At a recent “European Roundtable on the Benefits of Online Advertising for Consumers”, Neelie Kroes, VP of the European Commission responsible for the Digital Agenda, pronounced on the hotly debated issue of whether new EU cookie laws due May 2011 will mean “opt in”. Goetz Brandau, Legal Affairs Manager of the Federation of European Direct and Interactive Marketing Agencies interprets.
Topic: Online advertising
Who: Neelie Kroes, Vice President of the European Commission responsible for the Digital Agenda
Where: "European Roundtable on the Benefits of Online Advertising for Consumers" organised by IAB Europe in Brussels
When: 17 September 2010
Law stated as at: 30 September 2010
Commissioner Kroes held a keynote speech at an event in Brussels, where the IAB Europe presented the results of a study that measures the economic benefits of online advertising for consumers. She discussed the important role of online advertising in the digital society, but also raised concerns about the need for a balance between commercial interests and privacy interests of users with regard to the targeting of online advertising.
She recognised that privacy is not an “absolute value” and that privacy regulation should also be mindful of the health of the digital environment, but at the same time stressed the importance of maintaining a balance between protecting personal data of users, and supporting the development of innovative online services that are funded by advertising. Ms. Kroes raised strong reservations about the surreptitious tracking of consumers on the internet and called for clear rules that allow the online tracking of user behaviour as long as it is respectful of user privacy.
Nevertheless Ms. Kroes reassured industry representatives that their interests will be taken into account when implementing and applying the ambiguous provision on consent (Article 5.3 of the amended Directive 2002/58/EC). She remains convinced that applying the clause in a balanced way will not threaten “the advertising business itself”.
Potential major role for self regulation but work needed
Commissioner Kroes is willing to work through self-regulation to ensure a harmonised implementation and application at the national level. The implementation process would take into account business interests, on the condition that the self-regulation is clearly based on applicable EU legislation. Ms. Kroes challenged the industry to deliver solutions that provide users with a choice whether they want to be tracked or not. She specified that a self-regulatory instrument would have to include four elements in order to be deemed acceptable:
- Clear notice about targeting activity, to ensure effective transparency
- An “appropriate form of affirmation” which shows that the consumer accepts targeting
- A user-friendly solution to deliver information to the consumer, which could be browser-based
- Effective enforcement that includes complaint handling, third party compliance auditing and mechanisms for sanctions.
The Commissioner expressed her appreciation for the clear commitment she received from the online advertising industry to develop self-regulation, but the ideas she has seen so far do not meet her expectations. If the industry does not manage to deliver a reliable self-regulatory instrument that meets the Commission’s expectations, the Commission will use a more interventionist approach.
Why this matters:
The Commissioner’s speech is the first official indication that the Commission is willing to show some flexibility in interpreting the ambiguous “consent”-requirement which was added to Article 5.3 of the e-Privacy Directive. The Commission now recognises the need to find a balanced solution which respects users’ rights to privacy and data protection, but also takes into account the needs of the online advertising industry, which is funding the abundance of services on the internet that are available to users free of charge. This commitment to “find a middle way” gives reason for hope that the Commission is open to support pragmatic solutions rather than a general, dogmatic opt-in requirement for cookies.
The two most important statements by the Commissioner are her strong interest in consistent implementation of the cookies clause across the EU Member States, and her support for self-regulatory solutions. The Commission seems to understand the importance of ensuring that the regulatory approaches on targeting and online advertising in the different EU Member States do not contradict. The same goes for an alignment of approaches taken in the EU and the USA, where new legislation to regulate online tracking is under discussion. In order to reach a more consistent regulation of the online environment, such a trans-Atlantic dialogue must be welcomed. The Commissioner’s statement on self-regulation is a strong signal that the Commission is willing to develop solutions with the industry, and that the Commission is aware of the damaging effect that an unsophisticated approach to the cookies problem could have on the online industry at large.
In her speech the Commissioner went on the public record signalling the Commission’s support for using a self-regulatory instrument to develop processes that meet these requirements. However, this invitation to develop a self-regulatory solution is attached to tough conditions. The Commissioner established four conditions that a self-regulatory instrument will have to fulfil in order to be considered acceptable, including an “appropriate form of affirmation” on the part of the user. The most difficult part will be to meet the Commission’s expectations for an effective enforcement mechanism, considering that enforcement should work on a pan-European basis and that the deadline for implementation of the Directive ends in May 2011.
In summary, the Commission understands the value of self-regulation and is willing to support a self-regulatory solution to solve the cookies dilemma. Such support could be provided in the Commission’s guidance to the Member States on the implementation of the revised e-Privacy Directive, which is due shortly. However, industry will have to earn this support by convincing the Commission that industry will be able to meet the Commission’s expectations. Beyond the discussion of what constitutes an “appropriate form of affirmation”, the greatest challenge is to develop a functioning enforcement mechanism with effective sanctions within a very short timeframe.
A link to the IAB's announcement of the study shared with the Commission is here.
The text of Ms Kroes's speech is here.
Legal Affairs Manager
Federation of European Direct and Interactive Marketing (FEDMA)