Law and Order: Mobile Growth Unit

January 15, 2020

MGS20 is just around the corner (February 12-13)and we're excited to announce that Kimberly Culp, Director, Carr McClellan will be joing us again. Take a look back at Mobile Groove's Peggy Anne Salz's exclusive interview with Kimberly about the legal questions surrounding mobile applications and video game companies. Touch on complex privacy, compliance, and disclosure issues. (And don't forget to get your MGS20 tickets to hear Kimberly's advice for 2020.)

Peggy: Hi, I'm Peggy Anne Salz here at Mobile Growth Summit where we are talking to the speakers and the sponsors and the companies that matter because they're here at Mobile Growth Summit and talking about topics you need to know more about. So I'm very excited to have Kimberly Kulp. She's director at Carr McClellan. And you were on a panel about what is probably like the topic that app marketers probably didn't wanna think about at all, which is the legal side of everything. It's great to get really excited about saying, "Oh, we're gonna take this content," or "We're gonna get this data." "We're gonna monetize that." But at the end of the day they have to think about the legal side of things. So tell me, first of all, Kimberly, I mean you're obviously in a law firm, but is it specialized in app marketers and app marketer questions or...

 

Kimberly: No, the law firm itself is not specialized. We work with companies in Silicon Valley, companies who touch businesses in Silicon Valley and San Francisco. That is our target market. I work with mobile applications and video game companies.

 

Peggy: And is it headache? Do they get it? Do they understand what they need to comply with or do you have a lot of explaining to do?

 

Kimberly: There's a lot of explaining. It definitely depends on who your audience is and whether or not they've had a run around with the FTC or not. But part of my job is to educate, part of my job is to work with my clients around risk. What's their objective, what do they have to do, and let's figure out a solution that's the right solution for that particular client. It's not one size fits all.

 

Peggy: Absolutely. And if you're a global app, it's even more of a headache. I'm based in Europe where GDPR is everything, compliance is everything and it is very strict about that. There's no advance buts about it as you know. I mean, is it more difficult now or what would you say to an app marketer? You know, it's not as if wait until someone figures out what you haven't been complying with. I mean, it really is a greater risk now than it was before.

 

Kimberly: Right. So international is so much more complicated now because of GDPR to your point. And it is getting more and more complicated. So in California we have a new companion statute, if you will, on the privacy side. The California Consumer Privacy Act comes into effect January, 1, 2020. It is not the same as the GDPR. So what do you do if you are an international company? So you touch Europe, you have to think about GDPR. You're in California, you have to think about that statute. How do you balance those two? You know, that's a lot of what I do is to help make that analysis. And the answer is no one's perfect. Very rarely is any company perfect. And so it's talking about what are the risks? What's the upside? What can you tolerate? What can't the business tolerate? How close can you get to what you need to do for your particular situation?

 

Peggy: So what has become table stakes where it's like, no matter what you to do this. I mean, a lot of it I've understood it's about how you ask for compliance. That's really important. But that's just me as a layman. You're the expert. What is it you absolutely have to do in 2019 and get absolutely right?

 

Kimberly: So our panel today was about influencer advertising. I would say you absolutely have to get right, the disclosure that your influencers are putting in their feed about their relationship with your brand.

 

Peggy: Good poins. [crosstalk 00:03:26] underneath, "sponsored by." They have to say, "Hey, I am so-and-so and I have a relationship with X."

 

Kimberly: There's lots of ways to do it and that's a great way to do it. There's lots of ways to disclose the relationship. The trick is to actually do the disclosure. The Federal Trade Commission told us a couple of weeks ago that we should absolutely be expecting that they are paying attention to brands and influencers and agencies in the influencer space. And they will be active in 2019 and making sure that consumers are not being duped by this kind of advertising. So I think that is one space where everyone has to get it right. And the getting it right is disclosing the relationship between the influencer and the brand.

