27th Mar 2023

New doubts raised on tracking ads ahead of key vote

  • Investors argued that surveillance-based advertising does not add value to users, society, or the economy (Photo: Stock Catalog)
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Investors and small businesses are not as keen on tracking-based online adverts as Big Tech's lobbying efforts have claimed, new research revealed on Monday (17 January).

About 75 percent of small and medium-sized businesses in France and Germany think targeted advertising undermines peoples' privacy and other human rights, the new survey found.

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Tracking-based ads have increasingly become a source of concern for policymakers, mainly because they tend to rely on large amounts of behavioural data and invasive surveillance practices, of which the user is rarely aware.

However, Big Tech has until now been using their supposed popularity with business as part of its lobbying efforts against new rules supposed to hold online large platforms more accountable.

But the complex ecosystem of the so-called 'personalised ads' is also a problem for SMEs, who are unable to compete with Big Tech firms like Facebook and Google in the online advertising sector.

Nearly 70 percent of the business owners surveyed said they had no alternative but to advertise with these large platforms due to their dominance in the sector, while 8-in-10 felt that these companies should be subjected to stricter rules regarding users' personal data for online ads.

The survey results come ahead of this week's plenary vote by the European Parliament on the Digital Services Act, which attempts to impose stricter rules on targeted ads.

The vote represents "a vital opportunity" for MEPs to take action against advertising practices that rely on intrusive surveillance, said Claudia Prettner from Amnesty International.

But industry players such as IAB Europe and Facebook have been trying to water down the rules, by arguing that targeted advertising is key for the survival of SMEs in the digital ecosystem.

"It's been part of Facebook and Google's lobbying playbook to use small business' reliance on their services as a fig leaf to justify their invasive profiling and targeting of users for advertising," said Nienke Palstra from Global Witness.

"[But] given the overwhelming support from small businesses to regulate ad tech giants, there is every reason for MEPs to go further in the DSA and protect individuals from surveillance advertising," she added.

No added value

Meanwhile, a group of 65 investors, representing over €7.6 trillion in assets under management, have called on MEPs to prevent companies from tracking and profiling users to target them with online ads.

In a statement, they argued that surveillance-based advertising violates privacy, enables the spreading of misinformation and fuelling of hate, and does not add value to users, society, or the economy.

"This system harms human rights globally by leaking large amounts of personal data, exacerbating socioeconomic inequalities, enabling micro-targeted manipulation and even foreign interference with our democratic elections," they said.

Despite attempts from a coalition of MEPs in favour of banning tracking ads, the final report voted in the EU Parliament's internal market committee in November only introduces a ban for minors. However, it prohibits the use of sensitive personal data, such as religion or race, for targeted ads.

This issue, however, is likely to be divisive in the vote scheduled to take place on Thursday since MEPs from different political groups have tabled over a hundred amendments on the file.

NGOs, consumer groups, and digital rights organisations, for their part, have also called on MEPs to ban tracking ads in the DSA.

"The problems far outweigh the benefits," said the European Consumer Organisation, pointing out that "the time is now" to address this problem.

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 people looking to buy a car may visit.

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

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

EU lawmakers have agreed not to ban tracking-based advertising, after a lobby campaign. But experts have warned MEPs these techniques pose a risk for users' privacy rights and the EU's digital sovereignty.

EU to open up 'black box' of political ads

Paid political ads will have to show how much was spent on the ad, the sources of funds, the name of the sponsor. "Without providing this information, political advertisement will be illegal," commission vice-president Věra Jourová said.

MEPs to crackdown on digital 'Wild West'

MEPs will vote on new rules setting out transparency obligations for online players and holding Big Tech giants accountable. But some issues proved to be divisive after EU lawmakers tabled over a hundred amendments on the file.


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