United States: Continuing GDPR Pressure for Adtech

Data protection authorities (DPAs) in the European Union (EU) continue to scrutinize practices in the adtech sector for compliance with the EU’s General Data Protection Regulation (GDPR) and local data protection and electronic marketing laws. Companies operating in this space or that make use of these services should monitor this situation closely and examine their current online advertising practices.

Notably, in late June 2019, the United Kingdom’s DPA, the Information Commissioner’s Office (ICO), issued an updated report on adtech and real time bidding (RTB) (“ICO Adtech Report” or “Report”). The Report incorporates research and information from industry outreach. High-level analysis of the Report follows.

ICO Report

The ICO Adtech Report is generally focused on privacy concerns related to RTB. RTB is a tool that enables automated bidding for, and purchasing of, digital advertising space in real time. The ICO focused on RTB due to its complexity, the risks it poses to privacy rights and complaints the ICO received about alleged privacy violations in connection with RTB.

The ICO based its Report on work it has carried out over the past few months focused on the adtech industry. Those efforts included independent research; engagement with stakeholders; review of complaints, including those from privacy rights groups like Brave and Privacy International; and information gathered at a March 2019 fact-finding forum that the ICO hosted.

The report identifies seven key issues related to RTB and the risks to individuals:

1. Interaction between GDPR and UK’s Privacy and Electronic Communications Regulation

For some background, the current European law on cookies was established by European Directive 2002/58/EC (as amended by Directive 2009/136/EC), which is known as the ePrivacy Directive. Because it is a directive and not a regulation, EU member states were required to pass laws implementing the ePrivacy Directive into national law. The UK met this obligation by passing the Privacy and Electronic Communications Regulation (PECR). The European Commission is currently drafting an update to the ePrivacy Directive, known as the ePrivacy Regulation, which will apply across the EU as the GDPR does. With the GDPR in place, and absent the ePrivacy Regulation, there has been debate in the EU on how the ePrivacy Directive (as amended in 2009) interacts with the GDPR, particularly in relation to the use of cookies on a website.

In this guidance, the ICO clarified that PECR takes precedence over the GDPR with respect to regulating cookies. It also specified that the prior consent necessary under the PECR standard must meet the GDPR’s standard for consent. Specifically, the ICO notes that it is seeking to address “widespread confusion” about the role of PECR versus the GDPR’s lawful basis for processing personal data requirements. Specifically, PECR requires that companies provide clear and comprehensive information about the purposes of any cookie or similar technology that stores information on user devices and obtain prior user consent.

2. Conditions for Processing Special Categories of Personal Data

The ICO reiterated that, under the GDPR, processing special categories of personal data (namely data that is sensitive and therefore requires greater protection) is prohibited unless a listed condition from Article 9 applies. It emphasized that this standard applies to all organizations including the adtech sector.

Particularly the ICO noted that in the RTB context, special category data is used in a portion of bid requests for segmenting audiences to receive targeted ads. The schema used within several RTB systems, for example, includes fields relating to politics, religion, mental and physical health.

According to the ICO, in relation to RTB, the only applicable condition for processing special category personal data is explicit consent (Article 9(2)(a) of the GDPR).1 As a result, the ICO found that current consent mechanisms used by several market leaders are noncomplaint (without specifying how) and advised market participants to collect explicit consent, or cease processing such data.

3. Lawful Basis for Processing Personal Data

According to the ICO, in the RTB context, consent is likely the only available lawful basis that organizations can rely on to process personal data—specifically, to process personal data relating to the placing and reading of a cookie and the onward transfer of a related bid request. In particular, the ICO notes that bid requests that comprise of nonspecial category data do not require explicit consent under the GDPR, but that due to the use of cookies to process this information, consent (to the GDPR standard under Article 6) is still required under PECR at the initial point of processing for the use of any nonessential cookies.

The ICO provides that it believes “the nature of the processing within RTB makes it impossible to meet the legitimate interests lawful basis requirements,” meaning that legitimate interests cannot be used for the main bid request processing. The ICO appears to acknowledge that legitimate interests could possibly be used as a valid basis elsewhere in the RTB ecosystem and for certain “marketing activities,” but not for “business as usual RTB processing…(i.e. processing relating to the placing and reading of the cookie and the onward transfer of the bid request).”

