A third-party cookie ban won’t hurt the search giant’s healthy first-party data ad business.
Google announced on Wednesday that third-party cookies are over — at least, as far as its ad networks and Chrome browser are concerned. This represents a significant change for the ad business and seems to be a step forward for privacy, but it’s also a limited one. It doesn’t mean that Google will stop collecting your data, and it doesn’t mean the company will stop using your data to target ads.
What Google will stop doing is selling web ads targeted to individual users’ browsing habits, and its Chrome browser will no longer allow cookies that collect that data. Ad companies that rely on cookies will have to find another way to target users; Google thinks it already has. Meanwhile, Google will still track and target users on mobile devices, and it will still target ads to users based on their behavior on its own platforms, which make up the majority of its revenue and won’t be affected by the change. In other words, while the announcement will have huge implications for the digital ad industry, it probably won’t for Google itself.
Google has been building up to this for some time. The company revealed its “Privacy Sandbox” in August 2019, an initiative to personalize (or target) web ads while still preserving user privacy. In January 2020, Google announced that it hoped to block third-party cookies from its Chrome browser by 2022 — a move that other browsers, like Safari and Firefox, made years ago. Google has planned to replace third-party cookies with technology developed through Privacy Sandbox.
Third-party cookies are used by ad companies to track you as you go around the internet, building a profile of you and your interests based on the sites you visit and using that to send ads to you. Google’s third-party cookies are on millions of websites, feeding the company a ton of information about the sites you visit, which powers part of its massive ad business. But the public is becoming more aware of privacy issues these days, and regulators are passing more privacy laws.
That’s where Google’s Federated Learning of Cohorts (FLoC) comes in, which Google says is a “privacy-first” and “interest-based” advertising technology. With FLoC, Chrome will keep track of a user’s browsing habits across the web, and then place the user in various audiences, or “cohorts,” based on those habits. Advertisers will then target their ads to cohorts, rather than an individual user. So if you’re looking for a browser that doesn’t collect your data for ads — as an individual or as part of an anonymous audience — you might want to try a different one. (By the way, you can turn off ad personalization, activity tracking, and delete the data Google has collected about you here.)
So Google will still technically deliver targeted ads to you, but it will do so in a more anonymous and less creepy way. Google claims that advertisers can get nearly the same return on investment from FLoC as they would through cookie-based tracking, and is currently testing FLoC out with advertisers to see if it will work as its cookie replacement. FLoC may not work out in the end, but Google is at least confident enough in it to declare that cookies will die, and again, Google won’t be replacing them with a similar type of individual tracker.
As Recode pointed out last year, Google will still collect your first-party data — that is, what you do when you’re using its products, like YouTube and Search — and it will target ads to you based on it. That first-party data becomes even more valuable to advertisers as third-party data sources dry up. This is great for Google, whose platforms get billions of hits per day. In fact, the bulk of Google’s revenue comes from ads on Google Search — more than half of it, according to its most recent quarterly earnings report, and far more than it makes from its ad network that currently relies on third-party cookies. And because Google Search won’t be affected by the cookie ban, that data-based revenue stream will continue to flow.
This doesn’t apply to data collected through Google’s trackers in mobile apps. That said, Apple’s upcoming iOS 14 update will stop cross-app tracking, so iPhone users will at least have that privacy option within the next few months.
Finally, while Google says it is committed to developing and using ad tech that doesn’t rely on tracking and advertising to users, other companies are developing their own non-cookie tracking methods that do, and you could still be tracked by them when you use Chrome (or another browser). But for now, Google is getting out of the cookie and individual tracking game. Consumers don’t like it, legislation may soon outlaw it, and — perhaps most importantly — Google doesn’t need it.
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