Google has a new roadmap to ditch internet cookies, but major players in the ad tech industry are worried that the largest internet advertiser's strategy works against their own plans for a post-cookie world. There are concerns that Google’s latest plan prioritizes its own privacy kingdom, while locking ad tech rivals out of crucial access to internet users for the purposes of personalized advertising.
There were clues in Google's updated privacy timeline, released last week, that it has more fleshed out plans to test its cookie-free internet ad ecosystem known as the "Privacy Sandbox," rewarding publishers and advertisers with early adoption, along with an experimental period that will run into 2023. However, Google plans to also penalize ad tech vendors that try to use workarounds to continue business as usual outside its Privacy Sandbox. Mathieu Roche, co-founder and CEO of ID5, an advertising technology and identity firm that works with publishers, says it looked like Google was deploying the “carrot and the stick."
“FLoC and FLEDGE are the carrot and the olive branch, where [brands and publishers] can continue to do some of the things that are very valuable,” Roche says. “Privacy Budget is the stick that will restrict the ability for everybody else to work with user-level data. So, in contrast, [Google’s] user-level data assets can be more valuable.”
The so-called Privacy Budget, set to rollout in 2023, represents one of the biggest potential disruptions to internet advertisers, except for Google, by preventing practices like “fingerprinting” and “cross-site tracking,” which are how publishers and ad tech partners gather behavioral data on readers of their websites. The companies developing their own cookie alternatives and internet IDs say that Google has a transparent timeline for its pet initiatives like FLoC and FLEDGE in Privacy Sandbox, while it is still fuzzy on details about how third-parties will be affected by the restrictions imposed by Privacy Budget. In many cases, the effectiveness of alternative IDs, the cookie replacements that are being developed, depend on tactics like "fingerprinting" and "cross-site" tracking that Google is looking to shut down.
Meanwhile, Google gave a clear roadmap for the two key parts of the initiative that could prove successful for advertisers and publishers, known as FLoC and FLEDGE, showing that it would open them to testing in the fourth quarter this year, with plans for a transition period that could run until late 2023 and beyond. FLoC stands for Federated Learning of Cohorts, which attempts to use the Chrome web browser to create large sets of people with shared interests, so they don’t have to be targeted through personally identifiable information. FLEDGE is a similar experiment, where publishers and ad tech partners create the targeting cohorts.
Google's tests have the potential to upend the entire internet advertising world, transitioning away from third-party tracking tools, which record every move a consumer makes online, and instead it relies on private anonymous data. The changes will affect all the publishers and vendors that have evolved over decades to deliver ads within Google's platform, and some vendors worry that their tactics of tracking will be ineffectual under the new rules.
All eyes are on Google as it tries to figure out how to erect a privacy-focused ad platform. Google’s Android software runs on 50% of devices in the U.S., according to a recent report from Consumer Research Intelligence Partners. Google’s Chrome web browser accounts for about 60% of internet users, and Google’s ad network serves 2 million websites and apps. Any changes to how those sites and apps can track consumers, whether through cookies or device IDs, will affect the publishers, brands and third-party ad tech vendors in Google’s ecosystem. Google generates the most internet advertising revenue in the world, notching $150 billion in 2020.