4. Lack of Transparency

The ICO concluded that privacy notices offered by companies utilizing RTB are generally inadequate to provide data subjects with necessary transparency. Although it acknowledged the challenge of providing clear information in such a complex marketplace, the ICO called on all participants in the adtech sector to come up with a solution that better empowers individuals to understand the use of their personal data. The ICO emphasized that under the GDPR’s notice requirements, organizations must specify the recipients or categories of recipients of personal data. Importantly, the mere fact that an organization meets the consent requirements does not mean that it is automatically compliant with the notice requirements under the GDPR.

The ICO further criticized the creation and sharing of user profiles among RTB participants as “disproportionate, intrusive, and unfair in the context of processing of personal data for the purposes of delivering targeted advertising.” In many cases, individuals are allegedly unaware that the processing is taking place and the ICO asserted that the current notices in use do not clearly inform data subjects about how their data is truly being used. The ICO did not offer a solution, but called for reforms.

5. Data Supply Chain

The ICO determined that the nature of data processing in the RTB context leads to a risk of “data leakage”—meaning data is either unintentionally shared or used in unintended ways. Multiple parties receive information about a user during the RTB bid process, but only one user wins the auction and properly uses the information received in an advertisement. The ICO called for a technical solution to ensure that data shared with bidders is deleted or otherwise protected. It noted, “once data is out of the hands of one party, essentially that party has no way to guarantee that the data will be remain subject to appropriate protection and controls.” Accordingly, the ICO provided that relying on standard contractual provisions to ensure compliance may not be enough. Specifically, the ICO states that “[o]rgnaisations cannot rely on standard terms and conditions by themselves, without undertaking appropriate monitoring and ensuring technical and organisational controls back up those terms.”

6. Data Protection Impact Assessments (DPIAs) Required for RTB

The ICO specified that DPIAs—tools used by organizations to identify and minimize the data protection risks posed by their processing activities—are mandatory in the RTB context. This is because the GDPR requires that an organization conduct a DPIA in certain instances, including where there is large scale processing of special category data. In addition, the use of personal data in the RTB context hits several triggers for DPIAs under ICO guidance, including the use of new technologies, large-scale profiling of individuals and geolocation or behavior tracking. The ICO noted that it has “seen no evidence to date” that the DPIA requirements have been fully recognized by all participants in RTB.

7. Industry Initiatives to Address Issues

The ICO noted that it reviewed various industry initiatives that have been put forward to change the way the RTB ecosystem operates. The ICO noted it has yet to see “compelling evidence” that the initiatives are fully mature, would sufficiently address the ICO’s concerns or that the current market would adopt such measures voluntarily.

Key Takeaways

Companies should consider the following when evaluating how they use and engage with entities that use RTB:

  • Engage with your marketing and digital teams and evaluate what types of data they are collecting in relation to RTB and how they may use RTB.
  • Determine whether you collect and use special category data and if you have obtained explicit consent to use such data in the RTB context.
  • Review and update your privacy and cookie policies as well as the wording in your cookie consent mechanisms to ensure that they provide a clear picture of how user data is used in relation to marketing and digital advertising.
  • Evaluate current procedures related to the disclosure of information in the RTB context and undertake appropriate monitoring and assessment of the controls in place beyond reliance on contractual provisions.
  • Conduct a data protection impact assessment where applicable based on your use of RTB.

What to Watch For

DPAs across the EU are continuing to monitor and evaluate the adtech industry’s collection and use of personal data. From the ICO Adtech Report to the Commission nationale de l'informatique et des libertés (CNIL), focus on digital advertising is clearly a priority for 2019-2020 with European DPAs continuing to focus on this sector. The ICO has also signaled that it is prioritizing further examination into the processing of special category data without explicit consent and the complexity of the data supply chain. Additionally, in July, both the ICO and the CNIL have released updated guidance on the use of cookies. Both DPAs have noted plans to continue to engage stakeholders in the RTB ecosystem to further develop policies related to the use of personal data in the adtech space. As such, it is likely that the guidance on these topics will continue to evolve, particularly as the European Commission moves closer to passing the ePrivacy Regulation.

We are continuing to monitor developments in this space and will report on any further guidance provided by the DPAs.


1 Guidance from both the European Data Protection Board and the ICO provide that “explicit consent” under the GDPR requires that a data subject give an express statement of consent while general “consent” requires a statement or clear affirmative action.

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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