There are two sides to every story and two sides to every lawsuit.
In late August, the Federal Trade Commission sued mobile measurement and data provider Kochava, accusing the company of selling sensitive geolocation data.
The lawsuit wasn’t a bolt from the blue. The FTC had approached Kochava the month before, in July, with a then-yet-unfiled complaint and proposed settlement agreement calling for Kochava to remove and block all sensitive health-related location data from the Kochava Collective, its data marketplace.
According to Charles Manning, Kochava’s CEO and founder, Kochava was already developing a tool for that purpose when the FTC came knocking. Kochava first started developing the tool, called Privacy Block, in June after the Supreme Court’s Dobbs decision overturned Roe vs. Wade.
Which you might imagine would be the end of it. But the situation escalated quickly.
So sue me
Before agreeing to sign a consent order, Kochava asked the FTC to define exactly what it meant by “sensitive location data,” which Manning said the commission refused to do.
“Like, are pharmacies considered sensitive health locations? What about dentist offices or medical marijuana dispensaries?” he said. “If we went ahead and signed a consent order with a nebulous definition of ‘sensitive health locations,’ it would be easy for the FTC to change or expand their definition later and accuse us of not complying.”
And so Kochava preemptively sued the FTC in mid-August, claiming the agency was unjustifiably threatening to sue the company. Roughly two weeks after Kochava’s suit was filed, the FTC’s official suit followed and included language that Manning said validates his concerns about the proposed consent order.
“That settlement order only talked about sensitive health locations, but when the FTC actually filed its lawsuit, it included other things, like houses of worship and homeless shelters,” Manning said. “That just proves the point that the definition here is a moving target.”
Dueling lawsuits aside, in mid-September, Kochava released its Privacy Block tool, which removes location data related to health services from its data marketplace by default.
Manning spoke with AdExchanger.
AdExchanger: Why do you think the FTC focused on Kochava as opposed to any other ad tech company that touches geolocation data?
CHARLES MANNING: Well, you asked that question [of FTC Commissioner Alvaro Bedoya] recently and you got an answer which, to me at least, translates to the FTC wanting to make an example out of a company.
I can’t say for sure, of course, but I suspect that the FTC didn’t intend to actually file litigation. They fully expected us to sign a settlement agreement. But our position was that if we’ve broken any laws and we can remedy that by signing a settlement, okay, let’s do that. Or if we can make a change to how we operate to align with regulators, let’s do that.
But we weren’t provided with specificity in the settlement agreement, and that didn’t sit well with us. We were being threatened with a lawsuit on an issue that didn’t appear to have jurisdictional scope for the agency in question.
Yes, but why not always just err on the side of caution with any sensitive location data, health-related or otherwise? As in, why do you need specificity if you’re operating ethically?
Our position is that we have erred on the side of caution.
The question really comes down to whether we should have made a free sample of data available on the AWS Data Exchange, which we actually only did because researchers wanted to analyze it in the context of Covid infection rates, but they didn’t want to buy the data to do it.
There’s a process within ADX where research analysts fill out a form to explain why they want the data. In retrospect, it seems clear that the FTC masqueraded as someone other than themselves to say they were using the data for research purposes.
It all goes back to this question: Are vehicle manufacturers complicit in a car accident if it’s the driver’s fault and not related to the manufacturing of the vehicle?
But the fact is that the free sample was available to download until at least June, though, right? That’s the claim in the FTC’s suit.
At the time of the suit [in August], that data hadn’t been available for nine months.
Putting aside the legal back and forth, what sort of policy do you think would be fair for consumers and actually protect their interests?
That’s a question we were really eager to figure out by working with the FTC, and it’s why we pushed for clarity and specificity. If the FTC wants to protect sensitive locations, then they should identify what that means.
The exact language in the FTC’s complaint is that sensitive location data is any location data that could injure consumers by exposing them to stigma, discrimination or other harms – but “location data that causes stigma” is not an SQL query you can run against a database. That’s not a code segment we can create.
That’s why there needs to be specificity from a regulatory perspective about what locations could create stigma. That would be fair.
What percentage of your business is the data collective today versus the measurement side of the house?
The data marketplace is 30% of our business. It’s a side business.
What’s the status of Kochava’s lawsuit against the FTC?
Litigation is always slow. We’re looking at weeks and months of procedural process, both for our suit against the FTC and theirs against Kochava.
Since the Kochava Collective is a minority of your business, any regrets about launching it back in 2016 since it’s what caught the FTC’s attention?
I don’t regret it. We built it in response to customers asking for it and we’re hardcore about how we handle the data. We don’t use one customer’s data to serve another customer, and it helps them with targeting and audience identification. I also feel good about Privacy Block.
That said, during our negotiation with the FTC at the beginning, we went so far as to ask whether we could make this all go away if we just shut down the precision geo side of our business.
But they said, ‘No, we’re still going to require you to sign a settlement agreement, and we’re still planning on putting out a press release.’ So here we are.
This interview has been edited and condensed.
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