European parliament backs big limits on tracking ads

The European Parliament has definitively backed major limits on behavioral advertising during a plenary vote on amendments to the pan-EU Digital Services Act (DSA).

The move looks set to crank up pressure on Big Tech business models that rely on pervasive tracking and profiling of users to target ads — with adtech duopoly Facebook and Google, which make most of their money through mass surveillance and microtargeting of Internet users, squarely in the frame.

In an earlier vote the parliament already backed a full ban on profiling minors and limits on the use of special category data for ad targeting to be added to another piece of draft digital legislation, the Digital Markets Act (DMA).

But while the DMA will apply to so-called internet “gatekeepers” (such as Facebook and Google) the latest amendments expand the remit of restrictions even further as the DSA updates the bloc’s long-standing ecommerce directive, so is set to apply to digital services more broadly. 

Having the same provisions in both packages of legislation is also important for legislative consistency (which supports enforcement) — and sends a clear signal of where the parliament stands on this issue.

While MEPs rejected an amendment to the DSA that had proposed a complete ban on behavioral advertising, a number of amendments proposed by a coalition of MEPs, civil society organisations and companies — organizing as the Tracking-free Ads Coalition — were passed during the votes.

These included one that is — effectively — a ban on using UX tweaks to manipulate/force consent as the amendment requires platforms to offer parity in consent flows for refusing or agreeing to hand over data.

Moreover, in the event of a user denying profiling the amendment says they should be given “other fair and reasonable options” to access the service. This amendment was passed with 329 in favor vs 303 against (with 60 abstentions).

Another Coalition amendment which passed mirrors provisions in the DMA to ban the ad profiling of minors and also prohibit the use of highly sensitive personal data (such as racial or ethnic origin, political or religious affiliation, sexuality or health data) for behavioral targeting of anyone.

It passed with a larger majority: 410:273 (with 9 abstentions).

At the same time, an attempt to weaken the draft legislation by removing existing restrictions in the text on dark patterns — via a split vote — was also resoundingly defeated by MEPs in a definitive rejection of Big Tech’s lobbying against regulation.

On dark patterns the parliament voted overwhelmingly (524:157; with 11 abstentions) to reiterate its desire for a ban.

Practices the parliament wants outlawed include giving more visual prominence to certain consent options vs others; repeatedly requesting consent after a denial to try to fatigue users into agreeing; nudging users to change settings after they have already made a choice; ignoring automated opt-outs signalled by users and requesting consent regardless; and making it “significantly more cumbersome” to terminate a service vs signing up.

The upshot of these votes is that the elected representatives of EU citizens have signalled strong backing for significant restrictions to microtargeting and related adtech practices (like manipulative consent flows) which — if they make it through into the final law — will put a significant squeeze on surveillance-based business models, increasing pressure for adtech reform.

“This is extremely significant because — trilogue pending — you can’t target people anymore on all the sensitive data or whatever can be used to infer that sensitive data, so sexual orientation, political affiliation, trade union membership, ethnic origin and so on, that’s quite broad — and whatever could be used to infer that,” said MEP Alexandra Geese, one of the parliamentarians backing the Tracking-Free Ads Coalition, speaking to TechCrunch after the vote.

“This is a game-changer — together with the other provisions we already had, and the compromise on the DMA which is the ban for targeted advertising on minors… the [provisions against] dark patterns [to] clearly allow people to say ‘yes’ or ‘no’ to tracking. That’s a bunch of provisions that clearly limit the possibility to use surveillance advertising significantly and I think that could usher in a change of the whole business model of the internet — away from surveillance advertising and towards contextual advertising.”

“It’s going to be complicated for platforms,” she added. “They will defend [current targeting practices] but all the restrictions are significant and I think especially advertisers will start looking at that and say, well why do we have to put up with these — in the end we don’t reach the people, why can’t we just do context? So I’m really hoping for a change of the business mode… We’re clearly showing this is not working, this is not compatible with a democracy — do something about it.”

