Online Ads: Is the EU Pushing Internet Users Towards a Subscription-Only Future?
Main takeaways
- Increasingly narrow interpretation of the GDPR risks turning the internet into a gated community – at least for all European users
- Regulatory push for contextual ads will make users’ online experience less pleasant
- EDPB’s focus on large platforms risks creating two-speed data protection rights
Europe is at a crossroads and needs to choose what kind of internet it really wants. Do we want popular online services and content to remain free of charge for users who don’t mind personalised advertising, or is the EU going to push everyone towards a subscription-only model for the internet in the future?
Recent guidance from the European Data Protection Board (EDPB) suggests a troubling shift that may favour the latter. The guidance attempts to mandate that large online platforms present users with options that are economically untenable — a move that could drastically alter the free-access models that underpin the foundations of the internet.
1. Will the consent-or-pay model survive?
Within the increasingly labyrinthine rules of digital privacy, we’ve witnessed the emergence of a so-called consent-or-pay model. While the general principle used to be that users could be served behavioural ads by a platform without being presented a consent box, in recent years regulatory bodies increasingly started to insist that – under the General Data Protection Regulation (GDPR) – this also requires users’ explicit permission.
In order to accommodate users who don’t want to give their okay to seeing personalised ads, online platforms started to offer paid-for subscriptions that provide an ad-free user experience. Now, however, the EDPB wants to require large platforms to offer users three choices instead of two: consent to personalised behavioural ads, pay for ad-free access, or accept less targeted generic contextual ads and still receive free access.
2. Contextual ads not a silver bullet
Let’s be clear: these contextual ads are far from the magic solution they’re made out to be by some. According to a study by the European Parliamentary Research Service, the click-through rate of this type of advertising is more than five times lower than that for behavioural advertising.
As it transpires, ads stripped of any personalisation are just less effective and less useful to both advertisers and consumers. And the cost to reach the desired audience skyrockets. Online platforms would have to inundate users with repetitive, broadly targeted ads to achieve similar engagement for advertisers, cluttering news feeds with irrelevant ads.
Moreover, studies and real-life experiments consistently show that ditching behavioural ads invariably slashes revenue. A paper on the economic value of user tracking for publishers found that ad prices in the EU drop, on average, by 18-23% when user tracking is unavailable.
3. Two-speed data protection rights for Europeans?
At the risk of stating the obvious: businesses need sufficient revenue in order to be able to offer something free of charge. Behavioural advertising has been important in this respect, enabling many online services to remain free for European users across various sectors. It has also been instrumental in enabling European companies and SMEs to connect with potential customers across the single market.
Yet, there’s more at stake. By zeroing in on large online platforms, the EDPB risks going down a slippery slope, creating two-speed data protection rights for Europeans. One set of rules would apply to users of large online platforms, and another to everyone else. The EDPB seems to think that consumers should have a completely different experience when dealing with publishers or app developers rather than services provided by so-called ‘large’ online platforms.
But let’s be honest, isn’t the power (im)balance identical, regardless of the company’s size? If a user wants to access a service or content, they either decide to take a paid subscription or agree to being served those ads that the platform deems viable to cover its costs. Do people really feel they have greater privacy control with an indie mobile app than when dealing with a major social media platform?
Conclusion
Going down this road, with the EDPB dictating what kind of ads should give users free access, would force Europe to confront fundamental questions about internet access, user rights, and platform responsibilities. The GDPR was never designed to impose a set of one-size-fits-all choices on internet consumers or dictate business models, but to ensure fair and balanced data handling across all online services.
In the midst of this debate, we must ask ourselves: isn’t this kind of regulatory intervention (and reinterpretation of the GDPR) inadvertently erecting new barriers that undermine the openness and accessibility that the internet was designed to offer?
Once celebrated as a great equaliser, is the internet now destined to become a gated community in the EU, accessible only to those Europeans who can pay the price?
A German version of this article first appeared in Tagesspiegel Background Digitalisierung & KI – Online-Werbung: Drängt die EU Internetnutzer:innen in eine Abo-Zukunft?
