Preparatory Announcement for European Parliament's General Assembly Vote on the Digital Services Regulation
The European Parliament is set to vote on a series of amendments to the Digital Services Act (DSA) this Thursday, which could potentially have far-reaching implications for the EU's digital economy. One of the contentious issues under consideration is the regulation of informed consent for targeted advertising.
Regulating the informed consent process for targeted advertising could lead to several significant consequences. Platforms and advertisers would face increased operational responsibilities, ensuring that users' consent is explicit, traceable, and specific before delivering targeted ads, especially in sensitive areas such as political advertising. This could potentially result in joint liability for unlawful targeting if consent is not properly managed.
Enhanced transparency and accountability would also be required, as firms would need to implement mechanisms that collect, verify, and store proof of user consent. This could lead to more rigorous internal governance, documentation, and compliance protocols within political and commercial campaigns.
Stricter data handling practices would also be necessary, including auditing data sources to exclude indirect or sensitive data that users have not explicitly consented to for targeted advertising. This may reduce the scope of data available for precise targeting.
Heightened regulatory enforcement and financial penalties would also be a concern, with data protection authorities such as CNIL in France exercising investigative powers to ensure compliance. Companies that fail to meet consent standards could face significant financial impacts.
Potential market effects include legal uncertainty or overlapping obligations, as the DSA interacts with other EU acts like GDPR. There could be conflicts or dual enforcement tracks between the DSA and GDPR frameworks, complicating compliance for companies.
However, regulating informed consent for targeted advertising within the DSA context could also have benefits. It could strengthen user control and transparency, reducing manipulative or deceptive practices that undermine genuine informed consent, thereby safeguarding users from psychological manipulation in their digital choices.
It is important to remember the benefits of targeted advertising, particularly for small and medium-sized enterprises (SMEs) and start-ups, who use targeted ads to advertise to new audiences interested in their products or services. Targeted ads provide €16b in income per year for European media companies and app developers.
Benjamin Mueller, Senior Policy Analyst at the Center for Data Innovation, issued a statement regarding the DSA, highlighting the need to strike a balance between protecting user privacy and preserving the benefits of targeted advertising. Mandating that platforms do not disable functionalities for users who refuse consent could negatively impact the business model of many publishers.
Proposed amendments could also bureaucratize website designs, potentially conflicting with existing GDPR rules. MEPs should carefully consider these implications when considering amendments to the Digital Services Act. Ideologically driven campaigning should not overshadow the benefits of targeted advertising.
- The stricter regulation of informed consent for targeted advertising, as outlined in the Digital Services Act (DSA), could lead to increased operational responsibilities for platforms and advertisers, requiring them to obtain explicit, traceable, and specific consent from users before delivering targeted ads, especially in sensitive areas like political advertising.
- To comply with enhanced transparency and accountability requirements under the DSA, firms may need to implement new mechanisms to collect, verify, and store proof of user consent, which could result in more rigorous internal governance, documentation, and compliance protocols within political and commercial campaigns.
- Implementing stricter data handling practices, such as auditing data sources to exclude indirect or sensitive data that users have not explicitly consented to for targeted advertising, may reduce the scope of data available for precise targeting.
- Companies that fail to meet the consent standards outlined in the DSA could face significant financial impacts due to heightened regulatory enforcement and financial penalties, with data protection authorities exercising investigative powers to ensure compliance.