 

Peggy: Okay. I mean in many ways I can understand that they have to disclose, but you don't wanna do it like overtly, but you wanna do it correctly. Because, you know, if you have like a, I'm just thinking of an example... You know, you have fashion or beauty and you really want people to think the influencer is really excited about looking really amazing, not just because you gave them this stuff in the first place. So are you advising different companies about different ways to communicate that?

 

Kimberly: For sure. And it depends on the medium. A blogger will disclose the relationship in a very different way than an Instagrammer will. But I would say that most consumers don't wanna be duped. They wanna know that you've got that dress or that piece of swag and there's some relationships. So do it in a way that's fun and creative and authentic because that's why people follow your feed. That authenticity, if you disclose the relationship in an authentic way, your followers should appreciate the transparency. And I think most brands are understanding that there's not risk in the disclosure. The way to do it is to do it creatively and in a way that is interesting to the consumer.

 

Peggy: What about the other, you know, laws? There's so many of them now, but the one that I've been thinking about even for myself, because the content I create is the copyright. You know, you can't just pick out things the way you used to and sort of mash them up. You, I mean, you did say sort of where you got them, but you didn't sort of be very specific about it. And that's going to be, I would imagine a concern as more apps move into content marketing and into content. So how did they deal with that? What are you telling them about that one? That's a tough one.

 

Kimberly: It's true and there's legislation that's happening in Europe right now that could... I read an article today that said, 'end the internet as we know it." So let's put that reality to the side. But to your question, you think about user-generated content and you wanna have rights to that, you wanna reuse that, you put that in your terms and you think about all the ways in which you're going to want to use content. And you spell that out in your terms so that you have those rights to use that content. And let's put aside the doomsday, the internet end's example.

 

Peggy: Because I mean I would imagine... Yeah, the end of the world as we know it. Yeah. I would imagine you in some ways because when you're doing, like, your social feed and you're picking out little things, you know, for your gifts and what have you, I guess that's gonna, like, be very different now.

 

Kimberly: It could be and there's risk there for sure especially as you have influencers who have content that they are very protective and proprietary over, there are more opportunities to misappropriate content. And from an IP perspective, from a brand side, you need to get clearance. You need to know where did this content come from. You ask the marketing team, "That's a great picture. Where did you get it from?" "Do you have the rights to that?" If you don't have the rights to that, you go get them. You don't cross your fingers and hope that no one's gonna figure out that you took that piece of content from someone else.

 

Peggy: Especially because it's going to be something where we're gonna see fines. We're already seeing fines GDPR in Europe. I know it. I mean, this is not something where it's just, like, "I told you so." This is where we're gonna see action, real teeth to these laws. What about the app marketer? I mean, we could say, okay, they all go to Kimberly and you get what you need, right? But do you have to have, like, a lawyer on staff? I mean, what happens? To what extent do you need legal that you might not have needed legal before? Does it have to be someone in the headcount now or it's just what?

 

Kimberly: No, no. So certainly in this space, in the mobile space, you do not need to have an in-house legal team. You do need to think about what are the things that we are doing and prioritize. And again, you're not gonna get to every, all 10 items on the checklist. But you should work with a lawyer to figure out what should I be thinking about? What's my spend? I have $5,000 for Q 1 2019, what's the best way to spend it and have that conversation. And the answer may be, you know what, I need form contracts for my influencers. I don't have them. I should have them. Its space that I'm gonna get into and that's where I'm gonna spend my money. And I'm gonna maybe not worry about the CCPA right now because that goes into effect later. But you should be thinking about what are the issues and then walking through your checklist as you can.

 

And, again, there's not perfection, but it is managing risk. And that's where it is important to at least talk to a lawyer so that you understand the risk. You've thought about it, you've made informed decisions and you're not surprised if the FTC sends you a letter and says your influencers are not disclosing their relationship and we think that you've engaged in a certain amount of fraud.

