Since the European Commission’s proposal for the Digital Services Act was first published in December 2020, the legislation has progressed at pace. The trilogue negotiations commenced swiftly after adoption of the Parliament’s mandate in January and as the DSA reaches its final phase – with the co-legislators turning their attention to online advertising-related aspects – IAB Europe believes that policymakers must remain alive to the value of data-driven marketing, the risks of some remaining provisions of the DSA, and finally, the importance of a thriving digital media ecosystem and economy at large for Europe’s future.
The European Parliament proposed to introduce new obligations and further restrictions on digital advertising. Expansive and undue formulations under Art. 13a and Art. 24 raise fundamental questions about the implementation and functioning of the data-driven ads ecosystem as it functions today.
Unintended consequences and real-life implications of the DSA proposals
The proposed ban on so-called ‘dark patterns’ has been making headlines – as clearly no one wants the user to be misled in any way – but sweeping proposals under Art. 13a risk duplication and overlap with the existing privacy & data protection legal framework as well as relevant consumer law, the latter being evident from the recently published Commission’s guidance on the application of the Unfair Commercial Practices Directive.
Art. 13a 1(e) would likely take away the right of a publisher to independently hold a dialogue with the user about access to their very own ad-supported content or services – a growing concern given the ability to set signals such as ‘Do Not Track’ at browser or operating system level. Far from being a technologically neutral provision, this will pose an increasing problem for publishers looking to carry ads, as well as the businesses who rely on the reach of digital advertising to attract new customers. In 2021, Apple’s ‘Ask App Not To Track’ feature was estimated to have cost the biggest internet companies almost $10 billion – a significant sum that smaller players simply could not absorb.
Art. 13d 1(b) would in effect introduce a blanket approach to establishing validity of ‘consent’, imposing a prohibition of repeatedly requesting a recipient of the service to consent to any - not just ad-related - data processing when they have already refused. These matters - including the storage duration of user consent or refusal - are already being addressed by Data Protection Authorities (DPAs) guidance on the basis of their analysis of the GDPR provisions. It is important for any such interpretation of the GDPR requirements to be made on a case-by-case basis, including taking into account the context of different business models. Adding new, overlapping and possibly contradictory language on the matter of obtaining ‘consent’ would obfuscate the GDPR, and render DPAs efforts to-date irrelevant. For similar reasons, the added value of Art. 24 1a should be questioned.
Finally, though provisions that stand for an online environment that protects children and vulnerable people are important, they present cause for concern about how they might work in practice. The ban on targeted advertising to minors proposed under Art. 24 1b should take into account the business context and technical possibilities, avoiding a full ban on targeted advertising when the means of reliably discerning an internet user’s age - fully in line with the data protection regulation - cannot be found.
Preventing websites from asking vast swathes of users for their consent to advertise would remove a vital element of websites’ autonomy and concentrate it in the hands of a small number of gatekeepers – something European legislators are explicitly seeking to prevent and which has not been subject to any impact assessments.
Sustainability of the digital media ecosystem at stake
In this situation, many publishers could find themselves struggling, deprived of yet another crucial source of revenue. Facing years of declining print circulations, small publishers across Europe have turned to digital advertising to sustain themselves, often with great success. The Reuters Institute for the Study of Journalism reported that digital advertising revenues grew at their fastest rate ever in 2021, at over 30 per cent year on year, accounting for almost two-thirds of advertising spend.
Making digital advertising unviable would ultimately result in declining media pluralism across Europe. Even as policymakers strive to improve it. The Parliament’s Culture and Education Committee reflected on the fact that a shift to a subscription economy without advertising could lead to a decline in the availability of free quality information, stressing underlying liquidity issues of media organisations on another occasion. Diminished access to free, reliable content provides space for disinformation to take root, something that has plagued governments trying to combat uncertainty of the current times . Far from solving a problem, restricting digital advertising in this way could make the problem worse.
Digital advertising is no longer simply a nice to have. It is a crucial element of the modern media ecosystem, supporting pluralism and the proliferation of free, high-quality information. Severe restrictions on digital advertising could have equally severe, negative consequences.