In this edition of our ‘DSA decoded’ blog series we focus on how the DSA impacts online advertising and the challenges the new rules pose for online platform providers offering advertising services. In the law makers view, online advertising can contribute to significant risks, including the dissemination of illegal content, the financial incentivization of publishing or amplifying harmful or unlawful activities, as well as the discriminatory presentation of ads that affect the equal treatment and opportunities of citizens. Consequently, enforcement of the corresponding obligations on advertising under the DSA has been one of the European Commission’s key areas of focus (see our blog post DSA decoded #1 for more details on enforcement priorities).
Key rules for online platforms offering advertising services
The DSA introduces rules for digital advertising aiming to increase transparency and user control. These rules apply to all online platforms offering advertising services ,to compile and publish an ads repository (more on this below). Specific obligations apply for Very Large Online Platforms (VLOPs) and Very Large Online Search Engines (VLOSEs)
Key rules for all online platforms include:
- Ban on targeted advertising based on sensitive data: This includes targeting based on ethnicity, political beliefs, sexual orientation, or health data. Furthermore, targeting children is strictly prohibited.
- Increased transparency: Users must be clearly informed why they are seeing a specific ad and who is behind it ("on-ad transparency").
- Enhanced user control: Users must be given the option to easily hide or report ads and to control their ad personalization settings.
- Restrictions on dark patterns: Online platforms must not use manipulative design practices to influence users' choices regarding online ads.
On-ad transparency disclosures
Transparency is a cornerstone of the DSA's approach to advertising. Under the DSA, online platforms must provide clear and accessible information about the advertisements they display. This includes disclosing the identity of the advertiser, the main parameters used to determine why a particular ad is shown to a user, and the option for users to report ads that they find misleading or inappropriate. These measures aim to empower users with more control over their online experience and ensure that advertising practices are fair and transparent.
- The DSA requires "clear, concise, and easily understandable" disclosures on all online ads. This means users should be able to readily identify the advertiser and should be informed about the main parameters used for targeting them. For example, "Because you've shown interest in sports shoes" or "Because you are located in Berlin."
These disclosure requirements aim to empower users by providing context and enabling informed decisions about interacting with ads.
Additional requirements for VLOP/VLOSE: Ads repository
In addition to the rules above, VLOPs and VLOSEs have to compile an ads repository and make it publicly available (Article 39 DSA). This repository must be accessible via a VLOP’s/VLOSE’s online interface, through a searchable and reliable tool that allows multicriteria queries and through application programming interfaces (APIs). In addition to being able to browse the repository, it must also include detailed information about each ad, allowing for greater scrutiny and accountability of advertising practices of a given service. The ads repository must inter alia provide information on:
- Ad content: Including the name of the product, service or brand and the subject matter of the advertisement.
- Advertiser information: Details about the entity placing the ad.
- Delivery information: Reach and impressions data, including aggregated information about targeted users.
According to the DSA, advertising systems used by VLOPs and VLOSEs present unique risks and necessitate increased public and regulatory oversight to facilitate supervision and research into risks emerging therefrom (see Rec. 95 DSA). This includes illegal advertisements, manipulative techniques, and disinformation, which can have significant negative impacts on public health, public security, civil discourse, political participation, and equality. The aim of the ad repository is to offer a tool for researchers, journalists, and authorities to scrutinize online advertising practices, fostering accountability and enabling better enforcement of the DSA.
Some VLOPs have challenged the validity of the obligation to provide an ads repository arguing that this could create a competitive disadvantage. In their view, the administrative burden and the risk of exposing sensitive business information outweighs the benefits of increased transparency, leading to a disproportionate obligation which infringes their trade secrets.
Codes of conduct and voluntary standards
Beyond the core requirements, the DSA foresees that the Commission shall encourage and facilitate the creation of codes of conduct and voluntary standards to contribute to further transparency for actors in the online advertising value chain (Art. 46 DSA). These initiatives aim to foster industry self-regulation, provide more detailed guidance on implementing the DSA's advertising provisions, and complement the transparency obligations. Although voluntary, the codes of conduct will probably influence how the DSA will be interpreted and enforced. For VLOPs and VLOSEs, adhering to these codes can ensure appropriate risk mitigation measures are in place (See rec. 103, Art. 45 (2) DSA). After having engaged with stakeholders at the end of 2024, the European Commission (EC) is currently encouraging stakeholders in drafting such codes of conduct for online advertising intermediaries under the DSA.
Additionally, Article 44 of the DSA focuses on technical standards for issues like ad repositories and transparency disclosures.
Future of influencer marketing and online advertising under the DSA
The EC has signalled its intention to further scrutinize the regulatory framework for influencer marketing and online advertising. This includes assessing whether the DSA and the Audiovisual Media Services Directive (AVMSD) adequately address and balance these evolving forms of digital promotion.
The Commission plans to evaluate the interplay between the DSA and other regulations by the end of 2025, followed by an evaluation of the AVMSD in 2026. This could lead to further regulatory action to ensure comprehensive and effective oversight of influencer marketing and online advertising practices. Companies providing online advertisement shall be aware that Brussels is continuing its commitment to refining the online advertising regulatory landscape to keep pace with the dynamic nature of digital advertising among and beyond the DSA (see our blogpost for further information).
