The Cookie Aftermath: Why Google Gaslit the Ad Tech Industry and How It Reacted

The Merriam-Webster dictionary defines gaslighting as “the act or practice of grossly misleading someone especially for one's own advantage.”

“I never said that!”, “You’re crazy!”, “We didn’t intend to delete third-party cookies!” are all examples of terrible manipulations that lead the victim to question the adequacy of their thought process.

Luckily, the ad tech industry is mature enough to see through the toxic behavior. Today we take the role of the yellow tabloid and discuss the major ad tech drama that shook the industry this month – Google’s U-Turn on third-party cookies.

The Timeline of Third-Party Cookies Execution

By now, you know the drill. Third-party cookies are basically HTTP trackers generated by your device and tracked by websites you’re not currently using. Their primary purpose is advertising, the ethicality of which has been a hot topic for the last 5 or so years. 

Besides often being outdated (a great con for ad relevancy), third-party data, like the Apple of Eden, also tempts advertisers to implement horrendous activities that ignore user’s privacy. Arguably, third-party cookies are the biggest nail in the coffin of our web privacy.

That’s why, *clears throat and mimics a history memoir*:

• August 2019: Google quietly initiates discussions about the future of web privacy, hinting at significant changes. Industry insiders begin speculating about the possible end of third-party cookies.

• January 2020: Google publicly announces its intention to phase out third-party cookies in its Chrome browser by 2022. The announcement sends shockwaves through the advertising industry, marking the beginning of a new era in digital privacy.

• August 2020: Google introduces the Privacy Sandbox initiative, aimed at developing alternatives to third-party cookies. This initiative proposes new standards for web tracking that prioritize user privacy while maintaining advertising efficacy.

• March 2021: Google declares that it will not build alternate identifiers to track individuals as third-party cookies are phased out. This statement underscores the company’s commitment to privacy and prompts the industry to accelerate the development of first-party data strategies.

• June 2021: Amid mounting pressure and feedback from stakeholders, Google delays the phase-out of third-party cookies to late 2023. This delay reflects the complexity of balancing privacy concerns with the needs of the ad tech ecosystem.

• October 2021: Google begins testing Federated Learning of Cohorts (FLoC), a key component of the Privacy Sandbox, which groups users into cohorts based on their browsing behavior. The test receives mixed feedback, with concerns about the effectiveness of the approach.

• July 2022: FLoC is officially abandoned after criticism from privacy advocates and the advertising industry alike. Google pivots to a new proposal called Topics, which aims to simplify and improve privacy by categorizing user interests in a less invasive manner.

• January 2023: Google extends the timeline for the phase-out once again, pushing the deadline to the second half of 2024. This decision was made to allow more time to test the Privacy Sandbox.

• March 2024: Despite ongoing efforts, Google faces increasing skepticism from regulators and industry leaders. Some believe the company’s dominance in digital advertising could hinder the development of truly privacy-centric solutions.

• July 2024: Google unexpectedly announces the cancellation of its plan to phase out third-party cookies, citing the need for more comprehensive and balanced solutions. This decision shocks the industry, leading to a renewed focus on finding viable alternatives.

“At the same time, we recognize this transition requires significant work by many participants and will have an impact on publishers, advertisers, and everyone involved in online advertising.

In light of this, we are proposing an updated approach that elevates user choice. Instead of deprecating third-party cookies, we would introduce a new experience in Chrome that lets people make an informed choice that applies across their web browsing, and they’d be able to adjust that choice at any time. We're discussing this new path with regulators, and will engage with the industry as we roll this out.”

• August 2024 (you’re here): In the aftermath, Google reaffirms its commitment to user privacy and pledges to continue working on Privacy Sandbox and other initiatives. The decision marks a significant pivot in the company’s approach, illustrating the challenges (unironically) of implementing widespread change in a complex digital landscape.

Why Google Did This

Just like every other decent ad tech connoisseur, we’ve been digging into this topic for so long, that the reasons behind Google’s decision are as plain as day. Your humble servant isn’t trying to be the Devil’s Advocate here (although I’d wish to look as cool as Keanu), but not all of this is Google’s fault.

#1. The industry is not (and never was ) ready

First and most important, despite having almost 5 years to prepare, the industry just didn’t. 

