Google faces EU curbs on tracking users for adverts

Google, Facebook and other online advertising businesses face strict new privacy rules from Brussels on the ways they can track people online.

The new rules would compel websites and browsers, such as Google Chrome, to switch from a default of allowing users to opt out of online advertising to asking them to opt in to view adverts based on their browsing history, according to a leaked draft of new proposals from the European Commission.

The EU’s executive arm will also tighten its regulatory grip over services such as WhatsApp and Skype as part of a sweeping overhaul of the bloc’s “ePrivacy” directive, which dictates everything from online tracking to marketing emails.

It comes as part of a wider attempt by Brussels to regulate big Silicon Valley groups more closely. The EU is in the midst of overhauling its data protection and copyright rules. It has also launched various antitrust probes into Google and has ordered Apple to pay billions of euros in backdated tax to the Irish government.

Companies that break the new privacy rules face fines of up to 4 per cent of global turnover, raising the prospect of 10-figure fines for the largest tech businesses. The proposal is not final and may be subject to change in the coming weeks.

Online advertisers hit out at the proposals, saying they will upend the entire business model of the internet.

“This is very concerning — it’s putting at risk the entire internet as we know it,” said Yves Schwarzbart, head of policy and regulatory affairs at the Internet Advertising Bureau in the UK. “Our number one concern is asking for prior permission. Advertising is the funding model of the internet, and helps publishers create better content. That whole model could be undermined.”

This is very concerning — it’s putting at risk the entire internet as we know it

Instead, web advertising groups will be forced to rely on internet browsers encouraging as many people as possible to opt in. “It is a big deal to opt in for the first time, but once you have done it — then you are good to go,” said Eduardo Ustaran, a partner specialising in data protection at Hogan Lovells.

Elsewhere in the proposals, so-called “over-the-top” services, which provide things such as text messaging or calls via an internet connection, will be roped into rules covering the telecoms industry. This will probably limit how these services can use things such as a phone’s location data. The proposal comes after heavy lobbying from big telecoms groups, who argued that the likes of WhatsApp owner Facebook and Skype owner Microsoft benefited unfairly from a more lax regulatory regime.

“We think this will be very damaging to Europe’s digital future,” said an executive from a large technology company who did not wish to be named. “It creates huge barriers for digital businesses, large and small, compared to the rest of the world, and is likely to worsen the experience for European consumers over the rest of the world, as services become harder to use, more disruptive and more confusing.”

In a boon to the telecoms industry, operators will be able to use customer metadata, including when and to whom a call was made, in order to provide “value added services” such as advertising.

As part of the overhaul, rules around cookie warnings — the unpopular pop-up boxes that show when a website is tracking a user — will also be relaxed. Websites that use cookies to monitor things such as the number of visitors will not be required to warn users.

The draft admits: “While such banners serve to empower users, at the same time, they may cause irritation because users are forced to read the notices and click on the boxes, thus impairing internet browsing experience.”

While internet groups such as Facebook and Google declined to comment, they are part of industry body IAB Europe which has been heavily opposed to an overhaul of online advertising laws.

In a letter to the European Commissioner in November, they wrote: “Without the option of interest-based advertising as a viable revenue stream, European media would be hard-pressed to manage the challenging transition to the online environment.” Facebook, meanwhile, argued that the ePrivacy rules should simply be scrapped in its submission to a public consultation on the new law.