The MEP and Ad Tech Giants
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The MEP and Ad Tech Giants

on 05 January 2022

In a recent development, MEPs in the European Parliament have voted for the imposition of strict restrictions in how AdTech giants such as Facebook and Google collect internet user’s data for ad targeting purposes. The Internal Market and Consumer Protection Committee (IMCO) overwhelmingly voted in favour of implementing a new series of consent requirements pertaining to how personal data is used for ad targeting under the Digital Markets Act (DMA).

The IMCO have also voted for a complete prohibition on major platforms using personal data of minors for commercial purposes, therefore strengthening the original draft legislation. Furthermore, these newer restrictions shall also account for the surveillance of business models, and should also aim to limit digital market abuse altogether.

The proposed restrictions might not completely restrict major AdTech companies from targeted advertising, as these companies are considered masters of user consent manipulation. However, the proposed restriction on the use of minors’ personal data for commercial purposes may pose a problem for the likes of Google and Facebook. This is mainly because of a lack of robust age assurance, which is present across the entire internet.

According to the proposal, if these partial restrictions are passed into EU law, AdTech platforms might be able to decide if it is less risky legally to turn off tracking-ads as a whole, vis-à-vis trying to verify the age of their entire user base, as an attempt to prevent minors from seeing behavioral ads. Such a restriction will, at the very least, force ad tech giants to legally comply with these restrictions, but will not completely eliminate targeted ads as the MEPs have not voted in favour of a complete surveillance of business models.

Digital Markets Act (DMA)

The European Parliament is currently finalizing its negotiating mandate on the DMA, which will further apply a list of dos and don'ts on digital platforms. This is seen as an attempt to shift the balance of digital markets and market gatekeepers, which have tilted heavily in favour of US-based giants.

Critics of the mandate argue that this will lead to abusive behaviours that will negatively impact consumer privacy, and will limit genuine innovation in business models. The EU, however, argues that the regulation is necessary for digital platforms to respond to evidence of unfair digital practices that are a result of network effects, investor strategies and big data.

Another area highlighted by the IMCO is the expansion of the scope of the DMA, to not only include social media networks, search engines and operating systems, but also web browsers, virtual assistants and TV devices. The MEPs also voted for an increase in the quantitative threshold of a company to fall under the scope of a market gatekeeper to 8 billion in an annual turnover, with the market capitalization capped at 80 billion.

An additional requirement for any platform to become a gatekeeper under the DMA is the provision of a core platform service in a minimum of 3 EU countries, with 10,000+ business owners and 45 million monthly end users.

Conclusion

These provisions are backed by a centralized enforcement role for the IMCO, and sanctions on gatekeepers that break DMA rules include a fine of not less than 4%, and not exceeding 20% of the total worldwide turnover, thus proving to be a major regulatory step within the EU.

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