The EU parliament will vote on the guidelines this week, and they are highly likely to pass.
Remember that these regulations only apply to firms with a market cap of $90.7 billion, including Alphabet (Google), Facebook, Amazon, Apple, and a few others like Alibaba and Booking.com. As a result, the prohibition is not on utilising data profiling in ads aimed at minors but rather on the most prominent internet corporations.
Here are some of the most significant changes that Big Tech will need to make:
- The fines are huge: up to 20% of global turnover. Big Tech corporations will be much more cautious – at least until the ways the regulations are implemented become clear. With Facebook’s revenue forecasted to be $86 billion in 2020, the fine may be as high as $17.2 billion. It’s difficult to explain this to stockholders.
- The DMA officially prohibits the use of data profiling in commercials aimed at minors. While that seems (and is) far less than the complete ban that was considered, it will have considerably more consequences than the rules describe. Why? Put, determining who is a child is difficult. Thus corporations such as Google and Facebook, who rely on user profiles to appropriately target advertising, may apply these rules to all users by default. But it also means they’ll devote a lot more time and attention to profiling that demonstrates a user is an adult. That isn’t to say that isn’t conceivable. If you’ve looked into home mortgages, for example, you’re not likely to be a child.
- Unless there is “clear, unambiguous, renewed, informed agreement,” the guidelines will prohibit “combining personal data for the aim of delivering targeted or micro-targeted advertising.” On the other hand, tech companies are masters at persuading people to consent by making it the path of least resistance. In other words, a Facebook user may be asked to consent to ad tracking if they want to use a popular service. Almost no one reads those pop-up terms and conditions statements, and even if refusing does not prevent you from using a service, simply asking will usually get you what you want. On the other hand, the rules prohibit ambiguous terms and conditions, and the DMA also establishes a new EU-wide enforcement agency that will be aware of such tactics. Even so, Facebook will have to provide a means for users to opt out of being tracked.
- The DMA prohibits self-preferencing in search results, which means Google will be unable to make it easier for its items and services to appear at the top of a page of search results. This means that the tech behemoths enslaved by the laws may have to work more to improve their services, advertise them more frequently and effectively, and compete fairly with smaller rivals. As a result, small, agile businesses will have a higher chance of growing. However, competing with Facebook’s expenditure remains a difficult task.
- Because messaging and social media must be interoperable. They will be less of a closed ecology. It will give smaller platforms a better chance to grow into larger venues. WhatsApp, on the other hand, has 2 billion subscribers, while Facebook Messenger has 1.3 billion.
6. Apple will lose control of the iPhone’s App Store, as users will be able to add apps by downloading them, and the DMA’s 30 per cent transaction commission may be hammered harder than Epic Games‘ US lawsuit, which was a mixed bag that did not find the App Store to be a monopoly.