What are cookies and why do they matter?
For those who may be unfamiliar with the data collection industry on the internet, cookies are small bits of data which follow you from one page to the next to collect data on your journey across the internet as you browse. It can collect information such as what you clicked on, how long you viewed a page, and how far down on a page you scrolled, among other things.
Advertisers utilize this data to analyze consumer trends, measure against competitors, and target demographics they believe most fit their customer profile. Cookies alone as a data source within the greater digital advertising ecosystem account for roughly $180 billion of the ad tech industry annually.
According to Morning Brew, early reports from ad-tech companies showed that without cookies, publishers such as Target or Amazon could lose, in some cases, between 30% and 60% of their digital sales revenue. In announcing cookie removal, Ad Manager publishers saw a revenue drop of 20% while revenue for AdSense publishers dropped by 18%. That’s an improvement over a study from 2019, which showed an average revenue loss of 52% for top Ad Manager publishers, the company said.
What was Google’s plan for cookies?
Google planned as early as 2020 to remove cookies from the platform for all users in favor of alternative tracking methods which prioritize user privacy and safety. However, due to technical complexities along with pressure from business partners, the date for total cookie elimination has been delayed repeatedly- first in late 2022, then 2023, and most recently this past week on July 22, 2024.
Among the stakeholders in Google’s cookie saga are regulatory bodies, both private and public, who advocate for increased consumer protections against the secrecy and intrusiveness of data-collecting corporations. In the eyes of advocates, the removal of third-party cookers would theoretically limit advertisers’ ability to track private consumer information, pushing Google and the search engine ecosystem in a more user-friendly direction. To them, this newest decision from Privacy Sandbox (and Google) to move in an alternative direction after years of procrastination comes as a surprise.
In an official statement, VP of the Privacy Sandbox initiative (led, but not owned, by Google) Anthony Chavez wrote, “Throughout this process, we’ve received feedback from a wide variety of stakeholders, including regulators like the UK’s Competition and Markets Authority (CMA) and Information Commissioner’s Office (ICO), publishers, web developers and standards groups,
civil society, and participants in the advertising industry”, acknowledging that many players that will be directly affected as a result of this policy shift.
How might the future look?
The official announcement from Privacy Sandbox states that “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.”
Mr. Chavez further attempted to pacify concerns about threats to consumer privacy, stating, “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.”
Responses to the unexpected announcement have been mixed from various stakeholders representing different pieces of the Google and general digital advertising ecosystem.
For instance, Jeff Green, head of advertising platform The Trade Desk, said, “I have been saying for years now to our industry, to Google, and even to Wall Street that I think it is a strategic mistake for Google to get rid of third-party cookies”. Mr. Green’s business operates on utilizing data and retargeting which third party cookies provide.
Others responded with disagreement and even backlash to what they saw as the reversal of a net positive change for the entire internet.
The BBC reported that the UK’s data privacy watchdog said it was “disappointed” by the decision, as Stephen Bonner of the Information Commissioner’s Office (ICO) stated, “It has been our view that blocking third-party cookies would be a positive step for consumers”.
As for Google, the announcement came a day before their parent company Alphabet’s public Q2 Earnings Call reporting losses which contributed to a slide in the NASDAQ and S&P 500; the lower-than-expected revenues are partially attributed to the underperformance from Youtube advertising projections (CNBC). They have yet to detail the alternatives and opt-out options they will provide to users in lieu of the cookie policy reversal. Google hopes to provide a progressive update on the current system by 2025, but as their past deadline extensions have shown, no concrete plans exist just yet.
