May 29, 2018

GDPR laws are causing panic in Europe

Illustration: Sarah Grillo/Axios

Europe's sweeping data privacy law, the General Data Protection Regulation (GDPR), went into effect last Friday, triggering a flurry of multi-billion dollar complaints, the shuttering of news websites overseas and a programmatic (automated) ad-buying market crash in Europe.

Why it matters: There hasn't been any indication that enforcement will be that stringent — regulators have indicated they'll be more lenient in the beginning than businesses realize — but ominous press coverage and the fear of heavy penalties has been enough to rattle industry.

The latest:

  • News outlets have gone dark in Europe: News publishers — many of which were linked to newspaper holding group Tronc, like The Chicago Tribune and The Los Angeles Times — shut down access to their websites from Europe on Friday. As of Monday, those sites were still reportedly blocked.
  • New paywalls are launching in Europe: The Washington Post, is reportedly adding an EU-specific paywall, that is ad and tracking-free, but is more expensive.
  • The tech giants are being slammed with complaints: Google and Facebook, the two biggest data-driven advertising companies globally, were hit with complaints filed by European privacy advocate Max Schrems just hours after GDPR went into effect. Potential penalties, Schrems argues, total up to € 7 billion.
  • Programmatic ad buying has plummeted: Since the early hours of May 25, ad exchanges have seen European ad demand volumes fall between 25 and 40% in some cases, sources tell Digiday. "Ad tech vendors scrambled to inform clients that they predict steep drops in demand coming through their platforms from Google."

The big picture: The panicked reaction to GDPR is significant because U.S.-based attempts to clean up the advertising industry have basically been ignored by marketers.

  • The Federal Trade Commission (FTC) has had native advertising guidelines around deception since 2015, but a lack of enforcement around the rules has caused many publishers to ignore them.

Be smart: Expect enforcement in the U.S. to become a bigger priority now that there has been a full turnover of the five Commissioner positions at the Federal Trade Commission, which enforces consumer protection standards.

  • Two former FTC Commissioners told Axios in March that they expect data privacy and security to be their top consumer protection priority.

What's next? Digital advertising giants are already lobbying the next mega European law, a new ePrivacy Regulation that protects the confidentiality of electronic communications.

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