Recent weeks have seen important milestones in both the European Parliament and the Council of the EU on the proposed Digital Services Act (DSA), reflecting the keen interest and relatively fast pace of work on the file by both of the co-legislators. On 27 May, the Competitiveness Council received a progress report from the Portuguese Presidency. In the Parliament, three out of the four associated committees have now released their draft reports, and deadlines for amendments either loom or have already passed. In the Council, on the provisions that relate most directly to digital advertising, there seems to be a consensus that the Commission’s proposed way forward - doubling down on transparency to consumers so they are empowered to make choices that are appropriate for them - is the right one.
But the direction of travel in the Parliament, if the draft reports from the IMCO & LIBE Committees are any indication, is alarming. Here a fear of societal harm from online disinformation, insufficient awareness of how much transparency is already required under existing privacy and data protection law, and exasperation at the perceived failure of GDPR enforcement are driving a desire for something more radical, potentially including a full ban on targeted advertising. Rather than protecting democracy, amendments tabled in the two Committees would entrench inequality of consumer access to quality online content and services. A ban on targeted advertising, in particular, would effectively deprive all European citizens of a significant proportion of the content and services they benefit from today.
Over the past few months, IAB Europe has engaged extensively with EU policymakers about the value of data-driven ads and the existing policy and regulatory landscape. We appreciate these opportunities as they reveal legitimate and sincere concerns and questions about the advertising business model, which can be addressed during a frank exchange of views.
Nonetheless, as we have been digesting the released Parliament’s Internal Market and Consumer Protection (IMCO) and Civil Liberties, Justice and Home Affairs (LIBE) drafts, we note recommendations which could damage thousands of businesses that depend on digital ads across Europe. The IMCO report proposes an opt-in only paradigm for targeted ads, whereas the LIBE Rapporteur goes as far as claiming that even with consent, targeted ads compromise user safety and the sustainability of traditional media.
From the outset, we have approached the DSA with an open mind. We have taken good note of the importance attached by the European Commission to ensuring a sufficient level of transparency in digital advertising, an attachment that aligns to our own given the industry’s self-interest in ensuring transparency and trust across the value chain.
But we also believe that a discussion on what new transparency requirements is required in the DSA must be fact-based, in particular if restrictions on certain practices are contemplated. Data-driven advertising is comprehensively covered by the existing EU privacy & data protection legal framework, and any new provisions must not undermine or contradict that framework or its enforcement. Surely this should be as important for regulators as for the companies that have invested in GDPR and ePrivacy legal compliance, including by implementing the IAB Europe Transparency & Consent Framework (TCF).
With regard to the IMCO approach to targeted ads, it is relevant to recall that under the GDPR, there are six available legal bases for processing personal data, and no single legal ground enjoys an elevated status. A company’s choice of the most appropriate legal basis for processing of personal data cannot and should not be mandated a priori. Data Protection Authorities’ guidelines and interpretation can aid in taking such decisions, but pre-determining that choice solely for targeted ads, and in a legal act with a very different substantive scope to the GDPR would be inadequate. It would also add to the enforcement complexity, given a new proposed institution of Digital Service Coordinators.
Worryingly, the LIBE report proposes an outright ban on targeted ads. From industry perspective, bans and prohibitions are extreme and unnecessary, and anyway inappropriate in the context of DSA which focuses on ex-post transparency. The legal and enforcement uncertainty created by a ban would not only hit businesses. Ultimately - if reflected in the final regulation - it would result in the demise of ad-supported open web, and critically, take choices in regard to consumption of online content out of users’ hands. The very ad-supported web that is powered by targeted ads and which - according to our latest research - 75% of Europeans surveyed would choose over an internet without targeted ads, where they would need to pay to access most sites and apps.
The hard truth is that a ban would be illusory - that it would not end the practice of users’ behaviour across multiple sites and services being used to derive insight into what types of products they might be interested in, but instead just ensure that only a very small number of companies with a wide portfolio of online services would be in a position to do it. The advertiser spend that these diversified companies will be able to attract will be redirected from smaller sites to them, aggravating existing market failures.
We call on EU policymakers and legislators to ensure law-making grounded in studious care and attention, and we remain committed to continuing our critical conversations on the DSA dossier. It should be our joint priority to ensure that digital advertising can continue to support a pluralistic media and Europeans’ access to the free and open internet dependent on ad-supported content.
Greg Mroczkowski, Director, Public Policy at IAB Europe .