This post is by a our guest writer Carlton Daniel, a senior associate at Hammonds, a commercial law firm.

The UK is at loggerheads with the EU over how much protection is needed for internet users’ privacy, in particular with respect to the issue of behavioural advertising.  The legal position is likely to result in changes which will adversely affect the behavioural advertising sector but the position is not clear.  Advertising people and their legal advisors will be watching these developments with particular interest, because they could have a huge impact on behavioural advertising.

Behavioural advertising

Behavioural advertising is where advertisers obtain information about a user through monitoring their internet use and then deliver targeted advertising to that user.  This form of advertising has become increasingly common.  The techniques of information collection used by behavioural advertisers include:

• Storing websites cookies to advertise their own products
• Tracking data traffic through an Internet Service Provider (e.g. BT or Sky)
• Delivering targeted advertising across other websites (e.g. Facebook).

Laid back UK approach

The UK has traditionally taken a fairly light-handed approach to advertisers using and collecting cookies for advertising purposes.  However, the EU is taking an increasingly hard line on how member states allow the conspicuous collection of information for advertising.

One of the main topics of dispute is the way in which users consent to the collection and use of cookies for the purposes of behavioural advertising. Currently, cookies can be collected and used provided that the user is given clear and comprehensive information about the purposes of storage, and is given the opportunity to refuse. The UK authorities have interpreted this opportunity to refuse as being satisfied by what is commonly known as an ‘opt-out’.

Ad network providers can currently presume that a user has consented to cookies being stored unless they inform the provider otherwise (commonly satisfied by using an opt-out clause in a privacy statement).

New legislation

However, the EU has introduced new legislation requiring prior consent for most type of cookies, and has indicated that ad network providers should “move swiftly away from opt-out mechanisms and create prior opt-in mechanisms”.  An opt-in mechanism is likely to be in the form of a pop-up window which presents a number of issues:

• Users may ignore the pop-up
• The functionality of the website may change
• Users also find multiple pop-ups irritating.

The UK’s response to the EU’s revelation has been remarkably nonchalant, maintaining its advice based around opt-out mechanisms.  However, the deadline for implementing the new EU legislation in the UK is May 2011, so Parliament will need to take action and implement new law by then.  It remains to be seen whether the UK will maintain its traditionally laissez-faire approach to behavioural advertising regulation, or if we will bow to EU pressure and introduce a stricter regime.  No doubt the advertising community will be waiting for May 2011 with baited breath.

Carlton Daniel, Senior Associate, Hammonds LLP (from 1 January 2011, Squire Sanders Hammonds)