What impact will the Digital Services Act and Digital Markets Act have on your business?

While the new laws will primarily target “very large” platforms and tech giants, there will also be consequences for companies that use the platforms for advertising purposes.

Prohibition of targeted advertising to minors and through profiling of special categories
The Digital Services Act prohibits targeted advertising on online platforms for children. It is also controversial to use special categories of personal data such as ethnicity, political opinions and sexual orientation.

From 2021, advertisers on Meta, Messenger and Instagram could no longer target teenagers based on their interests. But the companies could still targeting ad campaigns to people aged 18 and under based on age, gender and location. TikTok does not allow you to target people under the digital age of consent, which varies by country (eg 16 in the Netherlands, 13 in the UK). According to the platform, it was never possible to target specifically based on profiling, such as the sexual orientation of a profile or political preference. However, advertisers may target based on your interests, for example “LGBTQ+ rights”. Also from 2021, advertisers on Meta could no longer target these sensitive interest categories.

The new law limits the possibilities of targeting by age and special categories of personal data. Depending on the type of organization, this can have a big impact on advertising opportunities. When the target group is minors (e-commerce aimed at young people, amusement parks or recruitment aimed at student jobs), it will no longer be possible to target that target group specifically. This will have a big impact on the effectiveness of online campaigns.

It will become more difficult for political parties and their online advertising to target specifically based on political views. It is a topic that has already been hotly debated leading up to many elections. In the EU, profiling users based on their political views has long been prohibited, but we know that in the US, Meta’s user interests were indirectly used as a proxy for politically targeted advertising.

Ban on dark patterns
The new legislation also bans the use of so-called “dark patterns” on online platforms, which refer to deceptive tricks that manipulate users into choices they do not intend to make.

The law means that it should not be more difficult to refuse than to accept tracking and personalized advertising. Changes to UX and visual design, for example changing the ‘accept all’ button to green, are known as ‘dark patterns’ and are no longer allowed.

It is important to note that this legislation targets “very large platforms”. That is, platforms that reach more than 10% of the total of 450 million consumers in Europe. For most organisations, this does not immediately create an obligation to change their own consent. But when platforms like Meta, TikTok and Google are forced to ask permission to be tracked, the number of users who accept these terms will decrease. While this will not affect most businesses directly, they will have to accept that there will be a larger group of people who cannot be targeted based on user data. Good to know that platforms can’t deny their services to people who don’t give permission. In the long run, this may even change their business model.

What will change for gatekeepers?
The Digital Markets Act requires gatekeepers to:

  • Services and products offered by the gatekeepers themselves may not be treated more favorably in the ranking than similar services or products offered by third parties on the gatekeeper’s platform.
  • Consumers should not be prevented from connecting with businesses outside of their platform.
  • Should prevent users from uninstalling pre-installed software or apps if they want to.
  • Not allowed to track end users outside of their platform’s core service for the purpose of targeted advertising, without actually being authorized to do so.

More specifically, the Digital Markets Act states that different messenger services must be interconnected, which means you can send a message from Facebook Messenger to Signal, or from iMessage to Telegram. This part of the Digital Markets Act has been heavily criticized for not being technically possible to connect these services. There is also no protocol like there is for e-mail (smtp) or telephone (ss7). However, legislation is not meant to be a technical requirement and this kind of legislation will keep everyone on their toes.

Finally, the new law states that users outside the gatekeeper’s platform can no longer be tracked without actual permission. The interesting twist here is “consent”. Under the GDPR, permission was already required to track users online. So you could say that nothing really changes. It is already practically impossible for many of these platforms to continue using their services without providing the appropriate level of consent. However, we must also see this in the context of the Act on Digital Markets. The combination of the two new laws could potentially mean that online platforms, such as Meta’s Facebook and Google, can no longer create these massive datasets based on people and interaction data that can be used for advertising.

The Digital Markets Act also requires gatekeepers to be more transparent with their business users. This means, for example, that Meta and Google must provide more information about the ads and campaigns that their business users run. So companies no longer have to rely on inaccurate or opaque reports, but can instead access in-depth data generated through campaigns.

In addition, gatekeepers are no longer allowed to self-promote their products on their platforms (for example, if you search Google for a voice assistant, Google is not allowed to put its Google Home first). This is an advantage for smaller companies that offer similar solutions.

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