Retailers Seek Exemption from AI Labeling in Ads

What happened?

According to Reuters and reported by The Next Web, an association representing European retailers has asked the European Commission to exclude AI-generated advertising from upcoming transparency rules. The regulation, still under development, would require companies to clearly label any commercial content produced with AI. Retailers argue that this obligation would impose a disproportionate administrative and operational burden, especially for small and medium-sized businesses. The petition, submitted by the association EuroCommerce (representing over 5 million retail and wholesale companies in Europe), specifically requests that AI-generated ads be exempt from the mandatory labeling requirement that the European Commission plans to include in the upcoming Artificial Intelligence Act (AI Act).

Why is this important?

The petition comes at a critical time: the EU is defining the AI Act and other digital transparency rules. If the exemption is accepted, it would set a precedent that could weaken consumer protection against misleading AI-generated advertising. Moreover, the retail sector is one of the largest users of automated advertising, so its stance influences how the rules will be applied in practice. According to European Commission data, digital advertising spending in the EU exceeded €70 billion in 2025, and it is estimated that over 40% of online ads already use some degree of AI for creation or targeting. An exemption for retail advertising could affect millions of daily ads, reducing transparency for consumers.

Context and background

This is not the first time industry sectors have pushed to soften tech regulations. In 2023, advertisers and digital platforms already resisted deepfake labeling rules. The difference here is that retailers do not question the need for transparency but request a specific exception for advertising, arguing that the risk of confusion is lower than in other AI uses. However, recent studies indicate that consumers struggle to identify AI-generated content even when warned: a 2025 Pew Research Center survey found that only 30% of Europeans could correctly distinguish an AI-generated ad from a traditional one. Additionally, the AI Act already includes exemptions for certain low-risk AI uses, but advertising is not classified as such. The retail petition seeks to have it considered low-risk, although consumer organizations like BEUC warn that AI-generated advertising can be especially persuasive and deceptive, as it allows personalized messaging at an individual level without the user's knowledge.

Potential consequences

• For consumers: less transparency about when an ad has been generated by AI, which could facilitate deception or manipulation. For example, an AI-generated ad could show a product with non-existent features or use deepfakes of real people recommending products. Without labeling, consumers could not critically evaluate the message.
• For retailers: reduced compliance costs, but also potential loss of trust if consumers perceive a lack of honesty. A 2024 study by consulting firm Accenture showed that 65% of European consumers would trust a brand more if it labeled its AI-generated ads. Thus, the exemption could be counterproductive in the long run.
• For regulators: a dilemma between fostering innovation and protecting rights; an exemption could open the door to more similar requests from other sectors, such as tourism or banking. Moreover, the European Commission will need to balance industry pressures with consumer transparency demands and the European Parliament, which has been stricter in its amendments to the AI Act.

What should readers know?

The petition is in its early stages and no decision has been made. However, it reflects the tension between the rapid adoption of AI in marketing and regulatory efforts to ensure transparency. Consumers should watch how this regulation evolves, as it will affect the ads they see daily. Companies, for their part, should prepare to comply with labeling requirements, even if they achieve partial exemptions. Experience with the General Data Protection Regulation (GDPR) shows that companies that got ahead in compliance gained competitive advantages. Additionally, the European Commission is expected to publish a formal proposal on AI labeling in the third quarter of 2026, so the debate will intensify in the coming months. Retailers could also opt for self-regulation systems, such as codes of conduct, to demonstrate their commitment to transparency without waiting for the law.

"AI-generated advertising is already ubiquitous, but its regulation still lags. This retail petition is a test of how far regulators are willing to concede." — TheVortiq