An industry standard framework for obtaining consents to serve tracking ads currently is already facing a finding that it breaches the General Data Protection Regulation (GDPR).

So quite how the current creepy adtech ‘standard’ — of pervasive, consentless profiling of Internet, users combined with high velocity trading of people’s attention — would be able to survive with even less rope to lasso consumers’ eyeballs in the future is indeed unclear.

Geese pointed to a statement by Facebook in November — when the tech giant announced that it would not longer allow advertisers to target people based on “sensitive” topics, arguing: “They are feeling the heat, definitely,” before pressing the case to follow through and cement legislative limits: “But as long as we don’t have the instruments to check this that doesn’t mean anything — I mean who believes Mark Zuckerberg anyway?”

The Commission’s DSA proposal also contains a package of measures to dial up transparency and accountability on platforms and their hierarchy generating AIs — requiring larger platforms to submit to a degree of regulatory oversight of their algorithms, as well as to provide public interest researchers with access to data to enable independent scrutiny of platform effects.

Such measures will clearly be crucial in ensuring any legislative limits on Big Tech’s microtargeting are actually implemented by the platforms.

“We clearly can’t solve all the problems with the DSA — because first of all we need to do a lot more research, and the problem is so far we couldn’t do the research because we couldn’t access the data,” says Geese. “[But] with the DSA you give the Commission, the digital service coordinators, researchers and NGOs access to the data if they have good projects in order to assess the compliance so once the DSA’s in force we will start having an enormous amount of knowledge, of insights. And we will be able to come up with even better and more precise regulation.

“We won’t depend on Mark Zuckerberg or someone from Google telling us ‘oh we’re doing nothing wrong’; we will have the knowledge to deal with it. I think this is really what makes a difference.”

The parliament’s vote to restrict adtech is especially significant given the massive lobbying effort by Google and Facebook throughout last year, also looping in their extensive proxy network of third party industry organizations to lobby on their behalf.

US tech giants have poured literally millions into trying to influence the shape of this major update to EU digital legislation in recent years — leading to some especially cringeworthy memeing this week from internal market commissioner EVP, Thierry Breton. (Albeit, at least Breton avoided straight-up parroting of adtech talking points, unlike some others in the Commission… ).

Big (ad)tech’s campaigning against regulation of tracking ads also — oh the irony! — included a blitz of ads targeted at EU lawmakers ahead of today’s vote, as well as plenty of cash splashed on traditional newspaper ads. Such as the below Facebook ad in a German newspaper pushing a self-serving claim that small businesses need tracking ads to survive…

In the end, MEPs don’t appear to have been taken in by Nick Clegg’s favorite talking point. (Aka: ‘Save Me(ta) to Save SMEs’.)

How did they resist all that spin? Paul Tang, another of the parliamentarians who’s backed the push against tracking ads, pointed to a recent YouGov survey of SMEs in France and Germany — which found a majority don’t actually want to use tracking ads but said they feel they have no choice but to use Facebook and Google because of their market dominance.

He also highlighted the impact of antitrust reports, produced by competition authorities in the UK and Australia in recent years, digging into the adtech duopoly — which have suggested the lion’s share of every ad dollar (or euro) ends up in the coffers of Facebook and Google. (Or, put another way, the Big Adtech philosophy is: ‘me, me, me; not SME’.)

Tang also pointed out that the Coalition put over a year of work into raising awareness and educating fellow lawmakers on the issues and harms linked to tracking ads, with all this effort inexorably buoyed up by a parade of Big Tech scandals over the period — such as the Facebook Files. Or the flow of cartel-ish revelations from various antitrust suits.

So, in the European parliament at least, the penny appears to have dropped on Big Tech.

What happens next? The plenary vote amending the DSA sets the parliament’s negotiating position for trilogue discussions with its co-legislators, the Council (aka EU Member States’ governments) and the Commission — so Facebook and Google’s lobbying will likely swing towards Member State governments in earnest. And perhaps we’ll see Sundar Pichai finding time for another politician-pressing tour of European capitals.

