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Facebook, Google face strict European Union privacy rules that could hit ad revenues

12 January 2017

Cookies are used for targeted advertising.

Moreover, the EC also wants to implement some new rules regarding the use of cookies, aiming to make the so-called "cookie provision" more streamlined so that users would no longer get bombarded by a slew of consent requests.

The new legislation looks to reinforce the rights of European citizens to communicate privately through messaging, email and voice services, by ensuring confidentiality of conversations and metadata.

Dautlich said that responsible marketers would welcome the stiffer penalties framework that the Commission has proposed for infringements of e-Privacy rules, which mirrors that which applies under the GDPR.

In addition to providing privacy of communication of its customers, the Internet company will have to ask for permission to use personal data for displaying targeted advertising.

The top EU court has already ruled this is illegal under European law.

A copy of the upcoming Privacy and Electronic Communications Regulation leaked early in December, but only yesterday has the European Commission acknowledged its legitimacy.

The politically independent executive arm of the European Union (EU) proposed tougher privacy rules that could have a negative impact on the advertising revenues of Facebook (NASDAQ: FB), Google and other technology companies offering electronic communication services.

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Andrus Ansip, Vice-President for the Digital Single Market, added, "Our proposals will deliver the trust in the Digital Single Market that people expect".

On cookies, the rules say, "No consent is needed for non-privacy intrusive cookies improving Internet experience (e.g.to remember shopping cart history)".

But it could also hit the bottom line of Facebook, Google, and chums because tracking consent may be harder to obtain if lots of users reject third party cookies.

On the other hand, the EC points out that the stricter rules could also open up some new business opportunities for traditional telecoms operators. The new rules would give users more control over their settings, and users would be able to accept or refuse the tracking of cookies, as well as other identifiers.

The new proposals also call on consent to process electronic communications metadata, such as device location data to allow for the "purposes of granting and maintaining access and connection to the service", the commission said.

"The European data protection legislation adopted a year ago sets high standards for the benefit of both EU citizens and companies", said Věra Jourová, Commissioner for Justice, Consumers and Gender Equality.

Brussels would also like to ban all spam - electronic letters, short message service (SMS) and, in practice, telephone calls, unless customers have given their permission to that effect.

The commission is seeking to create a digital single market for data for the world's biggest free-trade bloc of around 500 million people.