Google is under pressure on many fronts to find a third-party cookie alternative.
Users are demanding more privacy.
Legislators are constantly revising laws to protect privacy.
Alphabet shareholders expect Google to keep generating high annual turnover.
Ad platforms and businesses want to deliver targeted ads to Chrome users.
The Privacy Sandbox is supposed to solve the third-party cookie problem for Google, but instead, they’ve created worse tracking technology. So far, The Privacy Sandbox’s solutions have created a user data collection monopoly without solving privacy concerns.
If the Privacy Sandbox doesn’t find an alternative soon, it’ll have massive consequences for Google’s revenue while driving users to Chrome alternatives and increasing ad/cookie blocker adoption.
Google created the Privacy Sandbox in 2019 to develop tracking technology to replace third-party cookies in Chrome browsers. The desired outcome is to create a system where marketers have some third-party cookie benefits without compromising the public’s privacy.
As of December 2022, it’s still unclear exactly how this new system will work. There have been two public iterations:
The Federated Learning of Cohorts (FLoC): March 2021 to January 2022
Topics API: January 2022 to present (December 2022)
The Federated Learning of Cohorts (FLoC) was the initial major tracking initiative developed by Google and its Privacy Sandbox partners. If the name and acronym didn’t scare people, the third-party cookie solution certainly did.
FLoC received criticism from many organisations, including the Electronic Frontier Foundation, The Economist, DuckDuckGo, GitHub, Amazon, and others claiming the new tracking technology was a step backward for user privacy and anti-competitive because it required a lot of resources to operate, thus favouring large ad firms. WordPress and Drupal even went as far as blocking FLoC for their customers—who account for more than 50% of the internet’s websites.
Why was everyone so critical of FLoC? The problem with third-party cookies is that ad companies and data sellers sell people’s data without their knowledge or consent. With third-party cookies, these companies had direct access to user data through the user’s browser.
FLoC aimed to eliminate this direct access by creating cohorts or interest groups. The idea was these groups would give users more privacy. The problem was Google would be the user data collector and facilitator, thereby monopolising the collection and distribution—which is why organisations claimed FLoC was anti-competitive.
FLoC also failed to address the fundamental criticism of third-party cookies—selling and sharing user data. The technology used a fingerprinting strategy which isn’t much different from cookies. Even though there was more anonymity with FLoC, Google was still collecting user data en masse and profiting from its distribution.
Through FLoC, The Privacy Sandbox had created a worse version of third-party cookies where one company controlled all the user data collection, storage, and distribution while failing to protect privacy.
In succumbing to criticism, complaints, and legal challenges, The Privacy Sandbox abandoned FLoC in January 2022.
At the end of January 2022, The Privacy Sandbox announced a new initiative to replace FLoC called Topics API. Many, including the privacy browser Brave, have called Topics API a rebranding rather than a new project.
According to Peter Snyder, Sr. Director of Privacy at Brave, “Google claims this new API addresses FLoC’s serious privacy issues. Unfortunately, it does anything but. The Topics API only touches the smallest, most minor privacy issues in FLoC, while leaving its core intact.”
The Topics API works similarly to FLoC or other cohorts tracking models, grouping users anonymously by related interests. Instead of serving ads to a specific user, advertises place campaigns within “topics,” which then distribute the ads to users.
There are approximately 350 topics which The Privacy Sandbox claims will reduce fingerprinting concerns—a claim Brave and others dispute.
Most browsers, including Safari and Firefox, block third-party cookies.
Apple released Intelligent Tracking Prevention which blocks all third-party cookies in 2020.
Firefox followed suit in 2021 Total Cookie Protection.
Microsoft Edge offers the option to block third-party cookies.
So, why has Google been so slow with blocking third-party cookies? According to a 2019 Forbes article, “the company’s advertising business is expected to contribute $120 billion to Alphabet’s 2019 revenues, making up 70.2% of Alphabet’s $171 billion in expected revenues for 2019.”Google’s primary business model is selling ads. They do this by farming user data through Chrome and apps on the Google Play Store. Google packages this user data and sells it to ad platforms and its own Google Ads.Google can’t afford to block third-party cookies for Chrome until it finds a viable alternative. Blocking third-party cookies without a suitable replacement would severely impact the company’s revenue—hence, they have yet to set a definitive date. It’s unlikely that the Topics API will pass public and legal scrutiny in its current form.The Privacy Sandbox has done little to address the fundamental FLoC concerns with Topics API, instead adjusting the model slightly to amend privacy issues FLoC introduced rather than developing a viable replacement for third-party cookies.
Marketers must act like third-party cookies, and cross-site tracking no longer exists. Google’s attempts to find a third-party cookie solution have continuously failed. If they keep iterating on their cohorts/FLoC/Topics model, The Privacy Sandbox will be unsuccessful, as many organisations have demonstrated that they’ll block any efforts to track users.
The future of marketing is customer relationship building. Many organisations have begun implementing a first-party data strategy that includes customer-focused initiatives to increase customer lifetime value rather than the third-party approach of constantly acquiring cheap new leads.
At Metrics Labs, we use robust tracking frameworks and data science techniques to help companies understand their first-party data and develop data-driven initiatives to increase revenue.
Take control of your first-party data and build better customer relationships with a tailored data solution from Metric Labs. Contact us, and one of our data analytics experts will be happy to discuss a bespoke data solution to meet your business goals.
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