How Google’s cookie decision kills its Privacy Sandbox vision—industry leaders on what’s next for ad tracking

Google’s futile endeavor to reinvent online advertising without cookies led ad tech partners on a winding trip to nowhere. On Tuesday, Google announced it would keep cookies in their current form, meaning that Privacy Sandbox, its alternative programmatic ad platform, would no longer be core to the future of internet advertising as originally envisioned. There was some exasperation over the wasted time spent on developing the alternative ad tech, but also some relief that advertising would carry on unimpeded. In the end, Privacy Sandbox proved to be an ad tech-inspired shaggy-dog story. “Think about the time, investment and focus that was burned across this industry,” said Matt Barash, chief commercial officer at ad platform Nova and an ad tech industry veteran. “We’re talking about an unprecedented effort for nothing. This has been the biggest distraction in the history of this business.” The nearly six-year venture into Privacy Sandbox cost tens of millions of dollars, hundreds of millions even, when accounting for the dozens of companies that worked on it, according to ad leaders who participated in its development. The proposal launched a thousand whitepapers, consumed countless hours of public debates at ad conferences from Cannes to California, and was endlessly debated by regulators, especially in the U.K. Dozens of the biggest players in the industry representing programmatic advertisers and web publishers tried to remake their platforms to serve ads through Google’s Privacy Sandbox. They devoted engineers and project managers to the effort. Major ad agency holding companies walked their brands through the testing stages. Publishers were preparing to switch away from cookies, pushing ad auctions through Privacy Sandbox. “It’s a complicated dynamic, we provided lots of feedback over the years to Privacy Sandbox,” said an ad tech executive who worked extensively on the framework, speaking on condition of anonymity. “Ultimately, we’re happy it hasn’t been forced into primetime, as it simply wasn’t ready.” Since 2019, Google has said it wanted to kill cookies, the internet trackers that record people’s online visits, build profiles and target ads. Instead, Privacy Sandbox was conceived to eliminate “covert surveillance” in programmatic markets, Google said at its inception. But Google’s plan ran into multiple delays, missed deadlines and redrawn schematics. Then this summer, Google said it would scale back the goal and offer a “user choice” button for consumers in Chrome, letting them decide if they would accept cookies, instead of outright blocking them. That still meant Privacy Sandbox could be a vital channel to serve programmatic ads if a large portion of traffic went cookie-less. Now, Google won’t even offer the cookie notification in Chrome. Individual users can still control their cookie settings, and turn them off if they want, but Google won’t serve up a universal message steering them to an easy opt-out. Google declined to comment for this story beyond the announcement it made on Tuesday, in which it left the door open to continue work on Privacy Sandbox to find applications for its innovations. Google did subsidize the effort for many ad tech companies involved. But it is hard to imagine there is much enthusiasm to pour more resources into it, according to ad leaders. “It’s dead, but they’re not officially calling it dead,” said the ad tech executive. Google is keeping cookies in its current form What do Google’s ad tech partners think? Ad tech platforms on the supply-side, including Index Exchange, OpenX, TripleLift and Magnite, were working on Privacy Sandbox. On the buy-side, there were platforms such as Yahoo, NextRoll, Criteo and RTB House. After Google made its latest cookie edict, there was both confusion and relief among the community. No one Ad Age spoke with—at least 5 ad tech execs who were close to the project—expected Google to shelve the “user choice” message, which on its own would have justified their need to adopt parts of Privacy Sandbox. There also was relief because cookies remain a cornerstone for many ad tech companies, and Privacy Sandbox was still not ready, according to ad leaders. Privacy Sandbox is a complex system of APIs that offer ad services such as relaying anonymous data about the interests of consumers who could be prime targets for ads. There is an API to help with campaign measurement. Google also is developing cloud services, where buyers and sellers could use data without revealing proprietary information to either side. By most accounts, Privacy Sandbox is a promising concept, but it has fallen short in key areas. Video ad formats, for instance, were still having trouble in the new system. “We did see a path where this design could preserve addressability and be super privacy forward,” said another ad