Vizio Suit Forces Agencies And Vendors To Rethink Their Use Of Smart-TV Data

The fallout from the Federal Trade Commission’s (FTC) litigation against smart TV manufacturer Vizio for “unfair and deceptive data-collection” practices didn’t end with its $2.2 million settlement in February.

Separately, Vizio is also embroiled in a class-action lawsuit that industry insiders predict is far from over.

These allegations stem from claims the smart TV manufacturer violated the Video Privacy Protection Act by tracking and selling viewership data with third-party partners without affirmative opt-in from consumers. (A California judge recently partially overruled Vizio’s motion to dismiss the case.)

Some members of the vendor and agency community have temporarily cut ties with the smart TV provider or amended their use of smart TV viewing data altogether because of the ongoing litigation, sources said.

“We’ve had a lot of customers who have proactively asked us, ‘Are you, in any way, using Vizio data?’” said Ashwin Navin, co-founder and CEO of Samba TV, a smart TV analytics platform that partners with several smart TV OEMs. “The next sentence after that is, ‘Because if you are, then we can’t do business with you.’ Our answer has always been no, but this is something that’s propagating throughout the industry.”

One agency source, who asked to remain anonymous because of the impending class-action suit, agreed: “Since the litigation, a number of Vizio partners have been forced to essentially put their products on hold, which in turn, has put them in a holding pattern with advertisers and agencies.”

That source said agency holding groups’ legal departments were understandably spooked after the FTC’s legal action, as were advertiser clients, “so there was a significant backing off of working with Vizio.” 

Vizio did not respond to requests for comment.

Because most agencies don’t directly partner directly with Vizio – relying instead on vendor intermediaries that use Vizio data – the litigation significantly changed their discourse with partners.

Some agencies issued internal memos with a blanket rule “not to touch ACR [automatic content recognition] data,” according to the agency source.

And all agencies are more wary of contracts involving smart TV data activation even beyond Vizio.

“It’s certainly something we’re cognizant of, and when we work with a partner who uses ACR technology – whether it’s listening or on-screen content recognition – we definitely will vet it through our legal teams now,” said Misha Mukherjee, a senior partner and director on the NBCU Digital Investment team at Maxus.

“We’re ensuring we have a few approved vendors our team has evaluated for disclosure agreements, how they’re using or selling the data,” he added.

While Mukherjee acknowledges smart TV data – which often leverages ACR technology – can help close the loop on TV attribution, the data set still carries with it significant privacy challenges.

And Vizio is the perfect example of those challenges.

“It’s an example of diving in first and not properly positioning how they were collecting data or what their users were agreeing to,” Mukherjee said.

What Does Vizio Data Do Now?

Some sources indicate that recent hits to Vizio’s data licensing business were profound, but that things are starting to rebound, with some caveats.

“A lot of Vizio partners are back in the swing of things – with a new set of restrictions about what data they can and can’t provide,” the agency source said. “One of the downsides to the ruling is that Vizio is limited in the amount of their own data they can provide to third parties.”

For example, Vizio and its partners essentially must destroy all historical viewership data it collected prior to its new opt-in policy.

That loss of historical data complicates the job of TV buyers building attribution models since they need more than six months’ worth of census-level viewing data from a smart TV provider to make that data set valuable.

But Vizio’s legal battles could have some upside for the ad industry. If other smart TV manufacturers amend their privacy disclosures due to increasing regulatory attention, it could lead to greater transparency.

“Vizio was the obvious target because it has, by far, the largest footprint of TVs that utilizes ACR data in a progressive manner,” said Sean Muller, CEO of TV analytics platform iSpot.TV, who noted that Vizio now features explicit on-screen disclosures and requests an opt-in to enable Smart Interactivity tracking. “We believe all the other manufacturers will follow suit in making smart TV tracking disclosures clear to consumers.

“This debate wasn’t whether [smart TV data collection] was legal or not. The debate was all about the appropriate level of disclosures.”

Clarification: Vizio provided this response to AdExchanger: "Even before the FTC resolution became final, VIZIO had already begun to issue a software update with a new notification featuring a clean, simple, user-friendly, full-screen description of the ACR feature, separate and apart from its privacy policy and terms of use. Once received, the software update disables viewing data collection on VIZIO Smart TVs, and collection is only turned on if users select “Agree” on the notification screen.

Going forward, only VIZIO Smart TV units that have formally agreed to viewing data collection via these new notifications will be eligible for viewing data collection and sharing projects.  As a result, users and the data community can be assured that VIZIO’s best-in-class notifications and data collection practices are fully compliant with the FTC resolution.”

In response to AdExchanger sources' claims that all historical data prior to the FTC ruling must be deleted, Vizio stated that data collected over the last year (i.e., March 2016 to the present) is fully exempt from “from the data deletion requirement in the stipulated judgment. And even as to earlier periods, where units later opt in to viewing data collection in response to the latest notice, data need not be deleted.”

 

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