New EU big tech regulations target online advertising

New technology regulations passed in the European Union targeting large technology companies could also affect the advertising practices of other companies that rely on these platforms.

The EU’s legislative body, the European Parliament, passed the Digital Markets Act (DMA) and the Digital Services Act (DSA) on Tuesday. Lawmakers have spent months working on the two sweeping tech regulations to address concerns about the power of tech companies like Google, Apple and Amazon and their data collection, use and sharing practices.

The DMA focuses on competition and prohibits tech giants from ranking their own products and services more favorably on their platforms than third-party products, as well as from processing users’ personal data for the purpose of targeted advertising. The DSA targets social media companies and the dissemination of illegal content and misinformation online. It also focuses on advertising, banning advertising based on sensitive data such as race or religion, and requiring platforms to provide transparent explanations to users about why they see certain ads.

The The new EU rules affect not only the tech giants they cater to, but also commercial organizations and their ability to use tech platform vendor data for advertising purposes, said Paul McKay, principal analyst at Forrester.

McKay said not having access to sensitive data will challenge direct marketing efforts.

“This is a potentially huge change for CMOs, and it is only with the implementation of the law that the day-to-day realities will become clearer,” he said in a statement.

Changes in company advertising practices

Technology regulations will require companies to obtain clear consumer consent before selling or sharing data with companies like Google or Amazon, which the laws call “gatekeepers”.

The tech regulations aim to close what Forrester analyst Stephanie Liu called a “consent loophole” for tracking and data use that resulted after the General Privacy Regulation took effect. data (GDPR) from the EU. The GDPR required companies to obtain user consent before using cookies, which are small text files that online advertisers can use to track user activity.

However, while the option to accept cookies is clear when visiting a website, the option to disable cookies is much more difficult.

The new laws mean that marketers and businesses “need more consumer consent to do things they previously could have done without consumer permission, and the way they ask for that permission is becoming more stricter,” Liu said.

Liu said the DSA would also require companies to explain to consumers why they see certain advertisements. Facebook owner Meta, for example, already offers a feature that lets consumers understand why they see particular ads.

Liu said this kind of requirement for the open web could get tricky and raise questions.

How much of your ad targeting would you be okay with for a consumer to see?

Stephanie LiuAnalyst, Forrester

“How much of your ad targeting would you be okay with for a consumer to see?” she says.

Ultimately, the adoption of DMA and DSA “signals a marked shift in the relationship between consumers, large technology platforms, and the business organizations that depend on them,” Forrester’s McKay said.

“This change has the power to act as a blueprint for how governments and regulators around the world can empower consumers to avoid some of the imbalances and dominance that have become normal in the tech industry. over the past few years,” he said. .

Makenzie Holland is a news writer covering big tech and federal regulation. Before joining TechTarget, she was a generalist journalist for the Wilmington StarNews and crime and education reporter Wabash Plain Dealer.