Commentary

Google Gives Ad-Tech Companies A Reprieve... For Now

Google granted ad-tech companies a reprieve Thursday, when it announced it will delay plans to implement a privacy setting that would have hindered their ability to track and target web users. 

But, while the decision might benefit ad-tech companies in the short term, the industry still faces a growing backlash against what's now being called “surveillance advertising.”

To recap, in January of 2020 Google announced plans to block ad-tech companies from setting cookies in the Chrome browser.

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The change was originally supposed to take effect next year, but Google said Thursday morning it will delay the cookie-blocking setting until late 2023, in order to “allow sufficient time for public discussion on the right solutions, continued engagement with regulators, and for publishers and the advertising industry to migrate their services.”

When Google first said it would block cookies, privacy advocates generally cheered, but the ad industry complained bitterly.

The Association of National Advertisers and American Association of Advertising Agencies argued to Google last January that blocking cookies could "choke off the economic oxygen from advertising that startups and emerging companies need to survive."

Other critics -- including a Texas-led coalition of states -- claimed the move would be anticompetitive, because Google would still have access to data about Chrome users' web browsing histories.

For its part, Google repeatedly promised to impose the same restrictions on its own ad-services products (including the former DoubleClick) as on outside ad-tech companies. Earlier this month, the company formally made that commitment to regulators in the UK.

Not surprisingly, Thursday's news that Google will delay cookie-blocking drew praise from the ad industry.

Leigh Freund, president and CEO of the self-regulatory group Network Advertising Initiative, stated that the group appreciates “Google's thoughtful approach to ensuring a diverse, competitive, and privacy preserving internet experience for consumers and businesses alike.”

Consumer advocates see the decision differently.

It's disappointing,” says Justin Brookman, director of technology policy at advocacy group Consumer Reports. ”Kicking the can down the road just perpetuates the problems for two more years.”

Despite the postponement, companies that rely on online tracking and ad targeting still face regulatory threats.

Jules Polonetsky, CEO of the think tank Future of Privacy Forum, warns that the industry shouldn't take Google's announcement as a sign that the pressure on privacy is off. 

Advocates and legislators globally are fiercely determined to reform the current targeting and data sharing business models,” he says. “The additional time is an opportunity to redouble efforts to develop greater consensus for transparent privacy preserving technologies and business models that can support advertising in a trusted manner.”

Consider that already three states -- Colorado, California and Virginia -- have passed privacy laws that give state residents the right to reject at least some forms of targeted ads.

In addition, several months ago, Democratic lawmakers said they were readying a bill to ban surveillance advertising, and the Federal Trade Commission recently launched a broad probe of data-driven advertising.

Meanwhile, advocacy groups that once pushed for a do-not-track system -- which would have allowed consumers to opt out of targeted advertising -- are now seeking to ban it altogether. On Wednesday, dozens of watchdogs wrote to political leaders and regulators worldwide -- including President Joe Biden, federal lawmakers and the FTC -- to urge them to pass a privacy law that would include a ban on certain forms of personalized advertising.

In order to individualize and personalize digital advertising, we have seen the rise of a surveillance economy where everything consumers do is being tracked both online and offline, aggregated and shared,” the groups write. “The surveillance-based advertising model facilitates systemic manipulation and discrimination, poses serious national security risks, funds disinformation and fraud, while also undermining competition and taking revenue away from content creators.”

Blocking third-party cookies was only one part of Google's plan. The company also wanted to replace cookie-based ad targeting with a controversial system it dubbed the Federated Learning of Cohorts, or FLoC.

Google said Thursday it will also end trials of that plan soon.

The cohort-targeting proposal involved placing Chrome users into audience segments based on their web-browsing activity, and then transmitting data about those segments directly to publishers through a Javascript API.

That proposed system faced opposition from a variety of sources. Among other critics, the digital rights group Electronic Frontier Foundation called the plan a “terrible idea” and pointed out several privacy flaws with it.

For one, the system would have made it impossible for Chrome users to surf the web without also transmitting information about their potential interests.

Secondly, the information transmitted to publishers would have been another piece of data that ad-tech companies could have used for digital fingerprinting -- a tracking method based on characteristics of users' browsers.

Bennett Cyphers, a technologist with the Electronic Frontier Foundation, suggested Thursday that it would have been preferable for Google to end its cohort-based program without also delaying plans to block cookies.

“We've been pretty sharply critical of FLoC and some of Google's other ideas about advertising on the web, but never intended to say that the current state-of-the-art is ok,” he says. “The current state-of-the-art is awful.”

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