The Law and Business of Social Media
October 23, 2019 - Data Security, Privacy

Cookies: A Coming-of-Age Story

Cookies: A Coming-of-Age Story

One of the most recent chapters in the ongoing EU cookies saga has come in the form of a recent ruling by the Court of Justice of the European Union (CJEU) in the Planet49 case. The CJEU ruled that:

(i) implied consent is not sufficient anymore, requiring website operators to seek active consent from users which cannot be obtained by means of pre-ticked boxes; and

(ii) any obtained consent will only be sufficiently informed if an average user can understand what cookies do and how they function.

The outcome of the case – while pivotal – does not come as a surprise considering the cookie developments in the EU over the past few years.

In 2003, when the current Privacy and Electronic Communications Directive (ePrivacy Directive) came into effect, the use of cookies and similar technologies was not as advanced as it is now and did not process users’ personal information in the same way and with such complexity. Sixteen years later, cookies and similar technologies have become an indispensable part of almost every business. The amount of useful details that companies learn about their users’ interests and internet behavior through such technologies is vast and seemingly unlimited. As you would expect with such rapid technological development, the EU data protection authorities (DPAs) have caught on that the technologies are a data goldmine.

While the EU ruminates over the precise wording of the upcoming ePrivacy Regulation that will replace the current ePrivacy Directive (Regulation), some DPAs have decided to take matters into their own hands. This year alone, several DPAs across the EU proactively revised their regulatory guidance, which to a certain extent reflects, and on other points goes even further than, the Planet49 ruling.

The CJEU’s Planet49 Ruling

The Bundesverband der Verbraucherzentralen und VerbraucherverbändeVerbraucherzentrale Bundesverband eV v Planet49 GmbH (Case C-673/17) focused on a promotional lottery that Planet49 ran on its website. If users wished to enter the lottery, they would be presented with two checkboxes: (1) an unchecked box for receiving third-party advertising and (2) a pre-ticked box permitting Planet49 to set cookies to track the user’s online behavior.

The CJEU decided that:

  • A pre-ticked checkbox does not constitute valid cookie consent. The website operators must obtain an affirmative act from the user that demonstrates unambiguous consent.
  • The requirements for cookie consent are the same as the requirements for consent in the EU General Data Protection Regulation (GDPR), regardless of whether personal information is processed when placing the cookies.
  • Website operators are required to inform users about: (i) cookie retention periods and
    (ii) whether third parties are given access to the cookies.
  • Users must be provided with clear and comprehensive information to allow them to easily determine the consequences of providing consent. This information should be unambiguous and clearly comprehensible to the average internet user and sufficiently detailed to allow the user to understand the cookie functionalities.

The DPAs as Supporting Characters

As already mentioned above, the Planet49 ruling comes in the wake of several DPAs’ guidelines. In particular, we focus on the guidance from the UK’s Information Commissioner’s Office (ICO) and France’s Commission nationale de l’informatique et des libertés (CNIL). Both guidelines chime with the Planet49 ruling, even though they are not expressly referred to in the judgment. This table sets out an easy comparison of the main issues between the two DPAs:

Implied consentImplied consent is no longer sufficient – cookies and similar technologies require a GDPR-style consent. Users must take a clear, positive action to consent to non-essential cookies. Pre-ticked boxes or continuous use of a website is not valid consent.
Cookie walls Cookie walls that restrict access to users in order to influence users to provide consent are likely invalid. Cookie walls are not compatible with the GDPR as they do not let users exercise their choice without suffering major inconveniences in case of denial/withdrawal of consent.
Essential cookiesConsent is not required for cookies that are essential to providing the service requested by the user and cookies that are necessary for transferring information.
Analytics cookies Analytics cookies are not strictly necessary and require user consent.Analytics cookies do not require user consent, provided that certain conditions are met, including, but not limited to, limiting the lifespan of any analytic cookies to 13 months and that the analytics are placed by the website operator (thus only first-party analytics are allowed).
Proof of consentOrganizations using cookies must be able to demonstrate proof of the obtained consent.
Transparency obligations Users must receive the same kind of information as they would when their personal information is processed, including the cookies used and the purposes for which they are used. This extends to any cookies set by third parties.In addition to general information requirements (e.g., the identity of the controller(s), the purposes of cookies and how to withdraw consent), the guidelines specify that there should be an “exhaustive and regularly updated list of all entities (including third parties) using cookies.” All information must be complete, visible and highlighted at the time of the collection of consent.

