Ofcom consultation on proposals for the regulation of advertising on video-sharing platforms closes

UK (AND OTHERS) - ADVERTISING AND MARKETING

Ofcom is seeking views on the regulation of advertising on video-sharing platforms (VSPs), including the appointment of the ASA as co-regulator, distinguishing between VSP-controlled and non-VSP-controlled advertising, and how each of these approaches will be regulated. A finalised technology-neutral guidance framework is expected to follow shortly afterwards.

Key date(s)

• 1 November 2020 – The UK’s communication regulator, the Office of Communications (“Ofcom”) is given the authority to regulate video-sharing platforms (“VSPs”) under the Communications Act 2003 (the “Communications Act”).
• 12 May 2021 – UK Government publishes draft text of the Online Safety Bill (“OSB”).
• 26 May 2021 – Ofcom opens a consultation on draft guidance to assist VSPs in complying with their advertising obligations (the “Consultation”).
• 28 July 2021 – The Consultation period closes, following which a response and finalised guidance can be expected.

Status

• In November 2020, the Communications Act was amended in order to transpose changes brought about by the revised Audiovisual Media Services Directive to better regulate VSPs (a type of online video service which enables users to upload and share videos with the public for which the VSP does not have an editorial role, with well-known examples being YouTube or Vimeo). These amendments focused on protecting users from online harms (primarily to be addressed by way of the OSB and for which Ofcom has drafted guidance which is subject to a separate consultation process – see ‘related developments’) as well as additional obligations regarding advertisements, for which the Consultation focuses on.
• The UK Government has provided that paid-for advertising obligations will not be incorporated into the OSB, but instead by way of the ongoing self-regulatory system administered by the Advertising Standards Agency (“ASA”) alongside Ofcom as co-regulators.
• Ofcom has now set out its approach to guidance on such advertising regulation with the Consultation opened to seek stakeholder views prior to finalising a guidance framework which is intended to be uncomplicated and platform and technology-neutral.

 What it hopes to achieve 

• The amended Communications Act seeks to protect users from harmful material including by way of advertising and the draft guidance which is subject to the Consultation looks to mirror the distinction in the Communications Act between:
  • Advertisements which are controlled by the VSP (those which are marketed, sold, or arranged by the VSP itself) (“VSP-Controlled Advertising”).
  • Advertisements which are not controlled by the VSP (“Non-VSP-Controlled Advertising”).
• For VSP-Controlled Advertising, the VSP is responsible for ensuring compliance with the regulatory requirements. Ofcom suggests that the monitoring of these compliance requirements be administered by the ASA as co-regulator primarily, with Ofcom as the statutory backstop regulator. This approach looks to build on existing co-regulatory arrangements between the ASA and Ofcom (e.g. regarding broadcast and on-demand advertising) as well as ensuring continuity with the current self-regulatory system.
• For Non-VSP-Controlled Advertising, the VSP must still take appropriate steps to ensure that the content of the advertisement meets relevant regulatory requirements. In these cases, Ofcom proposes that it will monitor compliance itself, and collaborate with the ASA where necessary.
• The Consultation seeks stakeholders views on: (i) guidance in establishing how Ofcom will determine whether a situation amounts to VSP-Controlled Advertising or not; (ii) guidance on how Ofcom will regulate VSP-Controlled Advertising; (iii) the decision to involve the ASA as a co-regulator for VSP-Controlled Advertising; (iv) guidance on how Ofcom should regulate Non-VSP-Controlled Advertising; and (v) guidance on how VSPs can ensure regulatory compliance for Non-VSP-Controlled Advertising.

Who does it impact? 

• VSPs will need to understand in what circumstances they are viewed as controlling the advertising and then the compliance steps which they will need to take (including engagement with the regulatory bodies and advertisers where necessary).
• Advertisers on VSPs will need to ensure that their advertisements meet the applicable new requirements.
• Both the ASA and Ofcom will have expanded, collaborative roles to play in ensuring appropriate regulation.
• Consumers will, hopefully, be afforded greater protection from online harms brought about by advertising.

Key points 

1. Scope of advertising on VSPs

• • The Communications Act captures a range of advertising and commercial output which is made available by way of VSPs, including traditional advertising and product placement, as well as novel methods such as influencer marketing.
  • As such the Consultation will be of relevance to a broader spectrum of operators in the VSP space.

2. The Communications Act and the Consultation

• • Ofcom’s proposal to distinguish between VSP-Controlled Advertising and Non-VSP-Controlled Advertising mirrors the position taken in the Communications Act and will distinguish between the regulatory bodies who have oversight (ASA and Ofcom).
  • The distinction will turn on whether the VSP has ‘marketed, sold, or arranged’ advertisements on the platform with Ofcom’s view that this will be met if the VSP is involved in making advertising available on the platform such as by: enabling advertisement space to be purchased; providing tools to enable advertisements to be served; or to enable advertisements to target or optimise their reach

3. Penalties for non-compliance

• • The Consultation provides for substantial action by Ofcom for non-compliance which looks to have a deterrent effect.
  • For VSP-Controlled Advertising, where engaged by the ASA, Ofcom could investigate, give an enforcement notice, apply a financial penalty, or suspend or restrict a service. For Non-VSP-Controller Advertising, Ofcom could impose fines of up to 5% of relevant turnover or £250,000.

This blog post provides an overview of a key recent or upcoming development in digital regulation in the UK or EU as part of our horizon scanning timeline which can be found below.

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