Digital Services Act: new labelling requirements for online marketing

With the Digital Services Act (DSA), the EU wants to fundamentally revise and further standardise the rulebook for the digital industry. The DSA focuses in particular on combating “hate speech” and dealing with illegal content. However, significant changes are also planned in the area of online advertising. This concerns in particular new transparency obligations for online advertising.

The EU Commission has now published a new FAQ document outlining major new rules. The future regulation of online advertising was the subject of heated debate in the legislative process, especially in the context of the proposal by some MEPs to ban personalised advertising entirely. In the end, this proposal did not pass – the EU is nevertheless noticeably tightening the reins.
Although the EU Parliament and Council agreed on the new rules in April 2022, not everything is in the bag yet – the final version of the new law has not yet been published, so changes are still possible. Nevertheless, it is already becoming apparent what can be expected from the DSA.

Publishers are required to provide more transparency in user-specific online advertising
Personalised advertising will still be allowed, but new rules will have to be observed: In
addition to an explicit ban on personalised advertising towards minors or based on sensitive data (e.g. ethnic origin, sexual orientation), publishers must meet additional transparency obligations for user-specific online advertising, providing users with more information on the advertising displayed to them.

Users need to be able to clearly see whether and why they are targeted with an advertisement and who financed it. Users also need to be able to see whether content is sponsored or published on a platform in an original and uncontrolled way, or when influencers post advertising. Furthermore, reporting obligations apply to potentially illegal advertising.

It is clear that publishers cannot fulfil these obligations themselves – they must have access to the infrastructure of their advertising service providers. Accordingly, these businesses must take precautions to reliably deliver the corresponding information with the advertising content in the future.

The new law will also contain additional requirements for very large online platforms with more than 45 million users. These include the creation of publicly accessible (advertising) archives. These will archive advertisements and make it possible to check how advertisements were displayed and targeted. In addition, very large online platforms will be required to review their advertising systems to determine whether and how they are manipulated or otherwise contribute to social risks and how these can be addressed.

The new law will bring considerable changes for online platforms and advertisers. However, it remains to be seen whether this means, as EU Internal Market Commissioner Thierry Breton announced on Twitter, that “there is a new sheriff in town” who will “bring order” to the “Digital Wild West”. As soon as the final version is published, we will update you again.