EU Digital Services Act targets Advertising Algorithms

Jenna Lamb, online marketing analyst at Ontario SEO
Jenna Lamb
May 23, 2022
EU Digital Services Act targets Advertising Algorithms | Ontario SEO

New legislation continues to be created by governments looking to regulate the world’s tech giants. The European Union is one of the governing bodies looking to take on the challenge of enforcing policies to reduce the strength of tech companies like Google and Meta. In the last few years, they’ve crafted three major laws with the aim of gaining a grip on their power. The Digital Services Act is the latest piece of legislation and looks to regulate the use of targeted advertising, algorithms, content moderation, and more.

What is the Digital Services Act

The EU has become a leader when it comes to regulating major online platforms. Much of what becomes law not only transform policies within the European Union but impacts countries around the world. The Digital Services Act (DSA) has the possibility to reshape how people interact in the online world.

The goal of the DSA is to create tougher consequences against platforms and websites that host banned content such as hate speech and disinformation. The EU has said that they want platforms to be more transparent about their content marketing decisions, prevent misinformation from spreading, and preventing unsafe products from being offered in digital marketplaces. To achieve this, the DSA legislation would require Big Tech to explain to users, regulators, and third-party researchers how their algorithms work, including giving them access to platform data. Companies will face fines of up to 6% of their annual turnover if they do not comply.

How Could the Digital Services Act Impact Advertising?

The final version of the legislation has yet to be released but they have released information about the obligations within the policy. These obligations can transform how digital advertising currently operates.

One of the obligations included is a ban on specific types of targeted advertising. The DSA would look to stop all advertising based on a person’s religion, sexual orientation, or ethnicity. It would also include excluding minors from any targeted advertising. The EU considers this to be ‘sensitive data’ and cannot be used to create advertisements.

Another obligation is prohibiting the use of “dark patterns”. They define this as confusing wording or deceptive user interfaces that steer people into making specific choices on a website. Long terms and conditions, consent forms, or pop-boxes are examples of what they consider to be “dark patterns”. The legislation would look ban making consent options more visually prominent, repeatedly ask for consent, urge users to change settings, or make it difficult to cancel services.

Why We Care

This isn’t the first or the last time we will see legislation that looks to target Big Tech and to regulate the online experience. The major platforms have already limited targeting options in accordance with the proposed legislation. While the legislation has yet to be law, tech companies have also been lobbying heavily against the DSA, looking to dilute the requirements and obligations.

While the terms have already been agreed upon by the EU, the language still needs to be finalized and that is where companies like Google and Meta will be pushing hard against. And arguably rightfully so – we can’t imagine Google giving up its secretive algorithms easily! The impact of losing targeted advertising would also significantly change the way that platforms like Facebook and Instagram deliver ads to users.

The online landscape is constantly evolving, and we’ll be paying close attention to any amendments or changes to the current Digital Services Act. Working with a digital agency that seeks out new digital advertising strategies is beneficial so that you can keep up with the changing atmosphere. Reach out to us today to discover how we can help.