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Agency Business Agency Models Regulation

How new European tech laws could affect your marketing business

July 25, 2022 | 9 min read

New European tech laws will affect the way marketers and agencies operate within the EU, writes Dept’s Willem Blom. Here’s how.

EU flags flutter in a line

The introduction of these new laws has set Europe as the first single digital market in the free world / Unsplash

The European Parliament has approved the Digital Markets Act and the Digital Services Act – two new laws that will place tough constraints on how big tech brands such as Apple, Amazon, Alphabet and Meta tackle competition and handle user data.

The laws aim to create a safer digital space where the fundamental rights of users are protected, and to establish a level playing field for businesses in the European Single Market and globally. This is the first official legislation around the globe that aims to regulate big tech in such a big way.

While the new laws are targeted mainly at ‘very large’ platforms and tech giants, there will be repercussions for those businesses that utilize the platforms for advertising purposes.

What does this mean for marketers?

The DSA bans targeted advertising on online platforms by profiling children, or based on special categories of personal data such as ethnicity, political views or sexual orientation.

As of 2021, advertisers on Meta, Messenger and Instagram were no longer able to target teens based on their interests. But businesses could still target ad campaigns to people 18 years and under based on age, gender and location. On TikTok, you cannot target those under the age of digital consent, which differs per country (it’s 16 in the Netherlands and 13 in the UK). According to the platform, it was never possible to target specifically based on profiling such as the sexual orientation listed in a profile or political preference. However, advertisers could target you based on your interests, for example ’LGBTQ+ rights.’ Also, as of 2021, advertisers on Meta were no longer able to target these sensitive interest categories.

The new law will limit the possibilities of targeting children, or based on special categories of personal data. Depending on the type of organization you are, this may have a big impact on your advertising possibilities. When your target audience is minors (for example, e-commerce focused on younger people, theme parks or even recruiting focused on student jobs), it will no longer be possible to target specifically for your target audience. This will most likely have a big impact on the effectiveness of your online campaigns.

For political parties and their online advertising, it will become harder to specifically target based on political views. This is a topic that is hotly debated leading up to many elections already. It’s important to note that in this specific case, the EU bans profiling users based on their political views – but we know that in the US, Meta’s user interests were indirectly used as a proxy for politically- or racially-targeted advertising.

The DSA also bans the use of so-called ‘dark patterns’ on the interface of online platforms, referring to misleading tricks that manipulate users into choices they do not intend to make.

The law means that it cannot be harder to refuse than to accept tracking and personalized ads. Changes in user experience (UX) and visual design, for example changing the ‘accept all’ button to green, are also called ‘dark patterns’ and are no longer allowed.

Note that this legislation focuses on ‘very large platforms’; those that reach over 10% of the total 450 million consumers in Europe. For most organizations, that doesn’t directly create the obligation to change their own consent. However, once platforms such as Meta, TikTok and Google are forced to ask for consent to be tracked, you’ll see that the number of users accepting these terms will decrease. (FYI, platforms cannot refuse their services to those who do not consent).

Although this won’t have a direct impact on most businesses, they will have to accept that there will be a larger group of people that can not be targeted based on user data. In the long run, this may even change their business model.

What changes for gatekeepers?

The DMA stipulates that gatekeepers must not:

  • Treat services and products offered by the gatekeeper itself more favorably in ranking than similar services or products offered by third parties on the gatekeeper’s platform

  • Prevent consumers from linking up to businesses outside their platforms

  • Prevent users from uninstalling any pre-installed software or app if they wish to do so

  • Track end users outside of the gatekeepers’ core platform service for the purpose of targeted advertising, without effective consent having been granted

More specifically, the DMA states that different messenger services are to be connected to each other, meaning that you can send a message from Facebook Messenger to Signal, or from iMessage to Telegram. This part of the DMA is heavily criticized, as the technical feasibility of connecting these services together is low; there is no protocol like there is for email (smtp) or phone (ss7). However, legislation isn’t meant to be a technical requirement, and this type of legislation will keep everyone on their toes.

Lastly, the DMA mentions that users outside of the gatekeeper’s platform can no longer be tracked without effective consent. The interesting twist here is ‘consent.’ Under GDPR, consent was already necessary to track users online. You can therefore argue that nothing will really change. For many of these platforms, it’s already practically impossible to continue using their services without giving the right levels of consent. However, we need to see this in the context of the DSA as well. The combination of DSA and DMA could potentially mean that online platforms such as Meta’s Facebook and Google will no longer be able to create these enormous datasets based on personal and interaction data that can be used for targeting ads.

The DMA also requires gatekeepers to be more transparent toward their business users. For example, this means that Meta and Google will need to provide more information on the ads and campaigns their business users run. So, your business won’t have to rely on inaccurate or opaque reports, but instead have access to in-depth data that is created via your campaigns.

Additionally, gatekeepers are no longer allowed to self-preference their products on their platforms (for example, if you’re searching for a voice assistant on Google search, Google isn’t allowed to place its Google Home in the first ranking). This is an obvious bonus for any smaller companies offering similar solutions.

What to do now?

If you’re considered a gatekeeper (DMA), intermediary service, hosting service, online platform or very large online platform (DSA), changes will come your way. What exactly will change depends on the kind of service you offer or the kind of platform you run.

All other businesses will not be directly impacted by this new legislation, but will most certainly face indirect consequences. The most obvious impact is the restrictions of these platforms to target advertisements in a personalized way. Mitigating the implications of DSA and DMA is somewhat similar to the strategies we advise our clients to take to tackle the loss of cookies. Relying on these platforms to help you find your target audience isn’t a smart way to move forward. Instead, build your own robust first-party database and start investing in contextual advertising.

The first single digital market

There’s no doubt that this is a historic moment in digital regulation; the introduction of these new laws has set Europe as the first single digital market in the free world. While, in practice, GDPR and Intelligent Tracking Prevention (ITP) have already limited the possibilities to target users specifically based on their data, the introduction of DMA and DSA brings clear regulatory monitoring and punishments for non-compliance.

While the implications of the new legislation will be most intensely felt by the tech giants, the ripple effects will undoubtedly be felt across all organizations utilizing their platforms. Plus, it’s only a matter of time before smaller parties will also have to follow these regulations, so be advised to start following the same ‘consent rules’ that the tech giants are being given now.

While there will be challenges for businesses to overcome, establishing a framework to protect the fundamental rights of users and ensure fair commercial competition can only be a good thing for both the consumers and businesses of today and tomorrow.

Willem Blom is global senior vice-president growth of Dept.

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