Experts warn MEPs on tracking ads: 'Don't be fooled'

The internet has drastically changed the advertising industry. What used to be a simple interaction between a publisher and an advertiser has now become a complex and dynamic ecosystem, full of intermediaries, such as ad-exchange platforms, or supply-side platforms, who facilitate real-time transactions to push a message onto users' screens.

A coalition of MEPs has been trying to mobilise support for a ban on behavioural tracking-based advertising, under amendments submitted to the Digital Market Act – a landmark piece of legislation setting a list of 'dos' and 'don'ts' for the biggest online platforms, such as Google or Facebook.

They believe that a system where huge amounts of personal data are for sale to the highest bidder, in a highly-opaque market, breaches users' right to data protection and privacy.

The selling technique actually uses huge amounts of users' data to display online ads, including the individual location, gender, income, religion, political views, sexual orientation and even whether someone is the parent of a child with special needs.

Lobbying scare tactics

However, progressive MEPs failed to convince liberal and conservative lawmakers, who fear that a total ban could be disproportionate.

Under a compromise reached on Wednesday (17 November), EU lawmakers agreed not to ban this advertising technique. Instead, they introduced stricter rules to protect minors, and impose limits to data-processing when it comes to religion, race, trade union membership, and other sensitive data.

Facebook is still tracking and collecting teenagers' personal data for ads on its social media platform, according to new research – contrary to the social media giant's claims it will end this practice. In the past, the tech giant has been accused of targeting teens with with weight-loss and gambling ads on its social media.

Earlier this month, IAB Europe, representing the digital advertising and marketing ecosystem, launched a campaign against the ban on targeted advertising, arguing that such move would penalise SMEs in Europe.

However, according to Jan Penfrat from European Digital Rights, this is just "a scare tactic". "Don't be fooled," he told MEPs during a hearing on the matter on Friday.

"As long as advertising is based on personal data, Google and Facebook will have the upper hand because they have already historically collected this huge amount of data," he argued.

An alternative to targeted ads is known as "contextual ads" – which, instead of the user, focus solely on the content of webpages. So, for example, a car insurance advert would be displayed on webpages that car shoppers may visit.

Contextual ads to reach €365bn by 2025

According to Erik Bugge, CEO of a European startup on contextual advertising called Kobler, these alternative techniques can be a real solution to enhance transparency.

"Contextual ads can solve the opacity problem… and the harm caused by the inherited black-box nature of behavioural targeting that has tricked advertisers into funding ad fraud and misinformation on the internet today," he told MEPs.

He also argued that the IAB's arguments are misleading because "an unprotected data-driven market will tend to [benefit a] few dominant players".

This is partly illustrated when, for example, SMEs give Google and Facebook data on their customers, and these tech giants use such data to also run ads for their competitors.

Bugge urged MEPs to limit the data that the dominant players have access to, arguing that "if they continue like now, where they have access to everything, they will screw European SMEs".

Privacy advocate Johnny Ryan, for his part, also warned EU lawmakers: "You can have targeted [ads] without having tracking. But the industry that makes money with tracking wants you to think otherwise".

It is estimated that a ban on targeted ads could put at risk €6bn of advertising income for app developers.

Meanwhile, contextual advertising market worldwide is projected to reach $412bn [€365bn] by 2025 as the industry is moving away from intrusive techniques.

MEPs in the internal market committee are expected to adopt their official position on the Digital Market Act on Monday (22 November).