Consumer groups in both the US and EU have claimed that internet users are being cheated by digital advertisers and the light touch self-regulation of online behavioral advertising.
Today (14 September), regulatory advisers and advertisers will be meeting in the Hague to discuss recent efforts to stem potential data breaches as a result of online behavioral ads.
Data protection authorities have long eyed the complex practice of behavioral advertising with suspicion. Many web company profits are widely reliant on the practice, which involves providing users with ads based on their web surfing.
The information is gathered by cookies which are kept in a user's browser to help them log in to email faster, by remembering the username and password, for example.
"You cannot stop behavioral advertising because it is too important for online publishers, to name just one example," Kimon Zorbas, vice-president of the Interactive Advertising Bureau (IAB), told EURACTIV.
Though consumer groups accept that advertising generates valuable profits, they have come out in force against the industry's mode of regulation: currently embodied by a little known icon which, according to the IAB, as yet has no name.
"Consumers who may click on the icon are initially dissuaded from taking appropriate measures to safeguard their privacy, as they confront an array of information that online profiling is primarily about providing them with 'appropriate' advertising, is non-personal, and supports their access to a 'free' Internet," goes the argument of the Transatlantic Consumer Dialogue (TACD), forum of US and EU consumer organisations.
The group adds that research shows that users rarely click on the icon which is designed to help them choose how their data is used. In addition of the few who click, only 3% then decide to opt-out.
The IAB admits that the icon's take-up is an issue and that they are working on getting more companies involved. Large companies like Yahoo! and Google use the icon, though in this example (please click) it is barely visible.
"This is an unwelcome panacea. Concerns as to how Internet users are followed online are both fast-growing, legitimate and remain unaddressed. The EU should not accept the advertising industry's attempts to redefine people's Internet usage as 'non-personal data'. It's certainly personal and a clear line should be drawn, as this billion dollar industry is now the currency of the Digital Age. The current icon programme gives a false impression of fairness," said Monique Goyens, director-general of the European Consumers' Organisation (BEUC).
"Industry research conducted on the icon-based programme already demonstrates that very few users ever click on it, let alone decide to opt-out. Yet the icon is the foundation of what's supposed to be a robust programme of 'best' practices that can effectively empower users to make critical choices about their online privacy," said Julian Knott, head of the secretariat at the Transatlantic Consumer Dialogue (TACD).
"The mechanisms proposed by the EASA/IAB Code enable people to object to being tracked for the purposes of serving behavioral advertising. However, tracking and serving ads takes place unless people exercise the objection. While this mechanism is welcome and constitutes an improvement to the current situation, it does not meet the requirement to obtain the aforementioned informed consent," reads a letter written by Dutch regulator Jacob Kohnstamm representing the regulatory consortium, the Article 29 Working Party.
In defence of the industry's efforts to self-regulate using the AdChoices icon, industry sources said the following:
"This new approach fits in with the needs of today's Internet users: information is provided contextually where relevant and is instantly available. We use the dynamism and interactivity of the Internet to provide pragmatic privacy control for OBA", said Stephan Noller, the CEO of nugg.ad and chair of IAB Europe's Policy Committee.
Angela Mills Wade, executive director of the European Publishers Council and vice-chairman of European Advertising Standards Alliance, added: "Our self-regulatory initiative should be viewed as part of an overall set of several measures to implement Article 5.3 of the revised ePrivacy Directive. Some of these measures will be statutory and others self-regulatory which together will ensure an overall package of compliance."
According to a recent paper, the European Commission is gearing up for a crackdown on how web companies, in particular social networking sites such as Facebook and online advertising firms, use citizens' private data.
Citizens should be kept informed of "what their rights are if they want to access, rectify or delete their data," according to the paper, entitled 'A comprehensive strategy on data protection in the European Union'.
Behavioural advertising, when an individual's browsing history is used to better match advertorial materials with consumers, is also highlighted as a practice that needs stricter rules.
Industry sources argue that cookies are instrumental in their business models and that the Commission should avoid inventing burdensome consent or privacy notices that could hamper their business practice.
- European Commission:Protection of personal data [FR] [FR] [DE]
- Article 29 Data Protection Working Party:Letter to IAB and EASA(3 Aug. 2011)
- Article 29 Data Protection Working Party:Opinion 2/2010 on online behavioural advertising(2 June 2010)
- European Network and Information Security Agency (ENISA):Bittersweet cookies: Some security and privacy considerations(2 Feb. 2011)
Business & Industry
- European Advertising Standards Alliance (EASA):Meeting with Article 29 Working Party delegation(16 Sept. 2011)
- IAB Europe:Europe’s data privacy regulators’ latest opinion on cookies is out of step with online businesses and their consumers(22 June 2010)
NGOs and Think-Tanks
- EURACTIV Czech Republic:Spot?ebitelé brojí proti cílené online reklam?
- New Yor Times:Less Web Tracking Means Less Effective Ads, Researcher Says
- Wired:Privacy groups: behavioral opt-out system "insufficient and ineffective"
- USA Today:Ad industry's do-not-track plan blasted by consumer groups
- Tech Crunch:Stupid EU cookie law will hand the advantage to the US, kill our startups stone dead