Brussels - Online messaging services such
as WhatsApp, iMessage and Gmail will face tougher rules on how
they can track users under a proposal presented by the European
Union executive on Tuesday which could hurt companies reliant on
advertising.
The web companies would have to guarantee the
confidentiality of their customers' conversations and get their
consent before tracking them online to target them with
personalized advertisements.
For example, email services such as Gmail and Hotmail will
not be able to scan customers' emails to serve them with
targeted advertisements without getting their explicit
agreement.
Most free online services rely on advertising to fund
themselves.
Spending on online advertising in 2015 was 36.4 billion
euros, according to the Internet Advertising Bureau (IAB).
The proposal by the European Commission extends some rules
that now apply to telecom operators to web companies offering
calls and messages using the internet, known as "Over-The-Top"
(OTT) services, and seeks to close a perceived regulatory gap
between the telecoms industry and mainly US Internet giants
such as Facebook, Google and Microsoft.
It would allow telecoms companies to use customer metadata,
such as the duration and location of calls, as well as content
to provide additional services and so make more money, although
the telecoms lobby group ETNO said they remain more constrained
than their tech competitors.
The proposal will also require web browsers to ask users
upon installation whether they want to allow websites to place
cookies on their browsers to deliver personalized
advertisements.
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A previous version of the proposal would have forced
browsers to set the default settings as not allowing cookies
which are the small files placed on people's computers when they
visit a website containing information about their browsing
activity.
"It's up to our people to say yes or no," said Andrus Ansip,
Commission vice-president for the digital single market.
Online advertisers say such rules would undermine many
websites' ability to fund themselves and keep offering free
services.
"It will particularly hit those companies that ... find it
most difficult to talk directly to end users and what I mean by
that is tech companies that operate in the background and sort
of facilitate the buying and selling of advertising rather than
the ones that the user directly engages with," said Yves
Schwarzbart, head of policy and regulatory affairs at the IAB.
But the CEO of advertising tech company Appnext, whose
revenues come entirely from advertising spending, said the new
rules would bring clarity and would not have a significant
impact on business models or revenue.
"There is no doubt that it is time for the entire ecosystem
to become more transparent and fair to all of the stakeholders.
Users want easy access to trustworthy sources of information
while feeling safe with the data they share," Elad Natanson
said.
Companies falling foul of the new law will face fines of up
to 4.0 percent of their global turnover, in line with a separate
data protection law set to enter into force in 2018.
The proposal will need to be approved by the European
Parliament and member states before becoming law.