The EU Digital Services Act (DSA) came into effect on 16 November, 2022. While some provisions in the DSA have already taken effect, it will apply in full from 17 February, 2024.
The DSA has understandably been termed the new Constitution of the Internet. This is certainly one of the most important pieces of legislation concerning broad Internet law to have been enacted in the last twenty years. The DSA revisits a number of issues, including how online advertising is conducted.
Advertising defined under the DSA
The DSA defines an advertisement as information designed to promote a message, irrespective of whether to achieve commercial or non-commercial purposes, and presented by an online platform on its online interface against remuneration specifically for promoting that information, and this definition leads to three fundamental conclusions. Firstly, the definition of an advertisement applies to an information, while this does not have to be commercial information, as it might be political or social information as well. Secondly, this is an information posted on online platforms for remuneration, but not necessarily remuneration in pecuniary form. Thirdly, the new rules on advertising provided for in the DSA are applicable solely to advertising posted on online platforms.
Who is subject to the new rules on advertising?
The advertising laws are directed towards online platform providers. An online platform is a kind of hosting service that stores and disseminates information to the public at the request of the service recipient, while dissemination of information to the public is the making available of information (advertising content) at the request of the service recipient who provided the information (advertisers) to a potentially unlimited number of third parties (users of a platform). Examples are social media platforms such as Facebook, e-commerce platforms such as Allegro, online shopping sites with applications such as Google Play, and platforms on which content can be shared. The DSA provides for an important exemption, which is that it does not apply, with respect to the issues discussed here, to providers of online platforms that qualify as micro or small enterprises. On the other hand, special obligations with regard to online advertising have been placed on very large online platforms (VLOP). These are platforms that have a number of average monthly active recipients in the EU equal to or higher than 45 million.
Although the DSA is directed towards providers of intermediary services regarding online content, this will certainly have an effect on all of the organizations active in online advertising. The reason for this is that the practices that are prohibited or restricted with regard to advertising on online platforms determine the advertisements that advertisers will have to forgo. Platform obligations regarding advertising transparency will also have an effect on the advertisers themselves.
How online advertising will change?
Under the DSA, it is not permitted to present on online platforms advertisements based on profiling using special categories of personal data (sensitive data), meaning data revealing racial or ethnic origin, political opinions, religious or philosophical beliefs, or trade union membership, genetic and biometric data and data concerning health, and data on someone’s sex life or sexual orientation.
Another prohibition is intended to protect minors who use online platforms, which is that it is not permitted to present advertising based on profiling using personal data of a recipient who is a minor (based on data of any kind, sensitive or otherwise).
Transparency of online advertising on platforms
Additional obligations have been imposed to make advertising on platforms more transparent. Platform providers are required to state that a message is an advertisement, informing a recipient who the advertiser is and who is paying for the advertisement, of the parameters used to present an advertisement to them, and how to change those parameters. Meanwhile, providers of very large online platforms must make available a repository containing advertisements presented on the platform for a period of one year.
Right now, businesses operating in the online advertising sector – both advertisers and providers of online platforms on which ads are presented – should take a close look at the upcoming changes in the law and adapt their processes to the new requirements and prohibitions set forth in the DSA.
Author: Arkadiusz Baran