The issue of financing political campaigns has been a topic of discussion for a while, especially against the background of the ongoing deliberations within the EU surrounding the adoption of the draft Political Advertisement Act (PAA). The recently concluded Polish parliamentary campaign and the assistance offered by State Owned Companies, along with the weak level of oversight on these actions, have highlighted certain shortcomings in the proposed framework that remain unaddressed in the current EU draft legislation. In particular, I argue that the PAA does not adequately regulate the methods and extent of financing for political campaigns such as microtargeting and mistakenly assumes the independence of regulatory bodies tasked with enforcing its requirements. An independent institutional system warranted by the European Commission to enforce the proposed rules is pivotal for PAA to achieve its goals.
The PAA’s Purpose and Framework
First published by the European Commission in 2021, the PAA’s Trilogue process began in March 2023. The PAA aims to contribute to the proper functioning of the internal market for political advertising by introducing rules that ensure a high level of transparency in political advertising and related services. Additionally, it seeks to safeguard the privacy of individuals by establishing guidelines for the utilisation of targeting and amplification techniques in the realm of political advertising. It is justified by concerns that the internal market may not possess the necessary capabilities to deliver political advertising with a high degree of transparency, thereby ensuring a fair and open democratic process across all Member States [p.1].
The PAA lays down harmonised transparency obligations for providers of political advertising and related services to retain, disclose and publish information connected to the provision of such services.
It applies to
“political advertising prepared, placed, promoted, published or disseminated in the Union, or directed to individuals in one or several Member States, irrespective of the place of establishment of the advertising services provider, and irrespective of the means used.” [Art. 1 (2)]
Article 2 (2) PAA introduces a broad definition of ‘political advertising’ to include the preparation, placement, promotion, publication or dissemination, by any means, of a message either linked with a political actor (except for its private or commercial messages); or which can potentially impact the results of an election or referendum, a legislative or regulatory process, or voting patterns.
The PAA introduces several transparency obligations with respect to political advertising, including identification of political advertising services, their sponsor and a transparency notice, record-keeping and information transmission, and periodic reporting on political advertising services. It obligates advertising publishers to enable individuals to notify them, free of charge, that a particular advertisement they have published does not comply with this Regulation.
These obligations are checked by competent national authorities who must have the power to request that a provider of political advertising services transmit the information on fulfilling specific obligations (see below).
The Polish elections have laid bare two fundamental flaws in this framework as far as the regulation of political advertising goes.
Financing of Political Advertising
On the one hand, PIS conducted an aggressive political advertising campaign. It devoted a disproportionate amount of funds to that purpose, using both direct and indirect means of funding. According to Okopress (as of 30 September), PiS has spent at least 4 million Polish zloty on their internet campaign, setting a record. Komisja Obywatelska (the Civic Coalition – the major opposition party), on the other hand, allocated around 1.4 million zloty for this purpose. As indicated in the report by the Batory Foundation from the beginning of the campaign until October 9th, PiS spent over 4 million złoty only on advertisements on YouTube, while all other committees combined spent only 1.35 million zloty.
To this we must add some 300 million zloty that the TVN24 channel revealed were funneled into 10 foundations run by SOEs in 2022. These were then supported the referendum campaign. In particular, 14 foundations belonging to SOEs had registered as entities authorised to participate in free broadcasts on public media, which were produced by them and aired as part of the referendum campaign. Moreover, they also campaigned via other channels. Their involvement was permitted by the Act on the Nationwide Referendum which granted authorised entities the right to conduct a referendum campaign on programs of public radio and television broadcasters [Art. 48 (1)]. The reason officially indicated by those entities was to support participation in the referendum. In reality, the referendum questions were used as a pretext to financially support PiS’ electoral campaign.
By way of example of how this worked, the State of Poland Foundation (SPF), associated with the Bank Gospodarstwa Krajowego, the State-owned bank bought 25 advertisement slots. Displayed from September 25th to 27th on Facebook, these promoted the following message:
This is what a hybrid attack on Poland looked like. On October 15th, vote in the referendum: Do you support the removal of the barrier on the border of the Republic of Poland with the Republic of Belarus?
The video content featured archived footage depicting disturbances at the Polish-Belarusian border in Kuźnica, contrasted with serene scenes following the erection of the border wall.
Notably, the broadcast of these advertisements were targeted at the very local level. As was noted on X (former Twitter) profile @Polityka_wSieci:
Each county (powiat) receives a different message specific to the region. All video materials are tailored to the region’s characteristics (perhaps assisted by AI). Millions of local portal viewers, as well as local content consumers, will often see PiS materials online for the first time.
So far, no party since 2014 has conducted such a broad and complex process of fragmenting the Polish internet for electoral purposes.
The PAA’s Blindspot on Financing
The PAA framework includes such microtargeting within its definition of political advertising.
