No. 134: Advertising Transparency Under the EU Digital Services Act: Can Very Large Online Platforms Escape Article 39’s Reporting Obligations?
Abstract
The European Union’s Digital Services Act (DSA) regulates online platforms with the aim of creating a safer, more transparent online environment and addressing the risks posed by emerging technologies. Many provisions of the DSA have already proven effective, prompting platforms to improve illegal content reporting mechanisms, increase transparency in content moderation, and restrict targeted advertising to minors. However, one aim of the DSA—mandating heightened advertising transparency from the largest online platforms—has drawn significant scrutiny. Article 39 requires Very Large Online Platforms (VLOPs)—platforms with at least 45 million monthly users in the European Union—to publish information about the content of advertisements posted on their platforms, the identities of advertisers, and a breakdown of users targeted and reached on their platforms in each Member State. VLOPs argue that these disclosure requirements will (1) cause irreparable harm by exposing confidential marketing strategies and trade secrets, and (2) infringe upon both VLOPs’ and advertisers’ rights under the Charter of Fundamental Rights of the European Union (the Charter), including the rights to data protection and to conduct a business. The potential harms of Article 39 raise a critical question for VLOPs: Is there a way to avoid Article 39’s reporting obligations? This paper addresses that question in two parts. First, it reviews relevant case law and explains why VLOPs’ irreparable harm and Charter-based arguments have failed. Second, it evaluates several alternative strategies VLOPs might attempt to avoid Article 39 and concludes that such strategies are unlikely to succeed.