Data Clean Rooms: The FTC's Dirty Little Secret and What Businesses Need to Know
Data clean rooms are positioned as secure, privacy-preserving environments where multiple parties can analyze datasets without exposing personal information. In reality, without proper due diligence, robust encryption, and strict limits on what can and can’t be shared, the clean room can be a black box to the outside world and can facilitate privacy harms.
The Federal Trade Commission (FTC) has just fired a warning shot, reminding companies that data clean rooms are not a silver bullet for privacy. Data clean rooms, the supposed sanctuary for privacy-friendly data collaboration, may be anything but clean. In fact, they could be among the dirtiest places on the internet.
So, what makes a clean room dirty…? And why should I care?
As the FTC warned, they are not rooms, they don’t clean data, and they offer no protection if privacy complications arise. Despite their squeaky clean name, if data is dirty when it goes in, it will be dirty when it comes out.
A lack of third party verification often means that companies have to trust the quality, integrity and provenance of data going in, and hope impervious controls prevent unintended transmission. Unfortunately, if data is shared between a publisher and a vendor, for example, without either party verifying consent, the parties may end up knowingly or unknowingly laundering data.
A staggering 90% of websites have consent and compliance failures. This means that businesses relying on clean rooms to analyze unverified data collected from the open web may be exposing themselves to serious risk. Against a backdrop of regulatory investigations, class action lawsuits and complaints from privacy activists, there is a surprising lack of urgency on the part of market participants to apply data integrity standards – similar to the early days of Viewability and Brand Safety.
The Consequences of Dirty Data
- Compliance Risks: Companies may unknowingly violate privacy regulations, leading to legal and financial penalties.
- Reputation Damage: Unlawful data use can harm a company's reputation and erode consumer trust.
- Cost: Aside from fines and financial penalties, companies can be ordered to compensate consumers, delete vast datasets, upgrade security measures and cease further use of data for advertising, all at great cost.
- Poor Campaign Performance: Low-quality data can lead to bad targeting, bad performance and wasted media spend.
As we head into 2025, ignorance is no defence. Companies are responsible for their partners' data practices and must take accountability for their extended supplier network. The "trust me" approach to data sharing is a one-way ticket to risk, reputational damage, and financial loss. Data integrity is the new standard. Now buyers and sellers should only trust what they can verify.
How to Ensure Your Clean Rooms Are Truly Clean
- For Advertisers and Agencies: Implement new tools to validate the cleanliness of first party and third party data sources, ensuring it is accurate, reliable and consented. Implement a robust data compliance toolset for transparency and hold partners and suppliers to account.
- For Data Matchers, Sellers, and Onboarders: Ensure data accuracy and compliance, and regularly assess publishers using data compliance tools. This helps identify risk and positions you as a leader in responsible data management.
- For Publishers: Showcase your commitment to data compliance by highlighting your high-quality, consented data. Promote your data compliance efforts, including your PCI score, in sales and partnership strategies. Data quality is a vital differentiator in today's privacy-conscious environment.
Take Action Today: In an industry powered by data, the integrity of that data is the ultimate currency. Compliant helps advertisers build a defensive shield around first party data and verify the data integrity standards of publishers and retailers. We're not just offering protection; we're arming businesses to fight for a cleaner, more transparent data ecosystem. The future of clean rooms and other privacy-related technologies depends on it.
The time to act is now.
Contact Compliant today to learn how we can help you ensure the cleanliness of your clean rooms and protect your brand reputation. Compliant's solution ensures clean rooms stay clean through independent verification of data collection practices, transparency into the data supply chain, and quality assurance via our PCI scores.