Google backtracks on cookie phase-out: Advertisers breathe easy, privacy concerns linger

A move that seemed inevitable for the last couple of years has now been dismissed. Here is what the industry makes of it.

In a surprising turn of events, Google has announced its decision to retain third-party cookies in its Chrome browser, marking a significant U-turn from its previously stated plans to phase them out. This move comes after years of delays and discussions with regulators and industry stakeholders, leaving marketers relieved but privacy advocates questioning the tech giant's commitment to user privacy.

For years, Google has been dangling the prospect of a cookie-less future, repeatedly pushing back deadlines for the deprecation of third-party cookies. Initially slated for 2022, the phase-out was postponed to 2023, then to 2024, and now seems to have been shelved indefinitely. This constant shuffling has left the digital advertising industry in a state of flux, with many companies investing heavily in alternative tracking technologies and first-party data infrastructure.

While Google has been dragging its feet, other major browsers have forged ahead with privacy-first approaches. Apple's Safari and Mozilla's Firefox have already eliminated third-party cookies, which initially prompted Google to follow suit. However, Google's dominant position in the digital advertising market has made the transition more complex and potentially more disruptive.

Vinay Tamboli, CEO of Data and Insights at LS Digital, a digital marketing company, reflects on the industry's rollercoaster ride: "From the initial announcement of the Privacy Sandbox initiative in 2019, LS Digital has closely monitored Google's intentions to phase out third-party cookies. Initially, the industry was bracing for significant changes slated for 2022, which were then postponed to 2023, and later to 2024."

"With each update, our anticipation evolved from preparing for a cookie-less future to adopting new tracking technologies like FLoC (Federated Learning of Cohorts), and now to reevaluating our strategies in light of Google's latest decision to retain third-party cookies," he adds.

The Privacy Sandbox, which Tamboli references, is Google's proposed solution to balance privacy and advertising needs. This initiative aims to develop a set of open standards to enhance web privacy while supporting the digital advertising ecosystem.

Key technologies within the Privacy Sandbox include the Topics API, which categorises users' interests based on their browsing history without sharing specific site visits, and FLEDGE (First Locally-Executed Decision over Groups Experiment), which allows on-device ad auctions.

The goal is to enable advertisers to reach relevant audiences and measure campaign performance while protecting individual user privacy by keeping personal information on the user's device rather than sharing it across the web.

The reversal has left many marketers and brands questioning the value of their investments in first-party data infrastructure. Rajiv Dhingra, founder and CEO of ReBid, an advertisers' customer data platform, acknowledges this frustration, saying, "Advertisers who have been preparing for a cookie-less world might feel a mix of relief and frustration. Relief, because they can continue using familiar tools and methodologies, but frustration, because their investments and efforts to transition to a cookie-less environment may seem wasted."

However, Dhingra emphasises that these investments are not in vain: "First-party data remains a critical asset for personalised marketing and customer relationship management. The shift towards first-party data was driven not just by regulatory pressures but also by the need for more reliable and consent-based data. Thus, the value of first-party data remains intact and crucial for future-proofing marketing strategies."

Furthermore, Google's decision to maintain third-party cookies alongside its Privacy Sandbox technologies has been met with mixed reactions. Tejinder Gill, general manager of The Trade Desk India, a media buying platform, is critical of the move: "Google has finally acknowledged what the advertising industry has been asserting for years: the Privacy Sandbox is not a good product. It fails to sufficiently protect consumers' privacy, empower advertisers, and likely hurts publisher monetisation the most."

In addition to Gill's point, the UK's Information Commissioner's Office (ICO), a data privacy watchdog, has also expressed disappointment with the move. Stephen Bonner, deputy commissioner (Regulatory Supervision) of the ICO, stated, "It has been our view that blocking third-party cookies would be a positive step for consumers."

Gill also points out that the industry has not been standing still and has evolved since the discussions first surfaced. He says, "While Google spent years developing Privacy Sandbox, the advertising industry has moved on. Marketers now recognise that the fastest-growing parts of the internet extend beyond the Chrome browser. Consumers in India are increasingly embracing OTT, CTV, and music streaming platforms that operate in cookie-less environments."

On the other hand, Sahil Shah, president of Dentsu Creative Isobar, a digital creative agency, sees the decision as a pragmatic compromise.

He opines, "Google has made a good decision and it will help everyone, including customers, because there were privacy concerns. I think it found a middle ground and said that it will continue using third-party cookies but will ensure that the customer end of the bargain, meaning the actual users of the platform such as YouTube or Google Search, will not have their data compromised."

Google's plan to introduce browser-level settings for cookies is reminiscent of similar privacy-focused initiatives by other tech giants. Apple's App Tracking Transparency (ATT) feature, introduced in iOS 14.5, requires apps to get user permission before tracking their data across apps or websites owned by other companies. This move significantly impacted the mobile advertising ecosystem, particularly affecting platforms like Facebook that rely heavily on cross-app tracking.

Similarly, Mozilla's Firefox browser has implemented Enhanced Tracking Protection, which blocks third-party tracking cookies by default. Microsoft's Edge browser also offers tracking prevention features, allowing users to choose between basic, balanced, and strict privacy settings.

In this context, Google's proposed approach aims to strike a balance between privacy concerns and advertising needs. The company plans to introduce a one-time prompt in Chrome, allowing users to set their preferences for all Google browsing experiences. This will include options to manage cookie settings and potentially other privacy controls.

Shradha Agarwal, co-founder and CEO of Grapes, a digital marketing agency, explains, "The feature opens the gateway for new Chrome experiences, allowing people to make informed choices with the flexibility to make adjustments to their choices across web browsing at any given point in time."

Sajal Gupta, CEO of Kiaos Marketing, a digital marketing consultancy, offers a nuanced view of the situation: "Marketers have been investing in cookie alternatives and first-party data across multiple dimensions. Firstly, they aim to build consumer understanding and collect customer preferences, forming the basis for personalised messaging. Secondly, these investments focus on building direct relationships with customers to foster satisfaction, engagement, and long-term loyalty. Lastly, they facilitate targeted media outreach and enable an omnichannel experience."

Gupta further elaborates on the impact of Google's decision: "The recent changes announced by Google to retain cookies with a new user-consented feature have brought consumer privacy to the forefront. This move will devalue the targeted media outreach alternatives that AdTech platforms were developing."

However, he notes that the reduced market reach is not expected to significantly affect marketers: "The achieved market reach for most marketers, given their budgets, is typically around 40-50%, so there is room to achieve their reach goals even with a truncated platform reach of Google Ad platforms."