Meta’s privacy policy director, Melinda Claybaugh, has said that the proposed changes to the Privacy Act 1988 would force businesses that rely on ad dollars to find a new revenue model.

Visiting Australia from Washington DC, Claybaugh told journalists that “it’s the fact of the matter that companies that rely on ads to provide free services would be forced to find another revenue source.”

In its submission to the attorney general’s department review of the Privacy Act, Meta said that it supported 106 of the 116 points raised. However, two of the 10 points that it objected to caused particular concern for Claybaugh and her team – the broad definition of targeted advertising that would include even basic targeting of consumers at a postcode or age range level and the ability of consumers to completely opt out of targeted advertising.

Claybaugh explained Meta’s hesitancy on the proposed opt-out provision:

“As it is currently framed in the proposal, it would mean that people could fully opt out of seeing any ads in their personalised experiences. This isn’t just a social media issue. Ads support newspapers, they support all kinds of services.

“Advertising is what allows companies to provide free or reduced-cost services. By allowing people to opt out of that but still having to provide a service to them, which is what is contemplated, you are essentially forcing companies to look at other revenue models.”

Meta’s Melinda Claybaugh

Claybaugh did not rule out Meta adapting its business model in Australia and charging users for its services.

“It’s early days in the proposal and we don’t know what it’s ultimately going to look like,” she said.

Meta’s second main bone of contention was the overly broad definition of targeted advertising – something that industry organisations such as the Association for Data-Driven Marketing (ADMA) and the Interactive Advertising Bureau (IAB) have taken exception to, as well.

“We agree generally with the idea that high-risk targeting or targeting to certain populations may carry some risk that warrants mitigation,” explained Claybaugh.

“For example, we don’t currently allow advertisers to target ads to people based on sensitive data. We also don’t allow invasive targeting of kids under 18.

“However, the proposal, as currently framed, frames targeting much more broadly. The concern there is that not just advertising would be implicated but also the content that people see. We tend to think about personalisation just in terms of the ads that we see but targeting and personalisation are also about the content that you see as well.”

Claybaugh explained that by removing the ability of firms to target users for adverts or content, they ran the risk of serving age-inappropriate content to users and risking the ire of Ad Standards and other watchdogs.

“You have to be able to target and personalise content in order to serve age-appropriate content for people under 18 or in order to detect problematic content that you might not want to show people. If you take away or limit the ability to personalise content, you’re taking away the tools that companies have to keep their platform safe,” she said.

Claybaugh said that while she did not know why the overly broad definition of targeting was present in the proposed reforms, it was part of a wider trend.

“What we are seeing globally is an interest in how data is used for targeted advertising and making sure that people understand what ads they’re being served and why, and that they have control over their ad experiences,” she explained.

Of course, personalised advertising and content are fundamental to Meta’s current business model. However, Claybaugh and Josh Machin, Meta’s head of public policy in Australia, were keen to point out that many other small businesses, charities and NGOs also stood to lose out with a ban on targeted advertising.

“Ad-supported free services provide a lot of benefit for consumers, particularly if they’re personalised and they can get content and engage with communities that they are close to,” said Machin.

“It’s good for advertisers, particularly small businesses because it results in more efficient personalised advertising and it’s good for organisations that have tight marketing budgets, like NGOs. We’ve heard through this process about how safety NGOs and some of the other partners that we work with really appreciate personalisation. There are a host of trade-offs with some of these recommendations. It’s not necessarily just the business models of particular online companies, as important as that is, but also what the implications would be for everyone who benefits from the online ecosystem.”

Legislators, consumers and some big names in adland would take exception to Meta’s assessment of the situation. Author and adland veteran Bob Hoffman told the European Union in March that “The KGB, the Gestapo, and the Stasi could only dream of having the depth of information about citizens that Google, Facebook, and other adtech companies have” and has regularly railed against online advertising.

“Advertising can occur if it’s not personalised,” conceded Machin.

“But the conversation that we’re having is to encourage policymakers to think about the trade-offs and benefits that might be lost… The research that the IAB put out last year shows the economic benefits, about $10 billion, that come from improvements in efficiency and advertising. It’s a pretty significant contribution to the economy.”

Claybaugh also added that while contextual, rather than personalised content, worked for “some online services better than others” it would not suit Meta’s range of platforms as contextual advertising was “harder in a fully individualised service.”

“What you and I see on Facebook or Instagram, YouTube or whatever, is specific to us. There is no one context that you can target ads to. The concern is that you’re left with a very broad base of billboard-like advertising where everyone sees, essentially, the same ad,” she explained.

“What we know from our research is that people, if they are going to see ads, they want to see relevant ads. That’s a really bad experience for people to just see random ads. Some people do see contextual ads as maybe a silver bullet and it may be okay for some online services but for many online services, it just won’t work.”

There is, of course, a fair way to go before any of the 116 proposed changes to the Privacy Act become enshrined in law and Meta, for its part, said that it wants to remain a “constructive partner” and get an outcome “that’s good for the Australian economy and Australian small businesses and the broader industry.”