 

Peggy: So have you dealt with clients of yours that they've been called on things like this?

 

Kimberly: Yes.

 

Peggy: Okay. So it happens.

 

Kimberly: It definitely happens.

 

Peggy: Definitely happens.

 

Kimberly: And the consequences, you could be under a consent order, which means that for some period of time, 10 years, you may have to report back to the FTC what you're doing. You may be prohibited from participating in the influencer marketing space, marketing at all. There are significant consequence.

 

Peggy: And 10 years is forever in this industry.

 

Kimberly: Forever. Yes.

 

Peggy: You may as well just knock it off there. What about, you know, we're talking about all the different laws that are coming on and, you know, the impact. What's, like, a nightmare scenario for data compliance? We haven't talked about that one because it's, like, that's a big one. You know, you have to be very up front. What am I using the data for, etc, etc. And there's this, there's this fine line and I've been talking to app marketers like, you know, oh, we have this technology, we know which other apps you have on your phone so we can, you know, bring them all together. And it sounds like isn't this very convenient? But at the end of the day, it's like, isn't that also something on the borderline? Right. It's not straight forward and they're great business models are monetizing your app data, you know, anonymize it, but still some cases where it sounds maybe better and easier than it is. Do you come up against those? What's the deal on data?

 

Kimberly: Yeah. So the nightmares scenario to data is that you pretend as if GDPR does not exist. And you pretend as if consumers don't want some choice about how their data's going to be used. And you say, "I'm small, I'm mobile, I'm not a big brand name. No one's gonna realize I'm doing this. I'll be fine." That's the nightmare scenario because at the end of the day, it might not be GDPR. It might be the CCPA. It could be both. But if you've pretended as if there is not this burgeoning privacy regime and consumer expectation around transparency, you could be in a host of problems. So selling data in the ways in which we saw it maybe two years ago, those practices have to change.

 

Peggy: Or are you gonna end up at the very least... I mean, have you had anyone who served like imploded somewhere in the press? Because that's the other thing. Maybe no one gets you, but I've seen quite a number of articles recently, you know, about all the different things. You know, you can make screenshots of stuff when I'm looking at it, I mean, that's major companies, right? But you know, there are things that you can be doing as an app developer that you might not even realize you're doing and then someone's gonna call you on it. And that might even be worse than law itself.

 

Kimberly: Yeah. You know, it's a great question. I don't think we've yet seen the implosion, particularly at this level. To your point, there are much bigger companies where there have been issues around that.

 

Peggy: Like Facebook. I didn't say that.

 

Kimberly: Yes. But are we going to get there? Right. Eventually, yes. And eventually I think there will be shaming around companies that aren't giving their consumers more transparency and more protection of their privacy because that's the direction that we're moving in. So I don't think we're there quite yet, but we're moving in that direction. So thankfully under GDPR, there was a certain ramp up period and I think we're gonna have the same sort of ramp up period with the California statute and any other statutes that come around. So there's some not forgiveness but understanding that we are easing into a different period. Exactly.

 

Peggy: It's all going in that direction.

 

Kimberly: It is going in that direction.

 

Peggy: Consumers are, like, this is very interesting. I do everything now on apps because before it was okay browsing on the Internet, I don't understand, I understand some of the context but here we see the actual activity. So we have the full picture and if we add in some other data from cross channel. Are you looking at that? Do some of your clients also have the cross channel? Does that make them more susceptible because it's like they have two sides of the same person and although it's ''all anonymized,'' maybe they have a bigger problem ahead of themselves?

 

Kimberly: Yeah. Well in the way this, the California statute works, if you can put the pieces back together, you know, there are certain requirements around that as well. So just having it anonymized, if you can recreate the package that is itself an issue that needs to be worked through and thought through in terms of how you handle data and what you're putting into your privacy policies and your contracts and everything else. So it's not just enough to have everything anonymized, particularly if you can place the pieces back together.

