The EU law is intended to make the Internet more consumer-friendly

The EU Commission is currently working on a new law that will better protect consumers in the digital world. The project is called the “Digital Fairness Act”. There is no draft yet, but a report from the commission already sets out the direction. Civil society also has demands.

The liberal Irishman Michael McGrath will most likely be responsible for the law. He is to take over the justice department in Ursula von der Leyen’s second commission, which should also include the issue of consumer protection. In her assignment letter, the Commission President instructed him to develop the law.

The designated commissioner should tackle unethical techniques and business practices such as dark patterns or marketing by social media influencers, writes von der Leyen. He should also examine convincing designs of digital products, as well as the profiling of Internet users, especially when their weaknesses are exploited in order to sell them products.

Report provides direction

At the moment, the new Commission is still stuck in the final approval loop in Parliament: The Christian Democratic EPP is currently testing new alliances with the strengthened right, against its previous partners in the Social Democrats and Liberals.

Nevertheless, there is already an insight into the possible outlines of the upcoming law. At the beginning of October, the Commission published a “Fitness Check” on the status of digital consumer protection. The report should examine how well EU laws are still suitable for the digitalized world. To this end, the Commission surveyed consumers in several European Member States.

The answer to this question: The laws are not really suitable. Commission officials write that they would not be sufficient to counter current and future threats to consumers: “Without further action, EU consumer protection law will not achieve its goals,” they risk losing relevance in the digital sector. The Digital Fairness Act is intended to remedy this.

Manipulative design

The check identifies some areas in which something needs to be done, including the so-called “dark patterns”. This refers to manipulative digital user interfaces that trick users into making decisions they don’t actually want to make. Almost all of the consumers surveyed said they had been influenced or confused by such dark patterns.

In recent years, a number of EU laws have attempted to regulate dark patterns. There are rules for them in the Digital Services Act, including in the AI ​​regulation. The report considers that it could make sense to specify the rules in one place.

Addiction and gambling

A further problem cited in the report is design that generates such a problem: Many apps are designed in such a way that users spend as much time as possible on them – for example because they watch more advertising and the operators earn more money. Mechanisms include, for example, that after one video a new one is automatically shown. There are still no precise regulations in EU laws on this, the officials write, and therefore there are also some legal uncertainties.

There are also problems with video games. Here, officials highlight two points: the sale of virtual items, especially if there is a gambling element like loot boxes, and in-game currencies. These currencies can hide the true price of a purchase while playing. Almost half of the consumers surveyed said they had already been confused here. Loot boxes are allowed, the report says, but many games violate EU rules on transparency and return rights.

Of course, the officials also comment on influencers. Many of them would not disclose if they were paid for advertising, even though they should. 44 percent of consumers surveyed also said they had seen advertising from influencers for fraudulent or dangerous products. The report calls for more enforcement here, and the rules should also be applied uniformly across Europe.

Invasive advertising model not questioned

And then there is the issue of personalization and profiling. This is about companies that collect data about customers and then show them tailored advertising based on this data and profiles. This business model has made some companies very rich – and is the basis for today’s fully monitored Internet.

The officials do not want to condemn the entire business model, even though it demonstrably endangers privacy and national security. The only problems for the Commission are companies that personalize on the basis of particularly sensitive data or exploit the vulnerabilities of their users. The report sees the personalization of advertising and recommendations as a positive development. The only thing that should be examined is whether companies should be obliged to inform consumers more about personalized advertising.

Call for a complete ban

That doesn’t go far enough for a group of civil society organizations. In a position paper published today, they are calling for a complete ban on personalized advertising. Those involved include the Chaos Computer Club, the Forum of Computer Scientists for Peace and Social Responsibility and Wikimedia Germany.

“If digital offerings quickly become financed exclusively through personalized advertising, this poses significant risks to democracy, social cohesion, informational self-determination, the climate and national security,” the authors write in the paper. For true digital fairness, a ban on personalized advertising is needed.

Instead, organizations want an Internet that is once again built on context-based advertising. For example, if a user clicks on a page whose content is about bicycles, advertising for bicycles should be displayed there – without any data collection and analysis. This could also make disinformation more difficult and free small companies from the dominance of large tech companies, the paper says.

Katarina Barley, MEP for the German Social Democrats, also criticizes the current regulation. “It’s time to put Big Tech in the closet.” “Personalized advertising is based on excessive data collection that violates the rights of citizens,” Barley told netzpolitik.org. “We need comprehensive legal protection against the data octopuses from Google, Meta and Co. That is stronger consumer protection.”