Smart TVs are like “a digital Trojan Horse” in people’s homes

48-page report urges FTC, FCC to investigate connected TV industry data harvesting.

The companies behind the streaming industry, including smart TV and streaming stick manufacturers and streaming service providers, have developed a "surveillance system" that has "long undermined privacy and consumer protection," according to a report from the Center for Digital Democracy (CDD) published today and sent to the Federal Trade Commission (FTC). Unprecedented tracking techniques aimed at pleasing advertisers have resulted in connected TVs (CTVs) being a "privacy nightmare," according to Jeffrey Chester, report co-author and CDD executive director, resulting in calls for stronger regulation.

The 48-page report, How TV Watches Us: Commercial Surveillance in the Streaming Era [PDF], cites Ars Technica, other news publications, trade publications, blog posts, and statements from big players in streaming—from Amazon to NBCUniversal and Tubi, to LG, Samsung, and Vizio. It provides a detailed overview of the various ways that streaming services and streaming hardware target viewers in newfound ways that the CDD argues pose severe privacy risks. The nonprofit composed the report as part of efforts to encourage regulation. Today, the CDD sent letters to the FTC [PDF], Federal Communications Commission (FCC), California attorney general [PDF], and California Privacy Protection Agency (CPPA) [PDF], regarding its concerns.

"Not only does CTV operate in ways that are unfair to consumers, it is also putting them and their families at risk as it gathers and uses sensitive data about health, children, race, and political interests,” Chester said in a statement.

Beyond rising streaming subscription fees and the increasing presence of ads in streaming services, the growth of streaming has a "steep price," the report says:

The widespread technological and business developments that have taken place during the last five years have created a connected television media and marketing system with unprecedented capabilities for surveillance and manipulation.

The report notes "misleading" privacy policies that have minimal information on data collection and tracking methods and the use of marketing tactics like cookie-less IDs and identity graphs that make promises of not collecting or sharing personal information "meaningless."

"As a consequence, buying a smart TV set in today’s connected television marketplace is akin to bringing a digital Trojan Horse into one’s home," it says.

Generative AI

CDD's report highlights the CTV industry's interest in using generative AI to bolster its targeted advertising capabilities. Approaches currently being explored could alter what one viewer sees when streaming a show or movie compared to another viewer.

For example, Amazon Web Services and ad-tech company TripleLift are working with proprietary models and machine learning for dynamic product placement in streamed TV shows. The report, citing a 2021 AWS case study, says that "new scenes featuring product exposure can be inserted in real-time 'without interrupting the viewing experience.'"

Peacock is also working with TripleLift to develop "In-Scene" Peacock ads that owner NBCUniversal says it's currently testing:

When a user plays episodic content, your brand’s product or message is dynamically placed in the frame of targeted scenes, creating a non-interruptive ad experience that aligns the programming with your campaign theme/goals.

Generative AI could also enable advertisers to show different elements in ads, depending on who's streaming the ad, the report says. As a 2023 blog post from data-collection firm Experian and cited in CDD's report says:

Some AI tools can generate several versions of the same CTV ad — swapping the actor’s clothing and voiceover elements like store locations, local deals, promo codes, and more — and can create up to thousands of personalized iterations in just a few seconds.

CTV companies are also turning to generative AI for free ad-supported (FAST) streaming channels that are increasingly popular as streamers get tired of streaming costs and as a way to push ads.

Speaking to Ars Technica, report co-author Chester shared concerns that generative AI techniques for harvesting data from streamers will grow without checks, "making regulation much harder." He suggested regulation methods like identifying where generative AI in advertising can't be used, such as with pharmaceutical products or products targeting kids, and settling on a review process to limit harm derived from generative AI in CTV advertising and how much data is collected from this ad tech.

Data collection yields concerns around pharmaceuticals, politics

The report details concerns around the advertising of pharmaceutical products using CTVs. It notes that the US is "one of only two countries that allow direct-to-consumer advertising of pharmaceutical products." Drug advertising, the report argues, has "generated concerns from the public health community over its high-pressure sales techniques, misinformation, and deceptive practices." Despite claims that health data for ad targeting is anonymous, identity management and ad tech tools allow health marketers to target specific people, the report argues.

Similarly, the report's authors describe concerns that the CTV industry's extensive data collection and tracking could potentially have a political impact. It asserts that political candidates could use such data to run "covert personalized campaigns" leveraging information on things like political orientations and "emotional states":

With no transparency or oversight, these practices could unleash millions of personalized, manipulative and highly targeted political ads, spread disinformation, and further exacerbate the political polarization that threatens a healthy democratic culture in the US.

“Potential discriminatory impacts”

The CDD's report claims that Black, Hispanic, and Asian-Americans in the US are being "singled out by marketers as highly lucrative targets," due to fast adoption of new digital media services and brand loyalty. Black and Hispanic communities are key advertising targets for FAST channels, per the report. Chester told Ars:

There are major potential discriminatory impacts from CTV’s harvesting of data from communities of color.

He pointed to "growing widespread racial and ethnic data" collection for ad targeting and marketing.

"We believe this is sensitive information that should not be applied to the data profiles used for targeting on CTV and across other platforms. ... Its use in political advertising on CTV will enable widespread disinformation and voter suppression campaigns targeting these communities," Chester said.

Regulation

In a letter sent to the FTC, FCC, California attorney general, and CPPA , the CDD asked for an investigation into the US' CTV industry, "including on antitrust, consumer protection, and privacy grounds." The CDD emphasized the challenges that streamers—including those who pay for ad-free streaming—face in protecting their data from advertisers.

“Connected television has taken root and grown as an unregulated medium in the United States, along with the other platforms, devices, and applications that are part of the massive internet industry,” the report says.

The group asks for the FTC and FCC to investigate CTV practices and consider building on current legislation, like the 1988 Video Privacy Protection Act. They also request that antitrust regulators delve deeply into the business practices of CTV players like Amazon, Comcast, and Disney to help build "competition and diversity in the digital and connected TV marketplace."

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