Cookies (or similar technologies) are usually placed on an individual user's device by either the website publisher or by an advertising network organisation ("ad network") that is permitted by the website publisher to place a cookie to collect data in order to build a profile of that individual user based on their online search history. This profile of the individual can be used to target them with advertising relevant to their preferences and interests. This is known as targeted advertising or online behavioural advertising ("OBA").
The relevant provisions of the Privacy and Electronic Communications (EC Directive) Regulation 2003 (PECR 2003), which governs the position in the UK as to when and how a website publisher can place a cookie on an individual user’s device states that a person shall not store or gain access to information stored, in the terminal equipment of a subscriber or user unless the subscriber has given their consent, after being provided with "..clear and comprehensive information.." about the purposes of the storage of or access to that information.
The Regulation also introduces the concept of profiling or automated decision making, which is relevant to the functioning of OBA. In essence, individuals now have the right to be informed about the existence of automated decision making and subject to certain exceptions, the right not to be subject to automated decision making or profiling.
However, the fact is many ad networks are active on multiple websites; collecting, using, storing, aggregating and then transferring huge amounts of data to each other and this is often not made clear to users, in violation of the Regulation and its principles. The net effect is that users may have no idea who is collecting, using or storing their personal and non-personal data and in many cases are not even aware that their data is being used to build profiles about them. If they are made aware of collection of personal data, it is presented as a positive, to enable the website publisher to provide the user with a more personalised service. This is potentially risky for users, because profiles are generated by mathematical and statistical modelling of the information collected about users and are not infallible. The results of such modelling can therefore potentially lead to inaccurate and/or misleading results about an individual.
In the new world of online privacy regulation, it is no longer enough to simply have policies in place, without operational compliance. To minimise their risk of non-compliance with the law website operators should as a minimum ensure that:
Further, where a joint controller relationship between the website publisher and an ad network could or does exist, the user must be made aware of the conditions of that collaboration. This not only allows the user to understand who is responsible for protecting their data, it is also beneficial for website publishers and their ad network partners to understand in the context of their commercial relationship which party is legally responsible for compliance with the relevant privacy regulations.