European Union: Five Things We Still Don't Know About The E-Privacy Regulation (Which Are Getting Very Annoying!)

With all the focus on Brexit and the California Consumer Privacy Act (CCPA), there has not been much published about the draft e-Privacy regulation recently. Readers will remember that there had been plans to implement this companion legislation (which covers specific issues regarding cookies and direct marketing among other things), at the same time as the General Data Protection Regulation (GDPR). However, since the draft proposals proved (rightly) so controversial, this did not happen and the drafts have been chugging their way through compromise debates and revisions ever since.

Although some have begun to think that we may never see the legislation come to fruition, in fact there has been quite a lot of progress in the last six months. It is possible that a draft could be finalised by the EU Council by the summer (although it will still then need finalising with the EU Parliament and input from the European Commission).

Let's have a quick look at the most recent movements and some of the key outstanding questions that have dogged its progress:

1. Are the proposals still as scary as they were last year?

No. The original proposals would have resulted in widespread change for publishers, brands and the adtech industry, in particular, and would have been a barrier to a lot of data-based innovation. There has been extensive lobbying undertaken in Brussels over the last year, however, and what is emerging is a more digital economy-friendly text than many of us had begun to hope was possible. It is unlikely now that we will see a reversion to the initial proposals including requirements such as a browser-level do-not-track default across the board. We need to keep our eye on the ball, however, since the debates continue and even quite minor drafting tweaks could have big practical ramifications if stakeholders do not continue to contribute to the debate.

2. Will 'direct marketing' be extended and cover 'presented' ads?

The e-Privacy legislation has always contained detailed rules about direct marketing by electronic means (SMS, email, telephone, fax) and the type of consent required for this. Earlier drafts sought to extend this to other technologies. Specifically, words were included so that direct marketing would cover not just marketing communications sent but also to those presented. Seemingly intended to cover targeted pop-up or banner advertising (directed at an individual rather than generic), this inclusion led to an odd position since many targeted online or mobile ads largely rely on cookies that already have a separate consent requirement. It was unclear therefore what this would mean in practice – even more tick box options when users sign up on websites? Complicated layering of tick boxes and pop-up cookie consents? Or is it just intended to cover services such as Facebook Custom Audience, which uses email matching? We need the final text and provisions to confirm this situation once and for all.

The latest draft deletes the reference to presented ads from the recitals and definition of direct marketing. As many companies are already reeling from depleted marketing databases following the GDPR (albeit often from receiving incorrect advice about hard opt-ins or choosing to take a more conservative approach than was always necessary), the threat of having to get yet more consents remains a real concern.

3. Are cookie walls OK?

It is not yet clear. Some of the more successful lobbying has centred on the fact that many consumers are happy to accept a value exchange whereby they receive access to free web services or apps on the basis that some of their data is collected through cookies or similar devices, generally to fund the free services via advertising. I attended various conferences prior to the GDPR where EU Commission and other representatives held firm to the line that websites would simply have to come up with better financing models (such as crowdsourcing) that do not rely on tracking.

This line has definitely softened. The most recent proposal of the EU Council from March states that: "Making access to the website content provided without direct monetary payment conditional to the consent of the end-user to the storage and reading of cookies for additional purposes would normally not be considered disproportionate inter alia if the end-user is able to choose between an offer that includes consenting to the use of cookies for additional purposes on the one hand, and an equivalent offer by the same provider that does not involve consenting to data for additional purposes on the other hand." It is not yet certain whether services will have to offer alternative options and, if so, concerns still are to be raised about whether this creates a two-tier internet with some being able to pay for their privacy or whether, in reality, we will just see more generic versus tailored advertising options.

Websites need an answer on this question soon, because the issue is complicated in the light of recent different decisions from data protection authorities in the European Union. The current e-Privacy regime in Europe is directive based, which means that there are variations in the approaches to cookies (even before introducing GDPR interpretations). The UK Information Commissioner's Office, for example, issued a written warning to the U.S.-based Washington Post, which offered just that – a premium paid for cookie-less version and a free cookie-required version – stating that it had to offer a free version that was cookie free. In March, the Dutch data protection authority (DPA) wrote to several sites stating that the practice of cookie walls does not comply (after a series of complaints that users were blocked from sites unless they accepted tracking cookies). In contrast, however, at the end of 2018, the Austrian DPA held that a newspaper that offered uses options (similar to the Washington Post) did comply.

4. What form of cookie consent is required?

The original drafts had proposed the removal of cookie banners. This came as a pleasant surprise to many until a more detailed look at the draft revealed that the reason for such removal was because many cookies themselves would in effect no longer be permitted (the result of proposals for browser-based do-not-track mechanisms by default). This would have had huge ramifications. This position and the specific legal obligations on those who place software (that is, browsers) on the market have largely disappeared in recent drafts, however. Instead we now see a draft that recognises that cookie pop-ups can be annoying and counter-intuitive for consumer consent purposes, but which still puts the onus on websites and ad network providers to ensure that consent is obtained for tracking cookies and device fingerprinting. The recitals mention that consent should be for "specific and transparent purposes", which does not offer much clarity at the moment. With so many different solutions and styles of cookie notices around at the moment combined with increased activity from the DPAs in Europe auditing and writing to companies (but with different messaging), a consistent, clear and unified approach here is greatly needed soon.

5. Will tighter metadata rules inhibit innovation?

The metadata rules within the e-Privacy regulations tend to get little coverage but are significant for innovation since the information can be key to analytics and improvement. I have been watching carefully to see how stringent the conditions will be. The March draft suggests that further processing of metadata will be permitted but that may require consultation with supervisory authorities, impact assessments and, most significantly, a requirement to "genuinely anonymise" the result before sharing the analysis with third parties. Such data should not be used to build profiles of end-users or to monitor their behaviour. In my view, the draft needs careful review to ensure that the obligations are absolutely clear. For example, the recital still states that "the end-user must be provided with information about these processing activities taking place an given the right to object to such processing". However, this could be read in different ways as regards what 'these' and 'such' actually relate to – all further use of metadata or just a narrower instance of monitoring? Either way, this is a move forward from initial proposals that would have required specific consent.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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