In particular, the PAA defines ‘targeting or amplification techniques’ as
techniques that are used either to address a tailored political advertisement only to a specific person or group of persons or to increase the circulation, reach or visibility of a political advertisement;
It prohibits the use of targeting or amplification techniques that entail the processing of personal data as mentioned in Article 9(1) GDPR and Article 10(1) of Regulation (EU) 2018/1725 for political advertising purposes. For certain exceptions, specific transparency obligations are imposed on controllers. However, the scope of this prohibition is still debated.
Nothing so far indicates that PiS’ microtargeting concerned so-called sensitive data and would be illegal under data protection rules. Yet, PiS deployed these techniques to a far greater extent than other political parties. It could afford to do so because it managed to access disproportionately more funds than other parties for that purpose. Part of the disproportionality arose from their use of indirect means of funding their campaign through the use of state-owned enterprises. This, in turn, created a comparative competitive advantage for them.
This problem is not caught by the current draft of the PAA as it primarily focuses the problem microtargeting poses to data protection, rather than examining the methods and extent of its financing. As a result, it does not include any mechanisms to redress the competitive advantage that follows if one party can access disproportionately large amounts of money for the purpose of political advertising. Yet, it is precisely the access to ample financial resources that can empower political parties to target very specific voter groups and thereby influence a democratic process.
Presuming Independence and Competence
A second problem with the PAA pertains to its oversight framework. Instead of proposing the establishment of new authorities or bodies within Member States, it assigns the responsibility of overseeing and enforcing its rules to the relevant competent national authorities (NRA). Member States can appoint existing sector-specific authorities, equipping them with authority to oversee and enforce the Regulation’s provisions, such as those appointed pursuant to Article 51 GDPR, Article 52 of Regulation (EU) 2018/1725 or Digital Service Coordinators nominated under Digital Services Act. Member States are accountable for ensuring that these authorities have the required capabilities to safeguard citizens‘ rights in the realm of transparent political advertising.
Under the PAA, each competent authority must possess structural independence and be free from sectoral influences, external interference, or political pressures. It shall operate with complete autonomy, effectively monitoring and taking necessary and proportionate actions to ensure compliance with the PAA [Art. 15].
The independence of national regulatory authorities is crucial for effectively enforcing the rules they are competent to enforce. Independence is not a goal itself but rather a means to achieve an unbiased decision-making process. In this context, the term independence means
the capacity of the NRA to resist pressure, or act without interference, from politicians and their ability to maintain autonomy from stakeholders, mainly market participants. The independence of regulatory authorities is not limited to a lack of interference from those actors, but also includes a lack of consideration of those actors’ preferences.[p.20]
The need to prevent undue influence implies that ensuring the independence of regulatory authorities in a merely formal (de jure) manner is insufficient. The degree of independence is equally shaped by the actual practices of the regulatory authority and how these authorities themselves perceive their independence (de facto).
The Reality of Regulators in Illiberal Democracies
Kati Cseres and Judit Bard indicated that in respect to the EMFA, there is a presumption of independence regarding the media supervisory bodies. The PAA is based on the same assumption. This ignores that over the last 8 years, Poland has increasingly undermined the independence of its media and their regulators, with the European Media Freedom Act (EMFA) Impact Assessment noting similar issues across several Member States. In Poland, the very institutions the PAA designates as competent to enforce its requirements, including NRAs in the data protection and electronic communications, have been politically captured. There are several examples of the lack of impartiality of the acting head of the Polish Data Protection Authority, especially in highly sensitive political matters.
What is striking is that the Commission has not opened infringement proceedings against the Polish Data Protection Authority, even though the Polish Supreme Administrative Court has called the DPA’s actions „typical for authoritarian and fascist regimes”. Nor has it decided to open the infringement proceedings against Poland when it shortened the term of the National Electronic Communications supervisor back in 2020 for breach of EU law that guarantees the independence of the national telecommunications regulator. This might be reflective of the Commission’s general reluctance to take action in politically sensitive cases, as it is illustrated, e.g. by Sped-Pro case or state aid for public broadcasters.
The PAA’s failure to recognize the reality of captured NRA’s and the Commission’s refusal to remedy them is particularly relevant in the light of reservations concerning broad definitions included in the PAA as well as unclear tests of necessity and proportionality. In particular, there are no safeguards – especially those that could be carried out in a timely manner during electoral campaigns – against these bodies applying pressure on opposition parties and civil society by alleging that they have not adhered to the responsibilities outlined in the PAA.
The PAA can only serve its stated goals with proper scrutiny by the Commission on the fulfilment of the existing obligations under EU law as to the independence of NRAs. Imposing new obligations on NRAs without warranting the independent institutionalised framework in Member States makes those new rules toothless.