Google plans to stop selling ads based on individuals’ browsing across multiple websites, a change that could hasten upheaval in the digital advertising industry.
The Alphabet Inc. company said Wednesday that it plans next year to stop using or investing in tracking technologies that uniquely identify web users as they move from site to site across the internet.
The decision, coming from the world’s biggest digital advertising company, could help push the industry away from the use of such individualized tracking, which has come under increasing criticism from privacy advocates and faces scrutiny from regulators.
Google’s heft means the change could reshape the digital ad business, where many companies rely on tracking individuals to target their ads, measure the ads’ effectiveness and stop fraud. Google accounted for 52% of last year’s global digital ad spending of $292 billion, according to Jounce Media, a digital ad consultancy.
About 40% of the money that flows from advertisers to publishers on the open internet—meaning digital advertising outside of closed systems such as Google Search, YouTube or Facebook—goes through Google’s ad buying tools, according to Jounce.
“If digital advertising doesn’t evolve to address the growing concerns people have about their privacy and how their personal identity is being used, we risk the future of the free and open web,” David Temkin, the Google product manager leading the change, said in a blog post Wednesday.
Google had already announced last year that in 2022 it would remove the most widely used such tracking technology, called third-party cookies. But now the company is saying it won’t build alternative tracking technologies, or use those being developed by other entities, for its own ad buying tools to replace third-party cookies.
Instead, Google says it will use new technologies it has been developing with others in what it calls a “privacy sandbox” to target ads without collecting information about individuals from multiple websites. One such technology analyzes users’ browsing habits on their devices, and allows advertisers to target aggregated groups of users with similar interests, or “cohorts,” rather than individual users. Google said in January that it plans to begin open testing of ad buying using that technology in the second quarter.
Google’s planned change elicited some concerns in the ad world. At the moment, advertisers use the data harvested from people’s browsing across the web to figure out whom to serve ads to, and whether a targeted user went on to buy the advertised product. After Google’s change, advertisers won’t be able to get as detailed a picture of either. Still, other ad industry executives said the change is good for consumers and expressed hope that Google’s new targeting technologies will still help brands achieve their goals in online marketing.
Google’s latest move and the concern about its potential implications underscore tension in the digital ad industry between protecting user privacy and promoting competition. Smaller digital-ad companies that use cross-site tracking have accused Google and Apple Inc. of using privacy as a pretext for changes that hurt competitors.
Among the tech giants, Google and Apple have signaled they want to rein in user tracking in various ways. Facebook Inc. has struck a different tone, arguing that individualized ad targeting helps small businesses that otherwise would struggle to find customers.
Some analysts said Google could stand to benefit from the end of cross-website tracking because it is less reliant on data from other companies. Instead, it collects a large amount of data directly from users of its services, such as YouTube or Google Search. Google says it will still use that data, called “first-party” data, when targeting ads to be shown on its own websites. Many large advertisers also have a lot of first-party data on their customers.
“If you can only target based on first-party data, then the people with the most first-party data do best,” said Benedict Evans, an independent analyst.
Google says its new technologies, such as the cohorts that will be calculated on users’ own devices, have worked nearly as well as one-to-one targeting in its internal tests.
The company said its announcement on Wednesday only covers its ad tools and unique identifiers for websites, not mobile apps, meaning a substantial slice of the digital ad ecosystem wouldn’t be affected. Mobile ad spending accounted for 68% of all digital ad spending in the U.S. in 2020, according to eMarketer, a market-research firm, though that figure includes advertising on the mobile versions of websites, not just mobile apps.
The Google plan is the latest sign that the tide might be turning on user tracking more broadly. Apple plans to limit tracking of app usage by requiring developers to get opt-in permission from users before collecting an advertising identifier for iPhones. At the same time, European Union privacy regulators have fielded multiple complaints about the information that websites share with third parties about what content users are viewing as part of such tracking.
Facebook Chief Executive Mark Zuckerberg in January said in an earnings call that “Apple has every incentive to use their dominant platform position to interfere with how our apps and other apps work.”
In the U.K., the Competition and Markets Authority, the country’s top antitrust regulator, last month opened a formal probe into Google’s phasing out of third-party cookies from its Chrome browser. The probe stemmed from a complaint from a group of marketers that argued Google’s plan would cement the company’s clout in online advertising.
A Google spokesman said the company has been briefing the U.K. regulator on its plan to end its own use of unique tracking across multiple websites.
Google’s announcement complicates advertising industry efforts to come up with an alternative, more privacy-friendly technology for targeting individual consumers, such as the one being led by the Partnership for Responsible Addressable Media, a group of advertisers and advertising technology companies. That plan would rely on new identifiers, like strings of numbers and letters derived from users’ email addresses.
Google acknowledged that others may push ahead with different ways to track users. “We realize this means other providers may offer a level of user identity for ad tracking across the web that we will not,” Mr. Temkin wrote in the blog post. “We don’t believe these solutions will meet rising consumer expectations for privacy, nor will they stand up to rapidly evolving regulatory restrictions.”
Jonathan Mayer, a professor of computer science and public policy at Princeton University, said Google still has to fill in many details on its plans.
“These are proposals that read like a company that’s under enormous regulatory pressure and is trying to find a last-minute plausible compromise to stave off regulation,” Mr. Mayer said. “They’ve done the easy stuff and they haven’t done the hard questions.”
Google says that its new ad targeting technologies will promote privacy by design and the company has already chosen to make a long-term bet on privacy at the cost of user-level precision.
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