Alison Weissbrot
Aug 4, 2022

The three factors driving Google’s cookie delay

Regulatory pressures, lack of industry enthusiasm and potential cost hits continue to delay the inevitable.

Getty Images
Getty Images

I doubt anyone who has been following online privacy developments closely was too shocked last week when Google pushed back the deadline to remove third-party cookies in Chrome for the second time.

According to Google, the decision came down to the industry needing “more time to evaluate and test the new Privacy Sandbox technologies before deprecating third-party cookies in Chrome,” according to a blog post from Anthony Chavez VP, Privacy Sandbox.

To an extent, that’s true. From what I hear from media agencies, advertisers are testing new privacy-forward technologies but still relying on cookies with no intention to move away from them while they're still available.

Then consider the motives of the ad tech industry, which was built off the back of cookies and is now desperately trying to pivot to adapt before the impending deadline. More time for that would be nice.

But it's also a very convenient narrative for Google, which can point back to altruistic motives in its decision to delay.

Of course, Google has its own motives in postponing the inevitable, first and foremost among them increased regulatory pressures around the world. Google is maintaining an increasingly difficult balancing act between consumer privacy needs and antitrust concerns.

The irony is that as one improves, the other looks more suspicious. As Google tightens privacy controls, it gains more power because it maintains a direct relationship with billions of consumers — and that advantage gives it the capacity to edge competitors out of the market.

In the U.K., the Competition Markets Authority, the country’s regulatory watchdog, opened a probe into Google’s Privacy Sandbox Initiative to investigate whether it restricted competition in the digital advertising marketplace.

Privacy Sandbox is meant to be a collaborative industry effort to develop post-cookie targeting solutions. But because of the nature of how privacy on the web works, it inevitably hands more power to Google by giving it control over the industry’s new set of targeting tools.

The delay comes down to the fact that, in part, Google is still trying to find the right balance between creating a more privacy-friendly web and enabling the market conditions where independent ad tech can thrive.

But regulation isn’t the only cloud on the horizon. It’s been well documented that Google’s Privacy Sandbox tools have struggled to gain traction, as many advertisers view them as too basic compared to the sophisticated tools they’re used to.

Google sunset its initial cookie-replacement proposal, Federated Learning of Cohorts (FLoC), in January, after receiving pushback on the tool from both advertisers and privacy advocates (ostensibly for different reasons).

Its replacement, Topics API, is more widely accepted from a privacy perspective, but has been criticized by the industry for being too simple and potentially devaluing inventory on Chrome. Again, it’s a balance between privacy and targeting efficiencies that Google has not yet struck.

As Google toggles back and forth between solutions, tweaking its plans so as to not to tip the regulatory or privacy scales too far one way or the other, there’s a third consideration: With a $180 billion-plus ad business at stake, Google simply has too much to lose by removing cookies on the web too hastily.

Google has grown into an advertising powerhouse not just by monetizing its own properties, but also by creating the infrastructure to support programmatic ad buying and selling across the web — an infrastructure that, until now, has relied heavily on cookies.

If online privacy needs make these tools less effective, Google will have to manage the fallout from a cost perspective. And fresh off of a rough Q2 earnings report, managing the balance sheet is more important than ever.

Regardless of the reasons why, I, and many people I spoke with, believe Google is delaying the inevitable. Whether cookies really disappear in 2024 or 2034, a new digital landscape is on the horizon—and the industry should get prepared.

 

Source:
Campaign US

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