tech executive, who also spoke on condition of anonymity. “The design itself did have legs.” Given the choice, though, many advertisers would pick cookies. Look no further than IAB Tech Lab, the industry group that spun out of IAB that has been critical of Privacy Sandbox. Last year, it issued a scathing report outlining a litany of design flaws. Anthony Katsur, CEO of IAB Tech Lab, sent a statement in support of Chrome’s move to keep third-party cookies, saying it is a sign of “support for interoperability across the open web.” IAB Tech Lab also encouraged further development of alternative cookie technology. Why did Google stop its cookie plan? The regulatory environment has been tough for Google. In the past two weeks alone, the company has been in court for two separate antitrust trials, one for its search business and the other for its ad tech dominance. Google in August was deemed a monopoly in the consumer search market and text-based search ads. This week, the remedy phase of the search trial started, and the U.S. DOJ is even trying to get Google to divest from Chrome. The other trial found that Google violated antitrust laws with its ad tech platform. Google Ad Manager, the publisher ad serving tool, runs on more than 90% of websites. Google didn’t cite these cases explicitly in its cookie reversal, but Anthony Chavez, VP of Privacy Sandbox, alluded to changing regulations as being among the factors in the decision. “The regulatory landscape around the world has evolved considerably,” since Privacy Sandbox was first proposed in 2019, Chavez said. Privacy Sandbox also faced scrutiny from U.K. regulators, as Google needed their approval for the platform’s design. The U.K.’s Competition and Markets Authority is overseeing how Google implements its cookie rules to prevent self-preferencing and protect fair competition in online commerce. Meanwhile, the Information Commissioner’s Office is focused on safeguarding consumer privacy across Google’s platforms—often putting the two regulators’ priorities at odds. “Our work on Google’s Privacy Sandbox initiative has helped protect competition in digital advertising, which is [a] market worth billions in the U.K.,” a CMA spokesperson said in the email. “If Google had removed third-party cookies on its Chrome browser, then competitors could have been unfairly shut out of digital advertising. That’s why we stepped in, and Google gave commitments in 2022 to address our concerns.” How did ad tech firms outside Google’s Privacy Sandbox react? Some ad tech companies issued statements that are familiar to anyone following Google’s cookie saga. Google had postponed cookie deprecation several times in the past five years, and each time key sectors of the industry have come out to encourage marketers to move beyond cookies, no matter Google’s policy. Google Chrome represents 60%-plus of the global browser market share. Chrome’s moves to kill cookies had the potential to move all that advertising action into cookie-less settings. Travis Clinger, chief connectivity and ecosystem officer at data and identity platform LiveRamp, said that brands already have invested in first-party data, building direct relationships with consumers in ways that could strengthen marketing without the need for cookies. “Consumer preferences for privacy and personalization, and marketers’ demand for better performance, have already lessened the popularity of third-party cookies,” Clinger said in an email statement. Matthieu Roche, CEO at ID5, lambasted cookies as an imperfect advertising crutch. Roche noted in a LinkedIn post that cookies will mostly only be useful to advertisers on Chrome, representing a 15% fraction of digital ad audiences. Also, the industry is increasingly moving money to cookie-free zones, including connected TV. “If you think that Google’s move is going to make your life easier, think again,” Roche wrote in the note directed to advertisers. “The world is going to be more complicated and more fragmented in the future, and brands and publishers will need adaptable solutions to maximize the way they can engage with their customers, with and without cookies.” Publishing ad tech firm GumGum, which offers contextual advertising services that don’t use cookies, was critical of Google’s move, too. “Doubling down on cookies sends the wrong message,” said Adam Schenkel, GumGum’s executive VP, global platform strategy and operation, said in an email statement. “The internet doesn’t have a targeting problem; it has a trust problem. The solution isn’t clinging to outdated surveillance tactics.” Data-driven Marketing Playbook: Join industry leaders on May 22 to explore how data can drive marketing strategies, optimize media buying and improve customer engagement. Learn more here.

How Google’s cookie decision kills its Privacy Sandbox vision—industry leaders on what’s next for ad tracking

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