Campaign against targeted ad spills over the DMA amid business concerns

By cutting back on political content, Facebook is taking the responsibility to further distort political competition in countries like Hungary, where media pluralism has been severely hit by the ruling parties. Such a move could help Prime Minister Viktor Orbán secure another term in power, argues Anna Donáth. [Shutterstock]

A push by some EU lawmakers to ban targeted ads has entered the debate around regulation zooming in on Big Tech, with several business representatives voicing their concerns.

The trade organisation Connected Commerce Council criticised on Monday (23 August) the Green MEPs who had advanced a proposal to limit targeted advertising online, arguing that a ban would particularly harm small businesses by reducing the effectiveness and raising the costs of advertising.

Targeted advertising, including its fast-growing online form, allows marketers to target consumers with ads that reflect their specific interests and shopping behaviour.

The Green lawmakers have been among those spearheading the debate on curtailing targeted ads, gathered around the Tracking-Free Ads Coalition, which hosts MEPs from several political groups.

The latest initiative consists of an amendment to the Digital Markets Act (DMA), a landmark legislative proposal aimed at regulating large tech companies.

“Digital advertising is the single most important marketing tool for countless European small businesses. With limited budgets, targeted ads allow small advertisers to find potential customers easier and cheaper than ever before,” said Brandon Mitchener, an adviser to Connected Commerce Council (3C) Europe.

“Eliminating this valuable small business tool will only benefit big companies that already have brand recognition and can afford to spend millions of euros on mass media advertising,” Mitchener added.

Vested interests

3C states it defends the interests of its members, including 1,800 small businesses from 17 European countries. However, the company declined to provide a full list of its member organisations.

Margarida Silva, researcher and campaigner at Corporate Europe Observatory, criticised 3C for lacking transparency and for not being registered as a lobby in the EU’s Transparency Register.

“The 3C is trying to influence EU politics while shirking its lobby transparency rules. If an organisation claims to represent 1,800 small and medium-sized firms then they, at the very least, ought to be able to disclose who those members are.”

“MEPs and other EU officials need to be able to know exactly whose interests are being represented by the organisations that try to influence them,” Silva said.

Facebook and Google, the world’s largest online advertisers, feature as partners on the 3C’s website, as its declared intent is to connect small businesses to platforms that enable them to sell their services.

In 2019, Campaign for Accountability, an American NGO behind the Tech Transparency Project, accused 3C of masking its real intent, presenting the concerns of small companies while in fact advancing the interests of Big Tech. A 3C spokesperson told EURACTIV its positions are always approved by its members.

Business concerns

Magdalena Piech, chair of the European Tech Alliance (EUTA), gathering companies established and grown in Europe, echoed at least in part 3C’s concerns.

“A blanket ban on any form of ‘personalised advertising’ would cause more harm than good to consumers, European digital businesses, media groups, publishers and advertisers,” she said.

Media sector fears EU ban on targeted advertising

Media representatives fear a ban on targeted advertising would undercut their business model already hurt by the COVID crisis, with potentially dramatic consequences for media pluralism.

While agreeing that advertising should respect consumers’ rights, comply with EU privacy law and other relevant legislation, Piech said that “in-depth discussions on the matter will be needed to avoid overlaps and inconsistencies, bearing in mind the rights and needs of all interested parties.”

A more cautious position was expressed by Sebastiano Toffaletti, secretary-general at the European DIGITAL SME Alliance.

“We are rather critical of the downsides of the ad-based business models of the large players, but of course, it is important to consider the implications of a ban of a targeted advertisement on small businesses and the internet-reliant businesses overall.”

Toffaletti noted that the complexity of the issue would require an in-depth study to understand the full effect of the provisions on small companies.

Upcoming negotiations

Andreas Schwab, the DMA lead negotiator in the European Parliament, noted that the amendment in question does not propose a general ban on targeted ads, it would rather seek to prevent the gatekeepers, very large online platforms, from leveraging their market power for targeted advertising across different services.

The amendment would therefore strengthen a key obligation for gatekeeper platforms, which forbids them to combine the personal data collected through its different services without the explicit consent of the user.

Within this framework, for example, Instagram would not be allowed to share personal data with its parent company Facebook, nor YouTube with its owner Google.

Alexandra Geese, one of the Green MEPs leading the charge against targeted ads, argues that “many small and medium-sized businesses suffer heavily from the duopolistic structure of the internet and the lack of alternatives in digital advertising.”

“A ban of targeted advertising is a first important step to give customers a real choice and small and medium-sized business a real chance to compete in the digital realm,” Geese added.

Schwab said he still needs to complete the review of the 1,200 amendments to the DMA but specified he opposes a general ban on targeted ads, which the Tracking-Free Ads Coalition is trying to advance in the context of the Digital Services Act.

Leading MEP's bid to 'take back control of Big Tech'

The EU lawmaker responsible for the Digital Services Act (DSA) deems the landmark legislation will provide a “democratic rulebook for online platforms”, and indicates consumer protection and product safety as the red line for future negotiations.

[Edited by Zoran Radosavljevic]

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