EU Proposes New Rules That Could Limit Web Tracking for Ads
January 10 2017 - 8:09AM
Dow Jones News
By Natalia Drozdiak
BRUSSELS--The European Union has proposed new rules that would
curb how companies like Alphabet Inc.'s Google and Facebook Inc.
track users to deliver targeted ads, introducing legislation that
could reduce a key revenue stream for online advertisement
companies and other website publishers.
The European Commission, the bloc's executive arm, Tuesday
proposed rules that would require users to actively consent to the
use of cookies: tiny pieces of code deployed on web browsers that
track individuals' online activity.
The commission said the draft rules are to protect user privacy
and provide more transparency about how companies use individual's
data. Around 80% of Europeans say it is important that tools like
browser cookies are only allowed with the user's permission,
according to the EU.
"Transparency is important. People must know whether information
stored in their devices is being accessed or whether their online
behavior is tracked," the European Commission said in a press
release.
When installing a browser or any other software permitting
electronic communications, users would have to choose whether to
allow or reject the tracking for advertisement purposes before
continuing with the installation.
The settings, which could be changed at any time, would take
precedence over any individual consent granted to Google or
Facebook via a privacy-policy agreement.
If users reject the tracking, they would still see ads
online--but the ads wouldn't necessarily be personalized to cater
to users' interests. Still, the measure could deal a blow to
tech-ad giants that charge a premium for adverts that are targeted
at individual users based on the reams of user data they hold.
Currently, web users in Europe have to click through banners
displayed on individual websites asking for consent to cookies the
first time they visit a site. The commission says the new rules
would offer "an easy way to allow or refuse cookies."
But the proposals may prompt companies to display pop-ups asking
users to switch their settings to allow tracking before they can
continue using the services.
The EU's rules come at a time when the digital ad industry is
growing in Europe. Last year, digital ad spending reached around
$35 billion and is set to grow to $45 billion by 2020, according to
market research firm eMarketer. While it is unclear how much of
that revenue comes from targeted online ads, if a significant
number of users opt out of those premium ads, it could hit the
bottom line for big online ad brokers like Google and Facebook.
In a minor victory for the industry, the commission watered down
parts of the proposal from a previous draft that would have
defaulted the user's settings to reject the tracking if a choice
wasn't made when prompted.
Tuesday's proposal would replace a directive, which provides
guidelines to member states on how they should implement rules,
with a regulation that would be applied the same way in all 28
member states.
The proposed legislation enshrines the guaranteed privacy of
communications--both in content and metadata--which provides
information on the location and duration of phone calls and
messages. The rules are designed to complement the EU's broader
data-protection regulation, which regulates privacy around personal
information but doesn't specifically deal with privacy of
electronic communications.
The proposed regulation would also extend the scope of the rules
beyond telecom providers to also guarantee privacy of
communications on internet services such as Facebook Inc.'s
WhatsApp and Microsoft Corp.'s Skype.
The commission's proposal is now up for debate with European
lawmakers and member states, where the proposal could be amended
before it is formally adopted. The commission says it hopes the
rules are formally adopted by May 2018, when the EU's other data
protection regulation will enter into force.
Sam Schechner contributed to this article.
Write to Natalia Drozdiak at natalia.drozdiak@wsj.com
(END) Dow Jones Newswires
January 10, 2017 07:54 ET (12:54 GMT)
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