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The idea of a ‘free’ Internet is dead and buried

Those ads that pop up when you browse the Internet are annoying but at least it costs you nothing to see them. Imagine your irritation if you had to pay for advertising. Then, consider how you would feel if you were billed for the publication of a fake ad viewed online by thousands of robots.

Welcome to the world of advertising cyberfraud. An Internet security firm, White Ops, revealed a fortnight ago that a Russian criminal gang is currently earning up to $5-million (U.S.) a day from fake ads viewed by half a million robot users. The fraud ring impersonates well-known publishers, such as Fox News and The New York Times, and steals their ad revenue, competing for video ad space in high-speed automated Internet auctions and then uses software robots to "view" the videos.

The scam, dubbed Methbot by White Ops, is apparently still running and it is only part of a fraud industry that last year pocketed $7-billion, according to America's Association of National Advertisers. The sophistication of the scam and its use of software enabled it to mimic 6,000 premium advertising sites and create 300 million ad "views" per day.

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Advertisers and publishers are saying nothing about the proliferation of robotic readers and viewers; they earn no brownie points by highlighting the costs incurred from fraud and the revenue forgone. But Methbot's antics raise huge questions about the value of Internet advertising, half of which, some analysts say, is never viewed by a real human being. It is all made possible because of the phenomenon of programmatic advertising and millisecond Internet ad-space auctions, where no human being decides that this ad goes here or there. Instead, ads can wander through the Web and appear on your screen when you type the words "Caribbean holiday" because your mouse click made you a member of a statistical fraternity.

If you don't like the ads, you can block them using ad-blocking software, free to download into your browser. A fifth of adults use ad-blocking software on their computers, according to the Britain's Internet Advertising Bureau, and Pagefair reckons that 309 million people, 16 per cent of the world's smartphone users, are blocking mobile ads.

The power to filter out ads is a real threat to publishers and advertisers. It undermines the business model of most of the media, which has depended on advertisers for revenue since the first newspapers were printed in the 18th century. Without advertising revenue, most of the world's news-gathering organizations, whether broadcast, webcast or on printed paper, would fail, leaving us even more exposed to fake news on Facebook, fraud and the machinations of government propaganda units from Russia and everywhere else.

You might think that technology should provide the answer but it is creating more problems. If mass-market advertising on billboards or Web pages is too crude, why not ditch ads and target individual consumers? The accumulation of personal data on the Web is exciting the marketing departments of big consumer companies and it is also provoking a political reaction.

You may recall the dystopian world in the film Minority Report, in which iris-recognition software enables electronic ad hoardings (and the government) to recognize the hero, played by Tom Cruise, as he walks down the street and to call out to him, offering products. I am aware of at least one major energy company that is getting excited about the idea of targeting individual consumers at gas stations, using license plate and credit-card numbers. Your favourite soda, chocolate bar, madam?

If that sound like too much information about your sugar addiction (in the pockets of big business), the European Commission agrees. From May, 2018, any company that wants to handle data relating to EU consumers (and that means every major U.S. media/tech company) will have to comply with the General Data Protection Regulation, the fruit of four years of work aimed at stopping corporations from exploiting personal data without express consent.

Currently, Internet companies store masses of information about your Web viewing behaviour and they can pass it on to anyone who is interested. When the GDPR takes effect, it will become illegal for any such data to be stored or transferred without express and informed consent.

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No one yet knows how advertisers, marketers and Web media companies will behave in response to the EU's data protection dragnet. What it may mean is that one-to-one relationships between publishers and viewers become more valuable – the cost of passing on customers will be too high and, potentially, too dangerous. That would be a blessing but it could lead to a takeover frenzy as major corporations seek to hoover up the consumer data held by publishers.

It's a potential feast for lawyers but what it does mean is that the libertarian fantasy vision of the Internet, free as the open sea, is dead and buried. Like the real world's oceans, the Web is full of pirates, polluters and scum; the cost is borne by consumers.

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About the Author

Carl Mortished is a Canadian financial journalist and freelance consultant based in the U.K. With a career spanning investment banking, journalism and consulting for global companies, he was for many years a financial writer and columnist for The Times of London. More

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