The EU's Digital Services Act aimed to limit the power of social media and online platforms. Yet, it became a victory for the tech giants and a missed opportunity for the European Union. This article looks at how Big Tech’s strategic moves helped shaping EU law.

By Lisa Ostrowski, Sanna Sailer, Hanneke Slob

Published on 8 June 2022

Link to original article.

You searched online for something specific and a little later your social media feed is full of ads for just that – sound familiar? Businesses advertise online to users based on personal data collected by big tech companies.

This targeted advertising allows technology firms to capitalize personal data and select ads that fit a user's profile. In recent years, targeted advertising has also been at the centre of scandals with the 2016 US Presidential election and the 2018 Brexit vote.

In 2021 in a letter to politicians, 50 NGOs called for an end to targeted ads, arguing that it "facilitates systemic manipulation and discrimination, poses serious national security risks, funds disinformation and fraud".

The Digital Services Act (DSA), a law package recently approved by the EU, brought attention to the issue of targeted ads. This long-awaited legislation was initially developed under the narrative of protecting and safeguarding online spaces for Europeans. Since it was proposed, lobbyists have focused on preventing a ban on targeted ads.

This investigation sheds light on the lobby moves made by tech giants during the DSA negotiations. Data and analysis provide new insights into the influential game of Google, Meta (former Facebook) & Co. between January 2020 and March 2022.

A missed opportunity

In early drafts of the DSA in 2020, the EU Parliament recommended to "assess options for regulating targeted advertising, including a phase-out leading to a prohibition" of the pervasive practice. 

The final agreement of the DSA fell short of this goal – only ads on the basis of race, sexual orientation, religious beliefs, or trade union participation are banned. 

"On personalised advertising, we have not gone as far as we would like. I really think that's partly because of that gigantic lobbying campaign," admits a European parliament official who preferred to remain anonymous.

Targeted ads are big business. In 2021, Meta reported advertising revenues of more than $114 billion (€106bn), while Google (Alphabet) topped $209 billion (€194bn). 

"Google, like other companies, is afraid of being regulated, or of being subject to stricter rules, as they are now with the Digital Services Act," explains journalist and author Alexander Fanta.

Move#1: Pay to play

The tech industry is the highest-spending lobby sector in Brussels. Each year, Big Tech firms spend around 100 million euros lobbying EU institutions in various ways. The "Big Five"
– Google, Amazon, Meta, Apple and Microsoft – spent one-third of that amount in 2021. "If you just have money to set up things, events, to pay lobbyists, then your voice just gets stronger," confirms the EP official.

Move#2: Get on the inside track

The movement of employees between positions of power in the public and private sector is known as "revolving doors" – and a growing problem in Brussels. This investigation tracked the employment history of registered lobbyists. More than half of the registered lobbyists working for the "Big Five" have previously worked at EU institutions.

"In Big Tech’s recruiting ads for lobbyists, experience in the public sector was extremely welcome," states Margarida Silva who worked at Corporate Europe Observatory.

One case is that of Google’s lobbyist Andrea Busetto. His LinkedIn profile lists recent working experience as a policy advisor to an unnamed "MEP" and "political group". Archived staff registers reveal that Busetto worked nearly eight years for Liberal MEP Marco Zullo. During that time, he held multiple roles connected to the Committee on Internal Market and Consumer Protection (IMCO) responsible for DSA negotiations. “They really use EU officials and insider know-how to get clients," states Silva. 

Zullo stated that neither he nor his team had any contact with Busetto since his transition to Google. When asked whether he sees a conflict of interest in this revolving door case, Zullo replied simply: "No."

IMCO Commissioner Thierry Breton also moved through the revolving door: one month separates his role as CEO of the French IT company Atos and his appointment as Commissioner with responsibilities for the EU’s technology agenda.

MEP Alexandra Geese (Greens) also saw problems with Breton's appointment in 2019. | Source: Twitter   

MEP Patrick Breyer commented on Breton's case, "This is a no-go that someone from the industry – without a cooling down phase – is supposed to regulate the same industry in the public interestEuropean Ombudsman Emily O'Reilly recently reviewed 100 revolving door cases in EU institutions. She concluded that more needs to be done to stop the revolving door from swinging, saying that it "has become a problematic issue in Brussels, yet this is not fully reflected in how the EU administration deals with the matter". O'Reilly added that the negative effects of this staffing practice are underestimated. 

Move #3: meetings, meetings, meetings

To be heard in Brussels, meetings with powerful high-ranking officials are a must. Three politicians were mainly responsible for the oversight of the DSA: Commissioners Thierry Breton and Margrethe Vestager as well as MEP Christel Schaldemose, who acted as the Rapporteur for the IMCO.

In the first half of 2021, Rapporteur Schaldemose had 61 meetings with companies and business associations to discuss digital matters. 

"We have seen an unprecedented lobby campaign during the negotiations. [...] It is important for us legislators to speak and exchange views with people and companies that our legislation affects, but this doesn't mean that we are obliged to follow their wishes and ideas," commented Schaldemose.

Breton and Vestager's meeting lists also show a strong corporate presence. Between January 2020 and March 2022, the Commissioners and their cabinets held 379 meetings on "digital" topics. Companies and business associations had more than five times as many meetings as NGOs. 

Move#4: Befriend loud voices

Additionally, firms like Google and Meta sponsor the media sector as a way to protect their advertising revenue and encourage tech-friendly public discourse. Between 2015 and 2019, Google invested more than 150 million euros in European journalism. Google's media support is "a charm offensive" in the words of Alexander Fanta. In his report, journalists insist that the sponsorships have no direct influence on their reporting. However, Fanta believes this funding "can have a major impact on editorial independence".

Two of the three main sponsors of Europe’s largest annual media event – the International Journalism Festival – are Google and Meta. Such sponsorships anchor a dependence between journalism and technology companies. This prominent example symbolizes journalism industry events playing a part in Big Tech’s media campaign. 

The event’s co-founder Christopher Potter denied that Google’s and Meta’s funding influences the festival, stating, "Irrespective of who the sponsors are, the festival is independent because I and my fellow festival director (and co-founder) Arianna Ciccone ensure that it is." The festival declined to disclose how much they received from the two companies in 2022.

A level playing field?

This investigation shows how corporations can influence legislation and public discourse to pursue their profit interests. Nevertheless, Schaldemose is content with the compromise regarding targeted ads, stating that "with these new rules, we are taking a big step to stop the platforms from misusing our data."

A "big step" but not a stop. Big Tech’s relationships with politics and journalism are becoming increasingly complex, especially as online spaces evolve to take the place of the traditional public sphere. Without proper regulation, transparency and awareness, are citizens worldwide at risk of becoming pawns in Big Tech's lobby game?