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Operating in the advertising and communications industry means that the Groupe has to process a significant volume of personal data. Regulations governing personal data protection are complex and evolving, differ from country to country and generate important and increasing compliance costs. Some of these regulations applicable to the Groupe are well established, while others, more recently introduced, are still under development. An example of recently established regulations, the European Union General Data Protection Regulation (EU) 2016/679 of April 27, 2016 (GDPR) came into force on May 25, 2018 and has strengthened the obligations and liability of companies processing personal data, creating operational requirements (in particular in the event of a breach of confidentiality of the data in question) and increasing their obligations in terms of security and confidentiality. The GDPR has also strengthened the rights of individuals by giving them more control over their personal data. The GDPR provides for administrative sanctions of up to euro 20 million or 4% of global annual revenue for the most serious breaches.
More recently, the California Consumer Privacy Act (CCPA) came into effect on January 1, 2020. In the absence of comprehensive federal data protection regulations, the CCPA is the most important law in this area in the United States. The CCPA provides for a right to opt-out, allowing users to suspend the collection and sale of their personal data. Although this law only applies to Californian residents, one of the main challenges is distinguishing between users in order to apply the appropriate procedures and put in compliance the entire ecosystem by identifying precisely the responsibility of each actor. On November 3, 2020, the California Privacy Rights Act of 2020 (CPRA) was enacted. Most of the provisions of the CPRA will enter into force on January 1, 2023 and apply to personal data collected from January 1, 2022. The CPRA amends the CCPA and includes additional protections for consumer privacy.
Other legislation is currently being drafted in the United States and other countries have already introduced new laws on the protection of personal data. On September 18, 2020, the Brazilian law Lei Geral de Proteção de Dados Pessoais (LGPD) entered into force, but due to the Covid-19 pandemic, its application was postponed to August 1, 2021.
In addition, on March 2, 2021, the State of Virginia in the United States adopted a law strengthening the protection of consumer data (Virginia Consumer Data Privacy Act), which will come into force on January 1, 2023.
Any unauthorized loss or disclosure of personal data may give rise to substantial damages for the persons concerned, who may sue the Groupe. The Groupe, which deals with more and more personal data, could be subject to increased scrutiny by supervisory authorities. Any breach of applicable regulations may, on top of any liability suits and sanctions handed down against the Groupe, create a loss of client trust and have an adverse impact on the Groupe’s reputation and activities.
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The Groupe’s strategy of development through acquisitions and minority investments may create risks.
Part of the Groupe’s strategy hinges on enriching its range of advertising and communication services and increasing its operations in high-growth markets. In this context, the identification of acquisition targets may prove tricky and the assessment of the risks associated with an acquisition or equity investment may be incorrect. Sellers may also at times fail to divulge certain risks. The changing and unpredictable regulatory frameworks of certain emerging markets (see Section 2.4) and certain local practices in these regions are another source of acquisition-related risks. In addition, acquisitions may be concluded on terms that are less favorable than anticipated, and/or the newly acquired companies may either fail to be successfully integrated into Publicis’ existing operations or fail to generate the synergies or other benefits that were expected. Such events could have adverse effects on the Groupe.
A description of the Groupe’s main acquisitions during 2020 appears in Section 1.4.1. See also Note 3 (Section 6.6) to the consolidated financial statements “Changes to consolidation scope”.
Goodwill from acquisitions and intangible assets (trademarks, client relationships), recorded on the Groupe’s Statement of Financial Position for acquired companies may be subject to impairment.
Large sums have been recognized on the Groupe’s balance sheet with euro 10,858 million in goodwill and euro 1,509 million in intangible assets at December 31, 2020. Given the nature of its business, the Groupe’s most important assets are, generally, intangible, and are accounted for as such. Each year, the Groupe carries out an evaluation of goodwill and intangible assets so as to determine whether these need to be impaired. The hypotheses made in order to estimate the earnings and the forecasted cash flow in the course of these reevaluations may not be confirmed by subsequent real earnings. If the Groupe were to carry out any such impairment, the loss could have an adverse effect on the Groupe’s earnings and financial position. Analysis of goodwill and intangible assets carried on the Groupe’s Statement of Financial Position is detailed in Notes 11 and 12 to the consolidated financial statements (Section 6.6).
