EU's e-commerce toolbox, digital fairness & the case of personalized ads
The EU Commission unveiled the E-Commerce Toolbox, proposing Customs Union reform, removal of duty exemptions (<€150), stricter customs controls, and stronger consumer protections. By 2026, the Digital Fairness Act may offer restricting personalized ads, impacting both consumers and SMEs.
Yesterday, the EU Commission proposed "A Comprehensive EU Toolbox for Safe and Sustainable E-Commerce", which includes proposals on the Customs Union Reform Package, removing the duty exemption for low-value parcels under €150, more coordinated controls between customs and market surveillance authorities, enhanced product safety actions, and stronger consumer protection on online marketplaces.
By 2026, we'll likely see the Commission's concrete proposals for the Digital Fairness Act, spearheaded by the Irish Commissioner Michael McGrath. This Act is aimed at updating EU consumer protection laws to ensure “high level of [consumer protection] in the digital environment”, including:
- “dark patterns in online interfaces” which can “unfairly influence their decisions”
- “addictive design of digital services” (e.g. infinite scroll)
- personalized ads that “exploits personal problems, negative mental states or financial challenges”
- difficulties consumers face to unsubscribe
- “problematic commercial practices of social media influencers”
While some proposals seem okay-ish (f.e. no one likes deceptive subscription policy), others, like restrictions on personalized ads, ignore the broader impact on consumers, European e-commerce, and SMEs.
#1 Digital upskilling should be the focus - regulatory safety nets are just a temporary fix
The Commission argues that “consumers behave differently online than offline”, justifying the need for yet another layer of heavy regulations for the digital space.
The pink elephant in the room is Europe’s digital skills gap (See picture below), making consumers easy targets for shady platforms, scams, and online crime. Bad actors evolve quickly; they find and exploit loopholes faster than regulations can keep up. Without serious investment in digital upskilling, strict rules and guardrails won’t offer lasting protection - leaving law-abiding people and businesses burdened with compliance costs and lost opportunities.
Digital upskilling should cover a range of topics, including protecting personal data and sharing only what’s necessary online.
#2 "Insufficient enforcement" is a capacity issue, not a willingness problem. "Regulatory fragmentation" is a choice made by individual countries
The argument for “harmonization”/ “Single Market” is slowly being devalued by being used to justify anything - including overreaching consumer laws.
The European Commission explains their logic for DFA stating that “the effectiveness of EU consumer protection is undermined by insufficient enforcement , legal uncertainty, the increasing risk of regulatory fragmentation across Member States' national approaches”.
First - public administrations and regulators, especially in smaller EU Member States, have to increasingly focus on transposing and implementing EU laws, instead of anything else. The ‘insufficiency’ problem is often not a willingness but a manpower problem, and if the EU continues with the regulatory spree, we’ll face even bigger issues in the future.
Second – “national approaches”, especially on consumer-oriented advertising laws, are a Member State choice and must be respected. Simplistic example: my home country Lithuania bans alcohol ads (with some loopholes for ‘non-alcoholic’ beer), but that shouldn’t be forced on beer-loving Czechs. The Baltics ban public drinking in parks - should the French have to follow suit?
#3 EU’s e-commerce is booming, and personalized ads are its backbone
We have little clarity at the moment on which specific "vulnerabilities" the EU aims to safety net (the Commission plans to start another round of consultations soon) but restrictions on personalization of ads must be weighed extremely carefully. I’d argue it’s the most controversial part of the potential DFA package.
Post-Covid e-commerce boom. Since Covid, the EU’s e-commerce skyrocketed - from around €700 billion revenue in 2019 to over € 950 billion revenue in 2024. The growth isn’t slowing down.
Consumer Choice. After having tried shopping online, consumers are not looking back - 89% say they will continue shopping online more than before the pandemic. Moreover, nobody wants to see irrelevant advertisements and content - most prefer seeing ads relevant to their interests.
SMEs. Digital advertising has become a backbone for SMEs to find the right customer and be noticed. Digital advertising, with the help of personalized ads is the most advanced, cheapest and biggest ROI tool for SMEs in history. Small businesses using personalized ads see higher conversion rates and can technically compete with larger firms. No comparable alternatives are present.
Don't we have the strictest data privacy framework already? One of the core arguments for DFA's action on personalized ads are collection of users data which "exploits their vulnerabilities". However, we must acknowledge that the EU already has probably one of the strictest data privacy frameworks in the world - how many amendments and changes we'll need on that end?
To conclude, while online advertising per se will not be outlawed, restrictions on personalization of advertisements are only going to make advertising more expensive and less effective for the SMEs. The definition of "vulnerability" is also debatable - for some it's gambling, alcohol, for others - repetitive purchase of sport equipment, clothes and more.