In one early reaction to the parliament’s vote, the European arm of adtech industry association, the Interact Advertising Bureau (IAB), showed no signs of dialling down the lobbying — describing the vote as “disappointing”, and claiming that “personal data in advertising is already tightly regulated by existing legislation”, before urging EU lawmakers to “reconsider” to “ensure we end up with a DSA that provides legal certainty for all actors”.

The IAB’s regional director of public policy, Greg Mroczkowski, added in the statement: “It is disappointing that in a mistaken belief that targeted advertising causes online disinformation or breaches privacy and data protection principles, MEPs have decided to pass amendments that not only overlap with the GDPR and existing consumer law but risk undermining these rules, as well as the entire ad-supported digital economy.

“Ultimately, a Digital Services Act that boosts transparency and certainty across the online economy is in everyone’s interests. We will be consulting with our members and all interested stakeholders to try to come up with solutions that are workable, secure and efficient.”

There is still months more road to run on this drama before the full and final detail of the DSA is hammered out — so plenty could change. But, after the trilogue discussions conclude — assuming a compromise is reached (it still has not over the ePrivacy reform) — MEPs get another vote on the final text so today’s vote underscoring the parliament’s red lines on adtech sends a strong signal to Member States over what the parliament will accept in the final legislative package.

Hence why anti-tracking ads campaigners are sounding so jubilant. (And, well, the IAB isn’t.)

“There was an enormous amount of lobbying on parliament… It was really enormous — and we still made it. So I’m a lot more optimistic than yesterday, I have to say,” adds Geese. “This is a really really good report we’re passing in parliament today.”

On potential Council pushback, she suggests any pro-tracking moves by Member State governments might be tempered by the momentum that’s now been generated on the issue.

“In trilogue — let’s see. From what I know, surveillance advertising wasn’t a big issue in the discussions in Council that led to the general approach. It wasn’t even discussed much. And now there’s a momentum — that is very, very different — and I think governments will have to look into it. And ask themselves is that really the position we want to defend? Why are we defending Meta’s and Google’s interests rather than the interests of our own companies?

“So it’s going to be a different debate, I think. I know the general approach of the Council is already fixed but this is a possibility. We have to find a compromise anyway — and we will discuss it.”

“In Germany the government has changed in the meantime. That might have some weight. It depends a little bit. We will see. Too early to foresee that I think — but there’s an open space right now to talk about it,” she adds. “If we had lost this vote it would have been a lot more difficult because it would have been limited to minors. But now we have to discuss it in the trilogue very actively.”

Asked about the defeat of the amendment that had proposed a full, default ban on profiling for ads, Geese suggests Big Tech’s  lobbying did succeed in sewing enough FUD around the issue to create doubt in MEPs’ minds.

But she argues their spin won’t be able to survive the rising scrutiny — including from antitrust regulators interrogating the source of the adtech duopoly’s market power. So the direction of travel in the coming years looks clear.

“What the platforms manage to do was the instil the idea in people that either you have surveillance advertising or you have no advertising at all online. And that’s not true,” she tells TechCrunch. “We need some more time to show that this is not true — there’s some very good alternatives that would be even a lot better for European companies, also in terms of competition.

“We have these huge competition issues with Google and Facebook controlling in Germany and France, 70% of the market — globally a lot more — and now the people who really follow competition policy in digital markets know that, with the Texas lawsuit discoveries and so on that there’s really cartel curbing going on…. So once there’s interest for the topic you can communicate these facts but first you need to raise awareness.

“Because it’s complicated to explain and it’s not something people really feel in their daily lives, so politicians are not too motivated to look into this… And this is why this success is so important because in trilogue, the media, everyone will start talking about it, looking into it, and see how rotten the system is — and why it’s so bad for us. This is why I have quite a lot of home that sooner or later we will either have a total ban or just phase out the business model.”