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Fact sheets

Cookies

April 2002

What is a cookie?

The term "cookie" refers to the user-friendly internet tool used by the advertising and ecommerce industry to authenticate users and speed up and simplify use of the internet.

Online advertisers use cookies for the following purposes:

• to estimate the reach and frequency of online ads
  Reach and frequency are the fundamental measurements of all advertising which are used for selling e.g. TV and print media ads. These measurements are becoming increasingly important in making the internet a more widely accepted part of conventional media planning and buying. Without these all you have is impressions with no idea of how many people have seen them and whether they are being seen by one per user or 20 per user.
• to identify the source of an online lead or sale
  If a person clicks on an ad and hits the advertiser's page, a cookie can track them there and make a record. The data is not personalized and goes no further than that, but it is fundamental to measuring the success of a campaign. Without it, advertisers cannot answer the basic question 'how many sales resulted from this ad?' in the way that they can with a newspaper coupon reply, for example.
• to cap ads
  Flash ads, pop-ups and other formats have the potential to annoy users. For this reason good advertisers and publishers prefer to 'cap' these ads so that they appear only once for every user. This can only be done using a "cookie". Capping is also commercially valuable for some advertisers because it prevents wasting ad media on users who have already displayed disinterest by shutting down a previous instance of the ad.
• the most widely-discussed use of "cookies" by ad servers is for targeting ads
  In fact this is much rarer than many people suppose. Here technical solutions are provided by the web designers for some sites which use their software and are subscriber-based (users give their target criteria when they login). Sites are not allowed by the designers to share targeting information. Designers use this as a marketing tool: "buy our software because we respect user and site privacy".

However, the key point with targeting is that the commercial logic for targeting is weak and so it is not widespread.

Cookies are used:

• to protect users and ensure they are genuine visitors to a site and not somebody else using their password
• to authenticate and speed up a user's identification and ecommerce transactions
• to recognize preferences for all types of website and search engine - for example remembering use names and passwords

Without cookies, users cannot access personalized content on websites without logging on. Online functionality and navigation are also reduced and websites take longer to access.

The issue:

Articles relating to the regulation of cookies are contained in the directive on the processing of personal data and the protection of privacy in the electronic communications sector. The same directive deals with unsolicited email communications and traffic data (the requirement for data to be retained for a certain period).

The Directive: http://europa.eu.int/ISPO/legal/en/dataprot/compenfr.html.

The initial proposal insisted that systems be in place whereby consumers would have to give prior consent for the use of cookies, after Dutch MEP Mr van Velzen labelled "cookies" a 'spy' device. After the ecommerce industry launched an information campaign to clear up serious misconceptions about cookies, the European Commission introduced a compromise to allow for an "opt-out" system.

Then the Council amended the wording to require advance information be given to users. Click here for the Common Position text.

Latest:

A crucial amendment has just been passed by the European Parliament's Justice and Home Affairs Committee in advance of the second reading plenary vote this month.

The amendment removes the word "prior" from the text, meaning that users and subscribers must still have access to clear and precise information about the purposes of cookies or similar devices - but not in advance of a cookie being sent. The text also still allows the user the opportunity to refuse to have a cookie or similar device stored on their terminal equipment. A link to the EP report will appear here soon.

Timing:

March - June 2002

19 March 2002: EP Committee debate, Commission and Article 29 Group

03 April 2002: EP "Information day" on cookies

17-18 April 2002: EP Committee vote May Plenary - Second Reading vote

June 2002: Possible Telecoms Council

EPC position:

The EPC has lobbied alongside other media/online interest groups to retain the right to use cookies in a practical way whilst ensuring users have accurate and easy to understand information available via their websites. It is a valuable tool in ecommerce and a user-friendly device to facilitate use of the internet for consumers.

It has lobbied in favour of the Commission compromise to require an opt-out facility which would mean that links to information on how to reject cookies would be included on commercial websites.

The EPC has lobbied against a Council amendment to the Common Position which requires the provision of advance information on cookies. This, according to the EPC and its industry associates, would be as damaging to its sector as the original call for "prior consent" since it has similar cost implications and technical challenges. This legislation would, says the EPC, put the EU online sector at a serious disadvantage compared to its non-EU competitors.

According to the EPC, the opt-out proposal is fully compliant with existing legislation on data protection (Directive 95/46)  http://europa.eu.int/comm/internal_market/en/media/dataprot/wpdocs/wp37en.pdf.

The EPC supports the EP compromise text which allows consumers to remove cookies without imposing huge costs on web publishers.

Links:

http://www.iabuk.net

Key players:

Commissioner Erkii Liikanen
Mr Cappato, MEP: EP Rapporteur

Does a cookie pose a threat to the web user's privacy?

When a cookie is sent to a user, the user's computer is assigned a number (i.e. Mr. Smith's computer will become "computer holder of cookie 145"). This allows the user's browser to tell the website operator certain basic information, e.g. that the computer holding cookie 145 uses an internet browser in English or that it uses a UK-based access provider.

The cookie itself will not provide any personal data from the user (unless the user has consented to provide such data himself/herself in accordance with existing Data Protection legislation).

If a user chooses to reject cookies having logged onto a site, but after one has already been sent (which is common practice in both the public and private sector), this does not in any way affect or undermine his/her ability to enforce their right to refuse to have the cookie stored on their computer.

This is because the user will be able to erase the cookie by following the website operator's instructions on how to delete the cookie, so that it will be as if the cookie had never been received.

Further, by doing so, if any cookie-related information had been collected by the website operator when the cookie was first sent, the user's action of deleting the cookie from his/her hard disk would render the cookie-related data received by the website operator redundant.

The website will still hold the information about cookie 145. However, the next time the former holder of cookie 145 visits the website that sent him cookie 145, the site will not be able to identify that visitor as the former holder of cookie 145. Thus, the cookie-related information becomes redundant and completely unidentifiable, as soon as the holder of the cookie deletes it from his/her computer.

For further information

FOR JOURNALISTS on this or other topics, please contact Heidi Lambert Communications on Tel: +44 1245 476 265 or heidilambert@hlcltd.demon.co.uk.

FOR EPC MEMBERS AND GENERAL ENQUIRIES please contact Angela Mills on Tel: +44 1865 310 732 or angela.mills@epceurope.org.

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