Originally scheduled for 2022, Google has recently moved its ban on third-party cookies to 2023. The banning of third-party cookies is something that has already been done by browsers Firefox and Safari. However, Google’s involvement in this process is significant, as its Chrome browser has a global market share of almost 65%.
Initially appearing as a win for data privacy, Google’s ban on third-party cookies has a more complex effect on the future of targeted advertising and data privacy. Whilst some advertisers are concerned that it may hinder them in reaching their target audiences, Google won’t stop collecting user data or selling targeted ads.
The cookie ban will mean a restructuring and rethinking of the way ads are targeted. A key component in Google’s implementation of the cookie ban has been FLoC, a strategy which allows targeted advertising without third-party cookies.
Known as ‘privacy sandbox’, Google has said that it will phase out its use of third-party cookies ‘subject to our [Google’s] engagement with the United Kingdom’s Competition and Markets Authority (CMA)’. The delay has been stated to be partially due to Google working through these new cookie policies with regulating bodies, who want to ensure a fair competitive landscape for advertisers.
Third-party cookies are typically used by advertisers to target their products and services by using the data Google collects from your browsing activity. They are added to your device by other parties that a website that you are browsing has made an agreement with.
These cookies can track you as you browse the web. By doing so, they build a profile of you and your user activity. This allows advertisers to serve you highly relevant and highly personalised adverts depending on what you have been searching for. This results in high levels of advert personalisation, but has been criticised for its invasive nature.
In recent times, consumers, governments and legislative bodies have begun to criticize this large-scale data collection, with the topic of user privacy becoming a greater concern. As such, it may be in Google’s best interest to move away from these types of data collection.
A ban on third-party cookies would mean that third-parties would not be allowed to collect your data through cookies when you browse on their sites, share this data with advertisers, and direct highly specific products towards you.
The ban on third-party cookies does not, however, mean the end of targeted advertising. Instead, Google has been developing FLoC, its Federated Learning of Cohorts, as a new way to allow advertisers to target their services and products to relevant audiences without collecting third party cookies.
So, how does FLoC function? In this cookie-replacing technology, users will be collected into large ‘cohorts’ using the Chrome browser’s algorithms. These ‘cohorts’ are groups of users who share certain interests or qualities. The user’s browsing history will be looked at and analysed by the browser itself and then the user will be assigned into specific cohorts. Once grouped, advertisers are able to target their products and services towards the relevant cohorts.
With FLoC, the idea is for users to become more anonymous, hidden within a larger crowd, rather than being singled out in a very individualised and personal way. FLoC also uses on-device processing to ensure that the user’s web browsing history remains private on their browser. Personal browsing data is kept and analysed inside the user’s browser rather than being sent to other companies.
Whilst Google’s ban on third-party cookies will disrupt advertisers’ current practices, it will not be the end of targeted advertising. Google’s new FLoC system introduces cohorts of users with similar interests and these will be used instead to allow advertisers to reach the audiences most relevant to them.
Google believes that advertisers will get nearly the same return on investment with FLoC as they do with cookie-based tracking. They have stated that ‘tests of FLoC to reach in-market and affinity Google Audiences show that advertisers can expect to see at least 95% of the conversions per dollar spent when compared to cookie-based advertising.’
At present, the company is working alongside advertisers to test out whether FLoC will work as a cookie replacement. The delay to the rollout of the ban also means that there is more time for advertisers to acclimatise to this change, troubleshoot it and get to grips with the new technologies.
It is also important to note that Google themselves (including Google Search, Google Ads, YouTube and other Google platforms) will not be affected by this ban. They will still collect first-party data, which could force ad sellers to go directly to Google for this information, giving an unfair market advantage.
This means that Google’s advertising revenue stream will not be affected in the same way as other advertisers. In its most recent quarterly earnings report, it was shown that Google makes much more money from its own ad network than third-party cookies and so this change won’t have a massive effect on the tech giant.
While it seems that a ban on third-party cookies will be a way to preserve user privacy, this is not strictly the case.
Whilst FLoC means that less personal data is sent to third parties, the new cohort system brings into question how users will be grouped. Some worry that the automated grouping of users by FLoC may discriminate against certain groups. Users may be grouped by race, sexual orientation, or disability, which are all sensitive attributes to their identities.
The central concern here is that FLoC may be able to infer sensitive information about users from their general online behaviours and interests. Online attackers may be able to use these FLoC groups to easily identify certain groups of people and target them.
As such, there could be potential privacy implications related to FLoC if it is not implemented correctly. If implemented incorrectly, FLoC could leak sensitive information and, as such, this puts a large responsibility on browser makers.
So far, not a single other browser vendor has signalled that it is on board with using FLoC. Some have said they would block the technology, whilst analysis from Mozilla identified some problems with the system which could lead to further development in the future.
After Google announced its ban on third-party cookies, the CMA (the UK’s Competitions and Markets Authority) began looking into whether this change may result in advertisers shifting more of their budgets into Google Ads, which could cause problems in maintaining market competition. Google’s Chrome browser makes up two-thirds of the browser market, which means that changes it makes to its cookies policies will have a widespread effect of online advertising.
As Google itself is developing the new technology that will replace cookies, they have also been questioned on whether this gives them an unfair competitive advantage. As stated by Basile Leparmentier, a senior machine learning engineer at advertising tech firm Criteo, ‘the FLoC clustering algorithm that Google is proposing would be handled by Google themselves and common for all web users’.
This means that Google then has the power to modify the FLoC algorithm whenever it wants, which could cause upheaval for advertisers and force them to make further changes to their operational models to align with Google. It could also make it harder for smaller advertising companies to find a way into the market.
In response to this potential concern, Google has been working with the CMA to further develop its Privacy Sandbox in a fairer and more competitive manner. Google have said that they are taking more time to discuss with regulators to ‘avoid jeopardising the business models of many web publishers’, hopefully allowing the ban on third-party cookies to be enacted in a way which still allows advertising companies to operate effectively, whilst preserving more of online users’ personal data.
AR.