Interactive Advertising Bureau
28 June 2017

Proposed ePrivacy Regulation: An Internet without data flows?

In a legislative discussion that already has an aura of déjà vu coming so soon after four years of discussion on the General Data Protection Regulation (GDPR), it may seem unlikely that there could be anything new to discuss, especially where cookies are concerned. But a lunchtime roundtable discussion in the European Parliament on Tuesday, June 20 , hosted by the Developers Alliance and IAB Europe surfaced a few points that, while not entirely new, have not received quite enough airtime thus far.

Four points are worth highlighting.

Some EU institutions do not want credit for killing the Internet

A question that is made more urgent by the emergence of MEP Marju Lauristin’s draft report for the European Parliament’s lead Committee on Civil Liberties, Justice and Home Affairs (LIBE) is whether the future ePrivacy Regulation will kill the online advertising business model that currently sustains the vast majority of content and services on the Internet, or just handicap it.  As publishers sitting around the table pointed out, the European Commission’s original proposal would, arguably, only impair the delivery of data-driven advertising by making interactions between digital services and users subject to their prior consent as defined in the GDPR – with all the constraints that imposes. This is already a huge contrast to the GDPR, which would permit personal data processing under consent or five other legal grounds for lawful processing. The proposals in MEP Lauristin’s draft report, however, would effectively take consent off the table too. Notwithstanding the exhaustive information disclosure requirements accruing to data controllers under the GDPR, consumers are deemed unable to give informed consent and should have the choice taken out of their hands by the law.

The new development, at least in this observer’s view, was that some EU institutional stakeholders do not to want to be the cause of damage to the European data-driven ecosystem, and repeatedly – even emotionally – insisted that this was not the objective of the proposed ePrivacy Regulation. This may suggest that the extreme approach being pursued by Lauristin – with the backing of European data protection authorities and consumer groups – might be corrected in trilogues, even if it were to feature in the European Parliament’s first reading position.

Data-driven advertising is critical for publishing quality content online

During the roundtable, publishers reaffirmed the pivotal importance of advertising to their ability to create content. At the same time, they countered suggestions that random or contextual ads could be the way forward with insights into the revenue differentials between interest-based ads and other forms of digital advertising. As IAB Europe and others have repeatedly stated, interest-based advertising generates three times more revenue compared to non-targeted forms of advertising, based on their relative effectiveness to advertisers in reaching their target audience.  If interest-based advertising becomes either practically impossible or legally forbidden in Europe, global brands will not invest in inferior ad-products. Instead, they will take their advertising euros elsewhere – either to other media or other continents.

Importance of data collection for measurement and analytics companies

In addition, speakers from measurement and analytics companies stressed that services rely on data collection to understand how users interact with their services, and to derive important learnings about how to improve their business offerings. Requiring users to consent to the collection of such analytics data by expert third party measurement and analytics providers would deprive European services of critical information enabling them to build innovative, globally competitive web and mobile services.

Browsers will not cure cookie fatigue

Several publisher and technology company speakers pointed out the risk of unintended consequences from inserting browser manufacturers as ‘gatekeepers’ between publishers and other online service providers on the one hand, and their readers or users on the other. There is genuine alarm at the prospect of the European Union wrestling away the relationship between publishers and their readers to instead hand it to a few browser manufacturers.

There is also concern that the current wording of the proposed regulation would prevent publishers, both technically and legally, from inquiring if a reader whose browser is set to reject cookies or similar technologies could reconsider their choice, since the creation of quality content is expensive and third-party advertising provides the publisher with a critical revenue stream. Here there was also some relief on offer, with the European Commission apparently prepared to consider supporting amendments that would clarify that the law does not intend to prevent online service providers from asking users to consent to a proposed value exchange and turning away those users who do not agree to their offer: interest-based data-driven ads and/or allowing data collection for the improvement of a service in return for free content and services.

The inevitable follow-up discussion on where this left the European Commission’s high-profile public undertaking to rid Europe of cookie banners was left to another day. IAB Europe and its partners from the data-driven ecosystem, will be hosting more events in the course of the legislative process. The next event is planned for September 2017.

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