The Future of Digital Privacy and Taxation

As a result of mounting global criticisms surrounding Big Tech for their extensive influence and power, U.S. companies and states alike have begun to exert pressure to restrict digital media’s reach into consumers’ privacy and pocketbooks. Below, we examine a few recent stories and assess what they mean for digital privacy and taxation. 

Google To Halt User Web Browsing Purchasing

At the beginning of March, Google announced a plan to stop selling ads based on users’ browsing data – specifically that they plan to stop investing in tracking technologies that help Google identify web users’ online traffic patterns. This comes on the heels of their 2020 announcement to phase out third-party cookies, efforts that originate from their “privacy sandbox” proposal that enables publishers to target ads based on interests that don’t infringe on consumers’ privacy.. 

Google accounted for 52% of last year’s global digital ad spend of $292 billion. As a result, these proposed policy shifts could mean drastic changes for the advertising industry as a whole. David Tremkin, the product manager in charge of the change, acknowledges Google’s responsibility in addressing people’s concerns about privacy before the future of the free and open web is in jeopardy.

While the ad world will certainly reel around this news, a number of Google executives insist this change is ultimately good for users. They believe that the proposed group targeting will achieve enhanced privacy for consumers, while still helping brands achieve their marketing goals. When it comes down to it, Google makes too much money in advertising revenue to ever abandon their marketers entirely.

Digital Tax Law – Maryland

In February, Maryland became the first state to tax revenue generated by digital ads. The law resembles similar taxes passed in the European Union. According to analyst estimates, the tax of 10% would generate as much as $250M in the first year.

If you’ve been following the recent crackdowns on Big Tech, this is hardly a surprise. States, unwilling to wait for the federal government to regulate, are looking for ways to implement change for their own jurisdictions. Representatives from states such as Virginia, Washington, and Connecticut are looking to implement iterations of California’s Data Privacy Law, while Republicans in Nebraska and Florida have even touted the idea of fining social media companies for excommunicating their fellow party members from their platforms.

The Maryland digital taxation law has already been the subject of fierce legal scrutiny. A group of business organizations, led by the U.S. Chamber of Commerce, have already filed suit against the state of Maryland. As part of their initiative, the coalition Marylanders for Tax Fairness, launched last year in response to the ideation process with almost all of the large U.S. tech firms represented. These state laws are unlikely to make any significant headway for Big Tech in the immediate future, largely due to corporate pushback and a lack of organized, national policy ideas, but their efforts will continue to create the groundswell for such policies.

Digital privacy and taxation regulations are inevitable as the public becomes more knowledgeable and savvy. Once users feel more comfortable around their privacy rights and adequate checks and balances on digital have been established, they will be less hesitant to consume brand-generated content. For now, communicators should continue to keep abreast of the “policy sandbox” updates for Google and continue to think outside the box in terms of audience targeting.