 

Peggy: So this is coming, this is real. App marketers, should they be saying, "Okay, I had all this plus four, I had this budget for UA, I had this in mind for, you know, my push notification stuff, my CRM and all of this and now I'm gonna take this chunk and put it aside for, you know, legal advice." Is that the way it works? And if so, just ballpark, you know, because some are small developers as you said, and they're gonna get caught in the crossfire because everyone's gonna be under scrutiny. How much would they have to put aside mentally to say, "Here's what I need to think about because I wanna be on the up and up?"

 

Kimberly: Yeah. In terms of dollars let's think about it in time. You know, an hour, two hours worth of time with an attorney, and most attorneys, myself included, will have a conversation to just understand what's the lay of the land? Are you the right client for me? Am I the right lawyer for you? What are your issues? So you can get a sense of how to triage. Probably inan initial relationship, you'll get a list. It'll have five issues, 10 issues, whatever, you know, the particular issues for your company. And then you can say, "Okay, well what's it gonna cost me to hit all 10? What's it gonna cost me to hit five? What's it going to cost me to hit three?" And some companies, maybe were more sensitive to data and so they were in a better position. Some, perhaps had buried their head for the last couple of years and they're in a worse spot. Some may have said, "There's the FTC. What's the FTC? I didn't know anything about the FTC."

 

Peggy: "I thought it was a band."

 

Kimberly: And so it depends and it depends. And then working through those issues. And again, very few clients actually get to every single item on the punch list until you are of a certain size. So then it's just working through that list with that attorney or perhaps another one that you'll hire because, you know, it wasn't the right fit.

 

Peggy: And I imagine that at some level, you know, showing, you know, "I'm really trying here. I went to the attorney, I've got my list, I'm working it through," you know, "I'm doing everything I'm supposed to be doing." I guess that also has some clout when it went basically when it hits the fan that something has happened. There's non-compliance, but, "Hey, I'm really trying." It pays to do that, too.

 

Kimberly: A lot. So let's talk about influencer advertising specifically for that. If you have a contract with your influencers that says you need to disclose, this is how you disclose, this is how you're supposed to run this campaign. And you're checking. And let's say you're working with a thousand influencers, big number, and you're checking a hundred of a thousand to make sure they're compliant and someone slips through and they're in that 900 that you didn't check, you're gonna make that argument. "It was an oops. I was being reasonable." That's a good argument. It's not always gonna win the day and we don't yet have a good answer on do you have to monitor every single post by every single influencer ever or is it 10% or 20% or 30. We don't yet have and that's why you talk to a lawyer about that. But right now until we have a clear line in the sand, that argument," I thought about it. I was diligent. I tried very hard," will go a long way.

 

Peggy: Yeah. Okay. And speaking of long ways, you know, we're into the beginning of the year, going to be a long year ahead. What's ahead for you, Kimberly? What do you want to be accomplishing this year? What's top of mind for you?

 

Kimberly: I'm expecting a lot of work in the influencer space. I'm gonna expect a lot of clients that are worrying and thinking about CCPA and getting ready for that. That's January, 1 2020 so they have a ramp up period. And e-sports is starting to touch mobile more. It's not just at a large platform level now. And so there too we're gonna see, you know, what are the rules for the tournaments, what are the contracts? At what point does a player become an influencer? And then where do those pieces blend into each other?

 

Peggy: We have to define that too?

 

Kimberly: Yes, we will. Yeah.

 

Peggy: Then you have a lot. I won't ask you about how you're gonna spend your time because e-sports, of course, huge. And that falls into this when a player becomes an influence or not. That is a philosophical question to ponder. Maybe we'll do that next time, perhaps in another event. Kimberly, great to have you at Mobile Growth Summit.

 

Kimberly: Thank you for having me. It's been great to be here.

 

Peggy: And thank you for tuning in.

 

Kimberly: Thank you.



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