On December 15, 2020, the European Commission proposed sweeping new legislation for online intermediaries: the Digital Services Act and the Digital Markets Act. In this blog: the new rules for advertising on online platforms.
The proposed Digital Services Act contains new rules to counter potentially harmful effects of advertisements on online platforms. For example, online advertising may be unlawful, as in the case of fake bitcoin ads. But the European Commission also wants to set limits on targeted advertising. The proposal for the Digital Servies Act does not yet go so far as to ban targeted advertising entirely, as had been requested by the European Parliament. However, far-reaching transparency obligations will apply.
Of note here is that the definition of "advertisement" in the Digital Services Act is very broad:
'advertisement' means information designed to promote the message of a legal or natural person, irrespective of whether to achieve commercial or non-commercial purposes, and displayed by an online platform on its online interface against remuneration specifically for promoting that information
Thus, not only commercial advertising falls within the scope of the DSA, but also non-commercial advertising. So also ads from political parties or interest groups.
First, the Digital Servies Act requires online platforms to be transparent about advertising. Online platforms under the Digital Servies Act are parties that store third-party information and make it available to others through their platform (unless that activity is only a secondary and ancillary part of the core business, such as a comment facility on a newspaper's website). So that's a very broad category of service providers.
All those online platforms should start ensuring that the recipient of the service is informed in real time that he sees an ad, who the advertiser is and what are the key parameters on the basis of which he sees that ad.
In practice, that means that every ad on, say, Facebook, Twitter or Google should be accompanied by the recipient's key profile characteristics. For example, it should include that a recipient will see an ad for an electric cargo bike because he is a man between 30 and 40, has two children, lives in Amsterdam and is interested in renewable energy, to name a few. However, it will also have to be transparent that someone will see an ad from the Virus Truth Foundation because they live in a certain neighborhood, have liked certain posts on Facebook and have searched Google for information about vaccinations and coronasteun measures. In short, the recipient should at least be given the opportunity to gain insight into the filtering bubble they are entering, which is formed in part by paid advertisements.
Related to this is the requirement for the very large online platforms to be transparent about "recommender systems." These are systems based on which the platform determines what content you get to see and in what order. Think of your timeline on Facebook or Twitter, or the order of search results on Google. The very large online platforms should also offer the ability to turn off recommender systems that are based on profiling, so that you as a user get to see the content without any automated interference based on the data the platform has about you.
This rule only applies to "very large online platforms" (the VLOPS), online platforms with an average of more than 45 million monthly active users in the EU.
For the very large online platforms, there will be an additional transparency requirement. They must start keeping online databases of all ads shown on their platforms for at least one year after the ad was last shown. Among other things, the database must show the ad itself, inform who the advertiser was, in what time period the ad was shown, based on what parameters it was shown to certain specific handles of people and the number of people who saw the ad.
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