What do Europeans have to say about the Digital Fairness Act?

This story was originally published on EU Tech Loop as part of an agreement with Euronews. The opinions expressed in this article are those of the author and do not represent in any way the editorial position of Euronews.

The European Commission’s consultation on the upcoming Digital Fairness Act (DFA) concluded last Friday.

What’s the Digital Fairness Act? It’s the Commission’s proposal to update the EU’s consumer agenda and keep consumer-protection standards up to speed with the digital sphere. Led by Irish Commissioner Michael McGrath, the DFA debate currently covers: 1) unfair commercial practices related to dark patterns; 2) misleading marketing by influencers; 3) addictive design of digital products; and 4) unfair personalisation practices.

In simple terms, the DFA risks changing the advertising scene completely (via a de facto ban on using personalised data for advertising), leading to higher ad costs, less reach for SMEs, and more irrelevant ads for consumers. The definition of “addictive design” could stretch from bans on so-called “infinite scroll” to core UX elements that make digital products what they are.

Crucially, the definitions of “addictive design” and “dark pattern” _r_emain vague, and judging from a historical perspective, it appears that the Commission prefers it that way, leaving room to pressure digital service providers on an ad hoc basis.

European opinions: big picture

A record 4,325 submissions were received for the Call for Evidence (the channel for unique feedback to the Commission), thanks largely to hundreds of gamers concerned about the DFA.

Despite the public consultation (the second part of the process, based on a pre-arranged survey) being relatively one-sided and offering space for detailed input mostly to those who agree on the need for the Digital Fairness Act (we wrote about this problem here), the Call for Evidence shows it wasn’t only traditional digital associations or foreign companies saying “nay” to the DFA.

The non-profit/association picture looks traditional: most European business associations criticised the need for the DFA, while civic/publicly funded NGOs supported it.

The European champions that the EU is so keen to back, such as Finnish Wolt, Irish Ryanair, Lithuanian Vinted, Swedish Spotify, and many others, raised concerns about over-regulation and urged a focus on implementation rather than adding new rules on top of the existing ones.

Jupiter and the bull: the GDPR vs Consumer agenda

Tongue in cheek: why not apply to the online consumer agenda the same principle used for revising the GDPR? There, the Commission isn’t reopening the GDPR wholesale, but pursuing targeted improvements focused on harmonising application and simplifying reporting.

In its explanatory note, the Commission rightly states that “as a result of the development of EU consumer law over the last 50 years, EU consumers are among the most protected in the world, online and offline”.

That’s true: existing rules, such as the Unfair Commercial Practices Directive (UCPD), General Data Protection Regulation (GDPR), ePrivacy Directive, Digital Services Act (DSA), Digital Markets Act (DMA), Audiovisual Media Services Directive, Consumer Rights Directive, and more already address deception, manipulation, and misuse of personal data - the very issues the DFA aims to tackle.

The lack of enforcement of existing rules and market fragmentation across Member States are the two areas that deserve priority. A new regulatory layer should be considered only after those issues receive sufficient attention, so that the EU doesn’t need to review it in 5 years or less due to “overlaps”.

What’s the price tag for the DFA?

The European Commission cites €7.9 billion in “financial harm to consumers as a result of problems online” (we didn’t botch the phrasing, it’s an exact quote from the Call for Evidence explanatory document).

Has this number been weighed against the benefits of the very areas the DFA targets? Of course not, but several organisations, including ours, have reminded the Commission to do so. Recent studies indicate that personalised advertising generates at least €100 billion in additional sales for EU businesses, contributes at least €25 billion to EU GDP, and supports around 600,000 jobs. Moreover, at least 75 per cent of SMEs say they would struggle to find customers without personalised advertising.

Hopefully, we will at least see an attempt to compare the potential economic impact in the upcoming impact assessment.

E-commerce was a lifeline for many SMEs during COVID-19. To this day, personalised advertising remains a cornerstone for firms at various stages of growth, helping them reach consumers efficiently, compete with larger rivals, and, in smaller markets, access wider audiences affordably. If the use of personal data for personalised advertising were effectively de facto prohibited under the DFA, advertising costs would likely rise, and opportunities to reach broader consumer bases would shrink.

“Consumers are worried”

The core message from pro-DFA organisations backing stricter limits on personalised advertising is that “Europeans are worried about the use of their personal data”, often supported by (partly publicly funded) surveys.

Any sane person would say the same if asked such a simple question. Europeans are mindful of how their data is used, but they also prefer relevant ads: an earlier Center for Data Innovation survey found that 7 in 10 Europeans actually prefer seeing relevant (personalised) advertisements.

Again, the impact assessment and future policy talks should address both sides of the consumer interest spectrum, not just one.