Will targeted advertising on the Internet be banned?

Information is increasingly emerging about legislative initiatives aimed at curbing online platforms' practices of collecting and storing users' personal data for advertising targeting.

In European countries and the United States, the topic of online advertising regulation mechanisms is being discussed at the highest levels. We will discuss this in our article.

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Europe

On January 24, 2022, the European Parliament approved a bill concerning the use of targeted advertising on the Internet by a majority vote.

If adopted by Members of the European Parliament, it will legally prohibit internet platforms from using users' personal data to create targeted advertising.

The legislative proposal outlines a procedure for users to opt out of targeting while maintaining access to the online platform.

The essence of this legislative initiative is to combat aggressive online advertising and the posting of illegal content on the Internet.

Simply put,European legislators intend to completely change the targeting system by significantly limiting the collection of consumer data.

What exactly will be banned?

The upcoming Digital Services Act (DSA) intends to prohibit major internet platforms (Google, Meta, Amazon, Apple, Microsoft, etc.) from customizing ad serving based on data about:

• religious beliefs;
• sexual orientation;
• racial and national origin;
• and a number of other confidential characteristics of Internet users.

In addition, the bill containsA complete ban on targeting data from underage internet users.

Online platforms also intend to prohibit the use of any manipulative tactics to influence their audience.

We are talking about so-called “dark patterns,” which allow for the illegal (secret) collection of user data.

What does this give to users?

When/if the new regulations come into force, they will provide users with the ability to remove illegal internet content.

And if any platform violates the rules, a person will have the right to demand monetary compensation.

If the bill is approved, its provisions will come into effect in January 2023. Violations of the law will be subject to a fine of 6% of revenue.

USA

Legislative activity is also being observed in the home of most digital giants—the United States. At the end of 2021, a draft of the Justice Against Malicious Algorithms Act was introduced.

The document initiates a ban on virtually any use of digital advertising targeting by platforms such as Meta, Google, and others.

The list of exceptions includes only geographic targeting (taking into account the administrative-territorial unit (municipality) where the user resides).

The document has been sent to the US House of Representatives and Senate for consideration.

The changes will not affect contextual targeting.

There are no plans to ban advertising based on online content (webpage content) with which a user has interacted. The mechanisms for using contextual advertising will remain unchanged.

How much will the online advertising industry be affected?

If the law is passed, it will radically change the entire online advertising industry and significantly affect the business models of internet monopolies Meta and Google.

Some experts believe such a law will "make advertising less accurate and more expensive." Digital businesses fear that online retail and the emerging creative (blogger) economy could be under attack.

According to the Interactive Advertising Bureau (IAB), a ban on personalized advertising could destroy the national online advertising market and put 17 million people out of work.

Who will exercise control?

Under the bill, the Federal Trade Commission (FTC) and state attorneys general will oversee enforcement of the new targeting rules.

If Meta or Google violate the new law, users can sue them. Compensation for each violation is up to $5,000.

If the law is passed, platforms will be required to notify users of the opportunity to opt out of using “opaque” algorithms.

Moreover, it is stipulated that within 12 months from the date of publication of the law, platforms must create technical capabilities for users to visit (optionally) an acceptable version:

• without recommendation algorithms;
• with recommendation algorithms.

And also the ability to quickly switch between two different versions of the online platform.

Significant movements in this direction have also begun in Russia. Initiatives to regulate digital service algorithms are being discussed. For example, one bill under development considers the possibility of disabling recommendation algorithms on social media and video hosting sites.

Conclusion 

If the above bills are approved and the laws come into force, online advertising should become more transparent in the future: people will be informed about what information is being collected about them and for what purposes.

This is a definite plus for internet users. It's important to be able to interact with internet platforms without being manipulated and to meaningfully determine what data a particular service is allowed to use.

But how will the abolition of targeting impact the advertising industry? What financial losses await small businesses that rely on data-driven advertising to promote their products and services?

Industry representatives can only keep their finger on the pulse of the modern online market and keep in mind the need for possible changesmarketing strategy.

The main thing remains unchanged: an effective tool for promoting business remainswebsiteYou can find the right one with us.domainand reliablehosting.