a Democrat, and it's interesting to watch my party's primaries lining up. I worked in the Obama/Biden administration, so I'm particularly fond of Mr. Biden. I'm excited about his entry into the race, but there are a lot of other interesting candidates. I think Mayor Pete's rise is super interesting. I think Miss Harris has performed quite well on the on the trail. You know it's an interesting time. Obviously everything that's been going on with the Mueller Report and Mr., and our president here, and the tensions between the White House and the House of Representatives... All of that is super interesting, as well, and a little discouraging just because... These are institutions that I revere and spent my career working in, and to see sort of the, just the breakdown of decorum is challenging to watch.
Brian: [00:38:08] Yeah absolutely I would agree. I was curious... How do you see the upcoming race having an effect on what we've been talking about? On commerce? Do you see it impacting these privacy laws or do you see... Do you see any impact on commerce beyond privacy, as well? I mean that's a pretty big statement, but maybe specifically privacy, and then we can talk about retail in general in a second.
Danny: [00:38:40] Well they're... I mean, Miss Warren and Miss Klobuchar have spoken on the needs to modernize antitrust law, in particular. And there is an underlying, sort of tech lash that has happened, but I don't like calling it a tech lash because I don't think people are angry with technology or anti science, or anti technology, but they are increasingly concerned about the size, scope, and power of a very small group of companies in a 30 mile square area in California, right? It is challenging for Americans to see that kind of concentration of power. We've seen it before and it led to, you know busting of the trusts and all of that, and antitrust law. And so you're going to see some sort of version of society trying to wield some degree of order or, not control, but of supervision, over the particularly the largest platform.
Brian: [00:39:48] Interesting. Interesting, and do you think that will have an effect on the privacy discussions we just had? I mean we just saw Facebook had 3 billion dollars in the bank ready?
Danny: [00:40:03] Three to five billion, yeah.
Brian: [00:40:05] Yeah, three to five billion available because they knew something was going to happen in that range. Do you think that that is going to change how these companies start to operate? We've talked a lot about move fast and break things and then Mark Zuckerberg said you know, "We're going to we're gonna be a little more careful about breaking things." Right? That's a gross misquote. Yes. You know effectively we're seeing a little bit of movement there. What about maybe some of the larger retailers, and you know tech retailers, like Amazon and Wal-Mart... What do you kind of expect to see there?
Danny: [00:40:45] As it relates to law, and sort of where policymakers are, I think it goes back to what effect is this having on one, in the first instance prices? How is the market operating in terms of delivering services and prices at a continually more efficient way? Which is good for consumers. And then there's subsequent questions that are outside of price questions, that are not really questions of competition, but are the questions of what kind of society do you want to live in. So if we impose on retailers a very high minimum wage, which I think we should, we should have a 15 dollar minimum wage, then what does that mean to the comparative disadvantage that a physical store has relative to a direct to consumer brand or something that's delivered digitally? Right? Those are all really important questions. I don't think we're going to change these companies behaviors through fines. Three to five billion dollars is a whole lot of money to me. I'm sure it's a whole lot of money to you. So Facebook is not really that big a deal, right? It doesn't... It just doesn't structurally change the company. You know Facebook has a license to print money. They have the largest deterministic identifiable pool of human beings for advertising in the world. Right. Something like $.91 out of every dollar that went into digital marketing last year went to Facebook and Google. And the reason for that is just that that very huge pool of deterministic data and the depth of it that they have. I actually think that ironically the way to solve for that issue is to make recognition a commodity. That is to say you... The ability to have not a known person, but a known consumer, available to the entire marketplace would degate the gating power that the platforms have right now.
Brian: [00:42:54] That's an interesting idea.
Danny: [00:42:55] And then the question becomes what attributes and what characteristics can you use for the purposes of marketing, so that you weren't collecting more than is necessary or correct? Because right now, Facebook and Google have dramatically more information than they need to market to you. Right? And they don't use all of that information to market to you. And the question becomes, well what is the what is the just bucket of data? What are the characteristics that we are going to say are OK for knowledge and use for marketing to people? And I think that that would create a competition above the recognition layer that would drive innovation and drive investment and do some really really cool things, instead of, instead of just continuing to allow two platforms to become the dominant actors in the space.
Brian: [00:43:49] Yeah. I think that's a really interesting idea. Effectively, what can be sort of unconsciously collected at any given time without the consumer really having to think about it, if you will? They just know that these specific things are being collected on them at any given time.
Danny: [00:44:08] More importantly they know what isn't. So they know their sexual orientation isn't being collected or they know that contact information for all their friends isn't being collected. You know just to give two random examples, but...
Brian: [00:44:21] Yeah you can surf the Internet with freedom, yeah without fear and just know that those things are never gonna be touched because it's illegal for them to be, right?
Danny: [00:44:31] Unless you voluntarily opt in.
Brian: [00:44:34] Exactly.
Danny: [00:44:35] Let's say you you go to a Web site that is an LGBTQ web site, and you want to engage with them, and you want them to know you're gay. No problem right? But that should be your choice. There should be a matter for you to control. Right? And do so knowledgeably. And people shouldn't be able to infer or guess that you are sensitive things. At the end of the day what I would like to see is, to the best degree possible, for the market to see me or any of us as we wish to be seen.
Brian: [00:45:07] Interesting and not as you...interesting.
Danny: [00:45:08] And not as they decide to observe us and not as they decide to conclude about us.
Brian: [00:45:16] Yeah I think what that would encourage, and I actually would encourage retailers to do this right now anyway, is to gather their own data and make it an opt in process. And have people register accounts directly with you, instead of relying on others to provide you with that data. Build that, one PE strategy, then you're gonna be in a much better position when laws like this come to bear. I think that's huge. It's not just good for you in the long term. I think you can do a lot with that data in the here and now. So really interesting applications here.
Brian: [00:45:58] Thank you so much, Danny, for coming on. I know that we're running on our time here. One last question that we always ask at the end of our episodes... What are a few things that retailers and merchants should be paying attention to here and now and what are a few things they should be paying attention to for three to five years? We've been talking a lot about the three to five years... What's something they can do right now that you think would be worth investing their time in?
Danny: [00:46:29] Yeah I think what you said before is the right thing... Is to be really focusing on first party E, first party relationships and creating them, managing them, retaining them, delivering service to people in a way that they know that you are a trusted entity and that they can continue to come back to you and trust you with the information that they give you. I think in the three to five year range, all companies, but retailers specifically, really need to have a specific digital strategy, and they need to have specific talent in-house that is knowledgeable to the same degree as the vendors they use for digital services.
Danny: [00:47:10] They don't have to do it all themselves. They probably shouldn't do it all themselves, but they need to know... they need to have somebody in-house who knows as much about the technology as the technology people they depend on outside of house.
Brian: [00:47:21] I love that. Those are great recommendations. Well thank you again, dear listeners, for tuning into Future Commerce. As always, we're looking for your feedback, so please engage with us on any social platform, and/or on our web site, or wherever you can find us. Shoot us an email. However you can get a hold of us. We always want to hear what you have to say about these topics and any new ideas you want introduced.
Brian: [00:47:50] So please engage with us outside of the show, and thank you so much, Danny, for coming on. As usual, this was incredibly insightful, interesting, and engaging, and I just really appreciate your time.
Danny: [00:48:02] Thank you, brother. It's good to hear your voice again. It's been a while.
Brian: [00:48:04] You, too.
Danny: [00:48:05] I'm glad you guys are doing well.