By Mark Scott
LONDON — Europe is taking aim at the lifeblood of firms like Google and Facebook — online ads that track people around the internet.
In the latest salvo, a group of EU lawmakers backed proposals this week to phase out so-called targeted advertising when Brussels unveils an overhaul of its digital rulebook in early December.
Such a move — if supported by the European Commission — would effectively stop a firm like Google from showing web users ads based on personal profiles as they roam around the internet. In short, cutting off a key source of revenue at the heart of Big Tech's business model.
Silicon Valley can rest easy for now. The amendment in question was not binding, and a ban on targeted ads remains fairly remote. But the vote was a shot across the bow for tech companies and publishers who also rely on such ads at a time when regulators are turning up the heat on the online ad business.
It also raises a tricky question — not just for tech companies but for everyone who relies on free internet services provided to them (think, Google Search and Instagram posts) in exchange for personal data: If we put a stop to online ads, who will pay for the internet as we know it?
EU regulators are not letting such questions slow them down.
Earlier this month, Belgium's privacy watchdog published preliminary conclusions on online advertising in Europe, saying that it likely broke the 27-country bloc's tough data protection standards. IAB Europe, an industry body that oversees these so-called ad auctions, or sophisticated online bidding marketplaces that allow advertisers to place their messages on websites, said that it disagreed.
In Ireland, the country's investigation into Google's own advertising tools — and how they handle people's data — is more than 18 months in the making, and mirrors complaints filed with counterparts in Belgium.
In the United Kingdom, a scathing report published last year by the Information Commissioner's Office into how the advertising world played fast-and-loose with people's digital information has sat on the shelf after the agency said it had postponed its ongoing investigation into the sector because of complications caused by the COVID-19 pandemic. Still, the country's competition authority — whose own report from this summer painted a similarly dire picture of how online advertising worked — will submit its recommendations for a new regulatory regime to British politicians sometime in December.
Not to be outdone, Germany's federal competition authority — an agency that has often led the charge in clipping Big Tech's wings — is almost two years into a separate investigation into how a few companies dominate online advertising, and if their practices of data collection fall afoul of the country's rules. Soon-to-be-completed updates to EU-wide privacy standards, known as the ePrivacy Regulation, will similarly make it more difficult to use people's online information without their explicit consent.
In part, the update can not come soon enough.
Anyone who has seen the same online ad follow them around multiple websites knows that the current system can be creepy. In opaque (and automated) online bidding auctions, traditional advertisers, adtech companies and Big Tech giants routinely share people's often highly personal data in ways the average internet user has little control over. That is not exactly kosher under Europe's privacy standards, the General Data Protection Regulation.
On top of that, the dominance of a few companies whose ability to leverage global scale, access to large amounts of personal information and legal firepower to comply with privacy rules has made it almost impossible for rivals to offer alternatives to the status quo, according to the recent U.K. competition authority's report into online advertising. Even if someone wanted to build an internet not reliant on personal data, it would be almost impossible to gain a beachhead.
And yet, what many of these regulatory and legislative moves have not considered is what happens if this whole online advertising world is shut down overnight — or changed beyond recognition.
There's a legitimate argument, particularly in the age of COVID-19, that companies like Amazon, Google and Facebook have become quasi-public utilities, providing essential services that should be offered free of charge, and not dependent of the handing over of large amounts of personal data for uses that are often beyond the average person's comprehension.
But these businesses (now some of the most valuable in the world) also provide services that billions of people use on a daily basis. Study after study suggests that most are still comfortable with handing over their data in exchange for access to a social network, digital map or online marketplace, often served up with tailored ads that shows them goods they actually might want to buy. Few, if any, are willing to fork out the significant amounts of money required to pay for alternatives that are not funded, in some way, through advertising.
There's definitely an information gap between the reality and people's knowledge of how the online advertising industry works. If individuals were fully aware of what's going on in this somewhat murky industry, it's possible they would be less inclined to fill in online forms with their details.
But if regulators and lawmakers really want to reinvent a business model for the internet — one not fueled by people's personal information in an industry dominated by a few global giants — someone needs to spell out what that alternative might be.
It's one thing to highlight the legitimate problems inherent in how the internet currently works. It's another to offer a realistic alternative. And so far, that has been lacking — and is urgently required before how the digital economy, as we all know it, is irrevocably changed for good.
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