Google is no longer killing third-party cookies and will keep them operational within Chrome browsers next year and beyond, the tech giant announced Monday. Google said it would leave the internet trackers available in Chrome, but that it would develop options for consumers to decide whether to accept them or not.

New: Ad insiders and exec react to Google reversal

The cookie-saving plan represents a major about-face for Google, which has been promising to deprecate cookies since 2019. In April Google delayed the plan to turn off cookies until the middle of next year, a move it took under heavy industry pressure. On Monday, Google still said it is committed to building “Privacy Sandbox,” an alternative ad tech pipeline for serving programmatic ads without cookies. But with cookies still functional, it’s unclear how much publishers and ad tech vendors will be motivated to invest in the Privacy Sandbox ecosystem. Google ran into regulatory and industry pressure to delay cookie deprecation as many forces aligned against Privacy Sandbox and claimed it would harm internet commerce.

Also read: Inside Google’s post-cookie ad tech troubles

“We recognize this transition requires significant work by many participants and will have an impact on publishers, advertisers, and everyone involved in online advertising,” said Anthony Chavez, VP of Google’s Privacy Sandbox, in a blog post on Monday. “In light of this, we are proposing an updated approach that elevates user choice. Instead of deprecating third-party cookies, we would introduce a new experience in Chrome that lets people make an informed choice that applies across their web browsing, and they’d be able to adjust that choice at any time. We're discussing this new path with regulators and will engage with the industry as we roll this out.”

Test results are in

At the same time as the cookie announcement, Google’s ads team issued its first results after testing Privacy Sandbox, saying the platform showed the potential to provide an alternative to cookie-based advertising in some key areas. The tests showed that advertisers’ scale of spend and their returns on investment were strong in Privacy Sandbox. But Privacy Sandbox was less effective at retargeting, which is when advertisers re-engage the same customer with follow-up ads.

“Across campaigns using only remarketing audiences, our experiment showed a 55% advertiser spend recovery in Google Ads and 49% in Display & Video 360,” Google Ads wrote in a whitepaper on Monday. “These results are likely because remarketing today is more reliant on third-party cookies which enable a highly precise level of ads personalization, and the eligible inventory is limited because few supply-side platforms (SSPs) are currently testing the Privacy Sandbox.”

Google’s ads team said that Privacy Sandbox was close to replicating the scale of ad spend: “For advertiser spend—a proxy for scale—we saw an 89% recovery in Google Display Ads and an 86% recovery in Display & Video 360,” Google wrote.

And for advertisers’ return on investment: “For campaigns focused on conversions only, we saw a 97% recovery in conversions per dollar (CPD)—a proxy for ROI—in Google Display Ads, and a 95% CPD recovery in Display & Video 360,” Google wrote.

Google’s ads team is separate from the Chrome team that is building Privacy Sandbox, and Google’s ad products are subject to the same rules and restrictions as any ad tech vendor in Privacy Sandbox. Google’s planned ad tech changes are being closely monitored by the U.K. Competition and Markets Authority, which has been receiving industry feedback to determine if the deprecation of cookies would unfairly harm online businesses, publishers and advertisers.

Google is in a tough position because it has to preserve business functions online, and it has to meet growing internet privacy requirements. Apple’s Safari and other browsers have already killed cookies and other trackers. Apple especially has taken a hard line against allowing third-party ad tech vendors to access data on the internet habits of its consumers. Apple’s anti-tracking rules hobbled targeting and measurement tactics that advertisers used for years.

Google’s plan was to activate Privacy Sandbox next year and fully shut off third-party cookies. While the industry has experimented with cookie alternatives for years, Google’s plans made a post-cookie transition even more urgent. Chrome accounts for a larger than 60% market share for browsers worldwide, making it a significant force in programmatic, open-web advertising, which funds publishers and connects small businesses with customers.

Industry pushback

This month, U.K.’s CMA has been working on an assessment of Google’s post-cookie roadmap. The regulator has collected feedback from dozens of ad tech vendors in the program. Some of the participants, such as Criteo, IndexExchange, NextRoll and RTB House, published public results that outlined some drawbacks to the new ad tech system.

Criteo, an especially close partner in testing Privacy Sandbox, outlined a litany of shortcomings, including that publishers could see a drop in revenue of up to 60%. That figure was based on the amount of money Criteo sent to publishers through Privacy Sandbox ad auctions.

Google’s whitepaper found that publishers saw dips in revenue when third-party cookies were removed, and when publishers did not turn on Privacy Sandbox. Publishers that use Google Ad Manager saw programmatic ad revenue drop 34% when selling ads without third-party cookies, and without implementing Privacy Sandbox. With Privacy Sandbox implementation, there was still a dip, albeit a smaller one: There was a 20% decrease in publishers’ programmatic ad revenue through Google Ad Manager when they sold cookie-free advertising in Privacy Sandbox, Google’s Whitepaper said.

In general, the Privacy Sandbox tests have been beset by limited buy-in from some important ad tech participants, including supply side platforms that have yet to fully embrace the platform.

Google declined to comment for this story, beyond its public posts. The Privacy Sandbox team said it would proceed with developing the application programming interfaces—APIs—which are the new pipes through which ad tech vendors run advertising functions without sharing personal data. Google did not give further details about how it would present consumers with the option to turn cookies on and off in Chrome.

Google also announced a new privacy update on Monday. Google will turn on “IP Protection” for internet users in “incognito” mode on Chrome. IP Protection masks the internet protocol address of users, one of the easiest signals to use to target online ads.  

“It remains important for developers to have privacy-preserving alternatives,” Chavez wrote in the blog post. “We'll continue to make the Privacy Sandbox APIs available and invest in them to further improve privacy and utility. We also intend to offer additional privacy controls, so we plan to introduce IP Protection into Chrome's Incognito mode.”