Does the Digital Services Act give citizens back control in the digital space?

Published on: 22 February 2024

Current issues related to economy, (responsible) investment, pension and income: every week an APG expert gives a clear answer to the question of the week. This time Henny Crauwels (Senior Portfolio Manager of Developed Markets Equities) on whether the European Union’s Digital Services Act will provide more protection of our fundamental rights when we use Facebook, Instagram or other digital platforms. “We all know that our location is tracked when we use Google Maps. And yet we keep doing it, because updating your navigation system is expensive and Maps is free.”


It already applied to large digital platforms such as Facebook, Instagram and Amazon, but as of February 17, 2024, the Digital Services Act (DSA) also applies to smaller platforms. This European directive aims to create a safer digital space in which users’ fundamental rights - such as privacy - are protected and to ensure a level playing field for businesses. Will the DSA deliver on those promises? Yes and no, says Crauwels.

“Those fundamental rights of citizens are specifically about privacy. Facebook and Google, to name two examples, track your surfing behavior. That data is stored, but you don’t know where and what data it is specifically about. This happens even when you are logged out and Facebook follows you - through so-called tracking pixels - even if you don’t have an account at all. That was probably the most significant fundamental rights violation. As a result of the Digital Services Act - but also because of the Digital Market Act - digital platforms will have to become more transparent. For example, they will have to disclose their algorithms, how they target users with ads, and keep all that information. You can request all kinds of information that is being tracked about you. And on platforms like Facebook and Instagram, there is the option to opt-out, which ensures that your online behavior on other websites is no longer tracked. In that sense, you get more control over your data.”


Practice is recalcitrant

So much for the theory, about which Crauwels seems moderately positive. Practice, however, is more recalcitrant. Crauwels: “In practice, very few people will request the information that is collected about them. And with digital platforms, if you don’t pay for the product, you are the product. Most people find it convenient to use Facebook, Snapchat, WhatsApp, Instagram and TikTok for free. And then it is a lot like when you accept cookies. It’s a nuisance to have to indicate which ones you do and don’t want, so most people just accept them all right away. That’s how it works with the terms of digital platforms, too. The alternative is to start paying for a membership. For example, Facebook and Instagram offer ad-free subscriptions in Europe, but you pay between 10 and 13 euros for that. The question is how many people take advantage of that. Moreover, it is not yet entirely clear whether Meta (the parent company of Facebook and Instagram, among others, ed.) is also doing enough to comply with these regulations.”


Cat videos

Most people are familiar with the phenomenon: watch a few cat videos on Instagram, so to speak, and before you know it, you are offered more and more cat videos. The DSA should ensure that users can avoid falling into such a digital bubble or tunnel.

“As a result of the DSA, Meta has become more transparent about how their systems choose to offer users certain content. In addition, users will now have the opportunity to be offered only the stories and reels from accounts they follow, in chronological order, from new to old. And they can now also view results generated solely based on the search terms they entered, rather than their previous activities and personal interests. So, in both cases, the content offered is then no longer ranked by Meta’s systems.”


Just pay

Thus, as a result of the Digital Services Act, users have been given the makings of greater insight into what data is being collected about them and can take steps to curb the violation of their privacy. But it requires a great deal of personal initiative, willingness to delve into the available options and time, or willingness to simply pay for the service in question - assuming the provider of that service will no longer collect data about them in that case. To what extent users of digital platforms choose to go through that trouble is perhaps best reflected by Meta’s share price over the past two years, which appears to have been barely affected by the DSA.

Crauwels: “All in all, it seems that Facebook and Meta’s revenue models have not been affected by the DSA. So, investors seem to assume that 99 percent of users are willing to keep putting up with the terms of these platforms. As a result, their online behavior will continue to be tracked and they will continue to see targeted, personalized ads. We all know that our location is tracked when we use Google Maps. And yet we continue to do it because updating your car navigation system is expensive and Maps is free. It’s good that something is happening with the Digital Services Act to protect users. But it’s certainly not going to be perfect.”