While the industry may breathe a sigh of relief at Google’s decision, what are the repercussions for the industry and consumers arising from this reversal?
GOOGLE'S BALANCING ACT
In a significant announcement on July 22, Google has officially changed its earlier decision and advised it will now retain third-party cookies.
In June 2024, we wrote about the impact and implications for businesses of Google’s rollout of its privacy sandbox and the loss of third-party cookies, scheduled for later this year. A few weeks later, that announcement was reversed, and the status quo will be maintained.
While the industry may breathe a sigh of relief at Google’s decision, what are the repercussions for the industry and consumers arising from this reversal?
Google’s reasons for reversing its decision
The reasons Google has provided for this recent decision include:
Enhancing user choice
Google aims to give users more control over their privacy settings and introduce a feature that enables them to make informed choices about cookie usage during web browsing.
In a blog post of July 22, 2024, Anthony Chavez, VP of Privacy Sandbox, wrote:
“…we are proposing an updated approach that elevates user choice. Instead of deprecating third-party cookies, we will 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.”
Technical Challenges
Removing third-party cookies was challenging, especially maintaining the functionality of many web services that relied on these cookies for sign-ins and fraud protection, as well as the financial impact on businesses such as online travel agencies from reduced advertising revenue.
Delays in the rollout of Google’s Privacy Sandbox
Google has been working on its Privacy Sandbox initiative, a set of technologies designed to protect users’ privacy while providing companies with what they need to build and grow successful online businesses. Google initially aimed to roll out the Sandbox on Chrome globally in the second half of 2024.
Google is still developing and refining its Privacy Sandbox. However, it needs more time and work to be fully effective.
These reasons reflect the delicate balance Google is trying to maintain between user privacy, the web's functionality, and economic viability.
Google’s balancing act
While Google’s announcement may have come as a surprise to some, the reality is that Google has been facing heavy and sustained pushback from advertisers and publishers since it announced its plan to eliminate third-party cookies in 2019.
While this decision attempts to balance consumer privacy and regulatory requirements, Google is still in discussions with regulators to have their decision approved. If the regulators disagree with Google’s decision, they may still be forced to do away with third-party cookies.
Avoiding claims of anti-competitive behaviour
Google doesn’t need third-party cookies to maintain profitability. People type directly into Google’s website, making it easy for Google to target them with ads they may like based on their search entries.
Google needs third-party cookies because eliminating them would give it an added advantage over every other advertising platform. This would invite antitrust scrutiny beyond what it currently receives.
Given the legal proceedings it is already facing, Google is keen to avoid further scrutiny or interest from Regulators regarding anti-competitive behaviour. Maintaining third-party cookies helps protect Google from the potential of further anti-competitive claims.
Google has been working on its Privacy Sandbox initiative, a set of technologies designed to protect users’ privacy while providing companies with what they need to build and grow successful online businesses.
Balancing Privacy and Profit
According to Anthony Chavez, Google’s VP of Privacy Sandbox, Google is elevating user choice by “introducing a new experience in Chrome that lets people make an informed choice.”
Perhaps a more cynical but realistic view is that Google continues to prioritise profit. According to Michael Robbins, senior manager of paid search at Exverus Media, Google doesn’t want to compete with alternative identifiers and has realised the long-term impact on ad revenue if third-party cookies are depreciated.
Alternative identifiers are values used in place of third-party cookies to identify products or users in various contexts. For example, email addresses and names are used in marketing and advertising to maintain consumer privacy. Probabilistic IDs use algorithms to infer user identity based on behaviour patterns. These alternative identifiers help businesses and marketers adapt to evolving privacy regulations and the decline of third-party cookies.
Google does not support alternative identifier initiatives for several reasons. One reason is its investment in its Privacy Sandbox Initiative, which groups users into cohorts based on similar browsing behaviours. As mentioned, Google hoped to roll out the Privacy Sandbox in the second half of 2024; however, further work is required on this initiative.
A second reason is that by not supporting alternative identifiers, Google was hoping to influence the digital advertising landscape by encouraging advertisers to rely on Google’s advertising solutions. This would impact market dynamics by further consolidating Google’s dominance.
Third-party cookies are not great for user privacy, which is why other browsers that aren’t primarily online advertising platforms already block them. The risk for Google is that reversing its earlier decision and retaining third-party cookies, it looks like making the internet more respectful of a person’s privacy is too much of an inconvenience for Google.
What does Google’s decision mean for marketers and advertisers?
Google’s decision to retain third-party cookies means advertisers can still use them to track user behaviour, allowing for personalised ad targeting. However, care must still be exercised. Privacy and data security remain a priority. Consequently, privacy solutions for web users based on strong first-party data collection strategies still need to be focused on.
Regulators and governments also have greater regulatory requirements regarding privacy and user data. This means advertisers must continue to refine and adapt their advertising strategies to ensure they conform to regulatory requirements.
Google's decision provides a short-term reprieve for small advertisers who lack the resources to develop first-party data strategies. However, in the long term, advertisers may still be in a similar situation before Google reversed its decision. It is about using the reprieve provided by Google’s about-face to test and strengthen their first-party data collection strategies.
What does Google’s decision mean for users?
The main impact for users is that while removing third-party cookies was intended to enhance user privacy by reducing cross-site tracking, users will continue to experience some level of tracking by advertisers and marketers. This means users will continue to see ads based on their browsing habits.
The change will primarily impact Chrome users as other browsers, such as Safari and Firefox, have already implemented stricter privacy measures for third-party cookies.
What happens next?
As mentioned, Google is negotiating with the regulators and waiting for their approval for its decision. If the regulator doesn’t approve, Google will need to find a way to depreciate and stop using third-party cookies.
Even if the regulator does approve, marketers and advertisers should consider this a reprieve to enable them to test and strengthen their strategies for using first-party cookies.
In the previous article, we provided examples of things businesses could do to prepare for a future without third-party cookies. These strategies are still relevant for marketers and advertisers. As mentioned, the drive for user privacy and data security will ultimately impact the use of third-party cookies.
Users need to educate themselves on ensuring their privacy and security as much as possible when searching the web.
While Google will retain third-party cookies for the moment, they have indicated they will continue to work on their Privacy Sandbox. Given their continued investment in it, it will likely be rolled out and implemented at some point in the future. Whether Google will do away with third-party cookies at that point remains to be seen. In the meantime, marketers and advertisers need to stay up to date with how Google progresses with their Privacy Sandbox and future developments arising from this.
