EU Limits Targeted Advertising And Content Algorithms Under New Law

The European Union reached an agreement early Saturday to adopt the Digital Services Act after a marathon 16-hour negotiation session. The legislation aims to hold the world’s tech titans more accountable by imposing new obligations on businesses of all sizes once the act becomes law in 2024.

The DSA, like the Digital Markets Act before it, could have far-reaching consequences, some of which could extend beyond Europe. While the European Commission has yet to release the final text of the Digital Services Act, some of its provisions were detailed on Saturday.

The law specifically prohibits advertisements that target individuals based on their religion, sexual orientation, ethnicity, or political affiliation. Companies are also prohibited from serving targeted advertisements to minors.

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Another section of the law specifically mentions recommendation algorithms. Online platforms, such as Facebook, will need to be transparent about how their systems display content to users. They will also need to provide alternative systems that are “not based on profiling,” which means that more platforms will need to provide chronological feeds.

Furthermore, some of today’s largest platforms will be required to share “key” data with vetted researchers and non-governmental organizations so that those groups can provide insights into “how online risks evolve.”

“Today’s agreement on the Digital Services Act is historic, both in terms of speed and of substance. It will ensure that the online environment remains a safe space, safeguarding freedom of expression and opportunities for digital businesses. It gives practical effect to the principle that what is illegal offline, should be illegal online,” said European Commission President Ursula von der Leyen.

Ta da! 16 hours, lots of sweets (but cookies still declined 😉 We have a deal on the #DSA: The Digital Services Act will make sure that what is illegal offline is also seen & dealt with as illegal online – not as a slogan, as reality! And always protecting freedom of expression! pic.twitter.com/mUhU84Q9FS

— Margrethe Vestager (@vestager) April 23, 2022

The EU will have the authority under the DSA to fine tech companies up to 6% of their global turnover for rule violations, with repeat offenses carrying the threat of a ban from the bloc. According to The Guardian, in the case of a company like Meta, this would amount to a single potential fine of around $7 billion.

The DSA differentiates between different sizes of tech companies, with platforms with at least 45 million users in the EU receiving the most scrutiny. Companies like Meta and Google fall into this category.

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According to a recent report, these two companies, along with Apple, Amazon, and Spotify, spent more than €27 million last year lobbying EU policymakers to change the terms of the Digital Services Act and Digital Markets Act. The laws may serve as a model for lawmakers in other countries, including the United States, as they consider enacting their own antitrust legislation.

“We welcome the DSA’s goals of making the internet even more safe, transparent and accountable, while ensuring that European users, creators and businesses continue to benefit from the open web. As the law is finalized and implemented, the details will matter. We look forward to working with policymakers to get the remaining technical,” a Google spokesperson said.