Bite-sized ads: Google's cookie farewell makes advertisers nibble on alternatives
Bite-sized ads: Google's cookie farewell makes advertisers nibble on alternatives
The company started a pilot to block third-party cookies, which allow any party to create a profile of the user and personalize advertisements. At the same time, it’s tightening its grip on the market with Privacy Sandbox, a profile under its full control
Google is on its way to eliminating cookies. A web browser staple since the early days of the internet almost 30 years ago, cookies are an integral part of the internet and the infrastructure on which companies like Google, Meta, and others have built their extensive data collection systems. Now, Google is taking practical steps to eliminate them. Last Thursday, the company initiated a pilot for 1% of Chrome users, in which the browser stops supporting third-party cookies. This is with the goal of ending the use of cookies for all Chrome users in the second half of the year.
Mozilla Firefox and Apple's Safari already eliminated support for cookies four years ago, but with a global market share of almost 65%, only if Chrome stops using them will they disappear entirely. Don't celebrate too soon: experts caution that the alternative presented by Google for personalized advertising is expected to tighten its grip on the digital advertising market.
Cookies are small pieces of information stored on a computer while using a browser. They have many legitimate uses, such as allowing websites to identify returning visitors and preventing the need to enter a username and password each time for services like Netflix, Amazon, or Gmail. However, third-party entities, like advertising networks, can also implant cookies during browsing, using them to create sophisticated user profiles for personalized ad targeting during website visits.
This usage has faced significant criticism from privacy advocates and users. In 2020, browsers like Safari and Firefox blocked third-party cookies by default. The impact of these changes on the digital advertising market was relatively limited, as Google Chrome dominates almost two-thirds of the global browser market. Until now, Google refrained from blocking third-party cookies, stating an intention to do so responsibly. Cynical observers argued that Google's responsibility was not towards users but rather towards its revenue stream, which was significantly impacted by blocking third-party cookies without providing an alternative for monitoring browsing habits.
Now, after developing and implementing such an alternative called Privacy Sandbox, Google has begun a wide-scale pilot for its testing, aiming to completely part ways with third-party cookies by the end of 2024. According to the company's December announcement, this decision is in response to regulators' concerns about antitrust issues.
These concerns are related to Privacy Sandbox which moves the monitoring of user browsing activity from the websites the user visits to the browser itself. The browser locally generates a list of interests or topics for advertising purposes, sharing only these with the site and its advertising network during the user's visit. Google started incorporating this alternative into Chrome in September and the move received widespread criticism, among them that it concentrates more power in the company's hands, potentially harming competition in the digital advertising market. While third-party cookies allow any player in the market to create a user profile and tailor ads, Privacy Sandbox generates this profile solely through a tool under Google's complete control. There's no certainty that it offers a better alternative for user privacy protection.
In fact, not everyone understands the need for a tool that monitors user activity. "It's a terrible idea," argued the Electronic Frontier Foundation (EFF), a digital rights organization. "Google is framing it under the false assumption that we have to choose between 'old monitoring' and 'new monitoring.' It's not either-or. Instead of reinventing the monitoring wheel, we need to imagine a better world without the various problems of targeted advertising."
Critics within the industry question the timing of the move, claiming that Google is not ready for the change. Anthony Katsur, CEO of IAB Tech Lab, told The Wall Street Journal that Google needs to give companies more time to test technological alternatives before it removes cookies and that aiming to complete the move in the fourth quarter of 2024 will be a severe blow to the industry. “The timing remains poor. Launching it during the industry’s greatest revenue-generating part of the year is just a terrible decision."
Others argue that the expected change will boost Google's own revenue from displaying ads in Google Search, which doesn't require a detailed personal profile to tailor ads to users and thus may become a preferred destination for advertisers, especially during the transition from third-party cookies. "Privacy Sandbox likely has very few winners outside of Google, if there are any at all," said Bill Simmons, vice president of product at Trade Desk, a digital ad-buyer platform. He wrote that Google’s elimination of cookies would reduce the overall value of the digital advertising industry.
In light of potential difficulties for advertisers and websites to target users, causing a decline in ad prices, digital advertising company Criteo found in 2022 that third-party cookies are up to five times more effective in targeting users compared to Google's alternative. Advertising agency Havas Media discovered that a mix of alternatives can provide similar or better results than cookies, but found it challenging to estimate how well these alternatives will perform at significantly higher activity levels.
Google has dismissed the criticism, claiming that the change will improve user privacy while providing as much value as possible to advertisers. "The ecosystem contains thousands of companies, and they’ll continue to adapt and optimize over time," said Anthony Chavez, Google's Deputy President leading the transition from third-party cookies to Privacy Sandbox. "We’re confident in the ability for the industry to navigate the transition.”