Against these two DPAs’ guidance, it is easy to see why the Planet49 ruling should not be treated as an outlier. In fact, a number of regulators have presented guidelines and recommendations, taking similar positions to the ICO and CNIL, such as the Dutch and the Irish DPAs. Adding fuel to the fire, the Spanish DPA (AEPD) just issued a €30,000 fine against an organization on the same basis as the Planet49 ruling: implied cookie consent, where users are not provided with the choice to opt out from the placement of cookies, is not valid. The AEPD fine is likely not the last.

This is not to say that it is the same for all DPAs. Germany has never implemented the ePrivacy Directive. The German Data Protection Conference (which is the body of all German DPAs), however, did publish guidance in April 2019, stating that legitimate interest could be used for some non-essential cookies, provided that the use is proportionate to the impact on the users’ privacy rights. It will be hard for a website operator to reconcile this with the ICO’s position that active consent is the only option.

Other DPAs are still in the process of finalizing their guidance. Spain and Denmark, for example, have each indicated that they plan to issue revised guidance in the near future. It is currently unclear what this guidance will bring, although it is expected that the DPAs will likely not stray far from the above-mentioned approach of their EU counterparts.

All in all, there appears to be no overall harmonization in sight on this topic, so multinational organizations will have a hard time coming up with a practical and cost-efficient approach to compliance.

Takeaways for Organizations

The recent developments show that website operators should at least consider the following steps:

  • Reassess your cookie consent mechanism/tool to check that there are no pre-ticked or pre-selected consent boxes or sliders. The user must be able to actively turn on/toggle any consent boxes/sliders, otherwise they are not considered to be providing valid consent.
  • Include both “accept” and “decline” buttons on your cookie banner, giving the user a clear choice. EU institutions (like the European Parliament and Commission) have all set up their banners in this way. Note that if a user clicks an “x” button to make the banner disappear, this does not mean that they are giving their consent.
  • Review your cookies and similar technologies notice to determine whether: (i) it adequately covers the information specified in the Planet49 ruling (i.e., retention periods and third-party recipients) and (ii) it is written in a clear, concise and user-friendly manner that would be understood by an average internet user (and not just your privacy lawyer and IT team who drafted it).

As shown above, the DPAs do not appear to agree which cookies should be made exempt from the consent requirement. Again, this has led to different rules per EU Member States, a scenario that the Regulation will ideally resolve. Until then, some consideration will be needed as to whether you want to apply a pan-European approach, which satisfies the strictest DPA, or a more nuanced approach.

The Never-Ending Story

We cannot ignore the ongoing narrative of the Regulation, which has seen some movement recently after a period of inertia. According to the latest draft of the Regulation (as of October 2019), the use of these technologies requires GDPR-standard consent. There are, however, exceptions for technologies that track audience measuring (when carried out by third-party processors), as well as security, fraud prevention, and technical fault detection. These exceptions appear to take a business-friendly approach and in parts are not as restrictive as the ICO’s position on the same. In particular, the ICO guidance explicitly defines audience measurement cookies as analytics cookies. (As mentioned above, the ICO requires consent to be obtained for analytics cookies.)

The European Council plans on finalizing the draft by December 2019 and entering into discussions with the European Parliament in January 2020.

It is becoming obvious that cookies will be an area of increased regulatory scrutiny over the next few months and beyond. For certain industries, such as analytics and advertising, the Planet49 ruling and the surrounding DPA guidance will at best stymie future product development and marketing efforts. As a matter of simple psychology, asking users for explicit consent will lead to significantly lower cookies acceptance rates. An average user is more likely to turn off the cookie banner for good, without clicking on the accept button or changing the cookie settings. Organizations have reported to us that implementing the ICO’s consent approach for all analytics cookies has practically obliterated their analytics metrics. Consequently, requiring a GDPR-standard consent for analytics that are not privacy-intrusive and that may not even involve personal information seems like a step too far.

The Planet49 ruling and the DPAs guidance may have already stolen a march on the upcoming Regulation regarding what constitutes valid consent. However, the GDPR and the Regulation were never meant to stand in the way of organizations doing their business or frustrate whole industries. The EU still has the chance to take a more practical and business-friendly approach that does not compromise individuals’ privacy rights. Organizations can therefore only hope that the final version of the Regulation will exempt cookies that are not privacy-intrusive from the consent requirement, harmonizing the conflict in opinion between various DPAs. When it comes down to cookies and similar technologies, this appears to be the most pressing outstanding issue for the Regulation to resolve.

This is therefore not a happy-ending story (yet), and the plot thickens.