There were plenty of surveys and statistics from different sources, and without further yapping here are some of the highlights:

Adobe, 2022: In 2021, 33% of surveyed advertisers claimed to be ready for a cookieless future. In 2022, the number rose to 77%. Where are they now? Who knows…

IAB, February 2024: 57% of advertisers think that depreciating third-party cookies is the right thing to do. Only 51% of respondents say that they are ready to face the execution of cookies.

Teads, May 2021: Only 32% of publishers are preparing for the cookieless future. Only 28% of them are confident in their ability to comprehend the new reality.

Statista, July 2024: 75% of marketers from eight countries worldwide heavily rely on third-party cookies. Additionally, 45 % say that they are spending at least 50% of their marketing budgets on cookie-based activations and 64 % say that they are planning to increase their spending on such activations.

And so on and on and on. The data contradicts itself and doesn’t line up in a clear picture, because the ad tech is a mess. It’s an enormous challenge to replace a pillar like “third-party cookies,” because of how diverse and slow (hurts, but true) the industry is. 

Well, at least Google has tried…

# 2. Privacy Sandbox is not ready

For those of you, who are too lazy to click on our comprehensive analysis of Privacy Sandbox, we’ll have to explain all of that briefly here.

In short, Privacy Sandbox is a project launched by Google to solve the cookie problem. It’s a set of APIs called by a site or app to show you personalized ads while minimizing the amount of data collected on the user.

Theoretically, Privacy Sandbox should get less “noisy,” more accurate, and privacy-compliant data to the advertiser. The data is encrypted and tied to groups, so even if it gets leaked – it can’t be traced back to a single user.

It didn’t go smoothly. The Privacy Sandbox was stoned almost as badly as Saint Stephen at Jerusalem. The Competition & Markets Authority didn’t like the potential for Google’s monopoly. IAB didn’t like how Privacy Sandbox places smaller brands at a disadvantage. The Trade Desk simply trashed the initiative on every media platform possible.

Those are just the largest boulders. If we were to count every minor stone thrown at the Sandbox, this article would require a Subway Surfers edit to keep you reading.

# 3. Money…

so they say

Is the root of all evil today

But if you ask for a rise it's no surprise

That they're giving none away

It’s almost commonplace to bring up, but we should. Third-party data is simply too cheap, accessible, and heavily integrated into the whole ad tech universe to get rid of. 

Google is the largest digital ad publisher in the world, owning at least a quarter of all ad revenue. Moreover, cookies are needed to keep the company afloat. First-party data and contextual ads offer better precision, but they can’t cover the gap left by third-party cookies (Google tried in 2022).

So, it’s almost like a heroine needle of the ad tech industry. At this point, the rehab would be too long and too painful.

What the Industry Heads Think Now

You’d be surprised to know, but it’s not exactly “over”.

The opinions are divided into three groups:

“Cool”

Vishesh Sharma, fintech marketing expert:

“Somewhere, I believe that by not removing cookies completely and enhancing security features in Privacy Sandbox, Google has taken a more balanced approach,"

Kritika Arora, director of performance and acquisitions at Globale Media:

“Third-party cookies have been a cornerstone of digital advertising, enabling personalized experiences and effective targeting that benefit both consumers and advertisers."

Google's decision provides the industry with more time to develop robust, privacy-focused alternatives.”

“Not so cool”

Ian Colvin, Chief Strategy Officer at Greenpark:

“The ‘Privacy Sandbox’ alternative to third-party cookie tracking seemingly offered advertisers less granular data, so potentially lowering profits for advertisers. Google wants to protect its lucrative advertising revenues at all costs, even if that potentially compromises privacy.”

Tom Henriksson, general partner of OpenOcean:

“With ongoing investigations from the CMA and ICO, Google’s replacement is under intense scrutiny, and it may have tried spinning too many plates at once: replacing such a foundational technology while maintaining market dominance. The industry’s concerns around interoperability and the potential monopolistic implications of Privacy Sandbox have further complicated the transition.”

“Lmao, we don’t care”

Andrew Castle, CEO of Index Exchange:

“In terms of Index Exchange, this [Google’s claim] doesn’t change anything, we still have a roadmap for improvements to our tech for the sandbox that we intend to finish, and we’re going to do everything we can to make sure that alternative identifiers continue to flow into the market.”

Drew Stein, CEO of Audigent:

“As far as we’re concerned, the investments that we’ve made over the last five years still have tremendous advocacy, we don’t feel like we’ve lost anything with this announcement, it’s business as usual for us in terms of focusing on the Sandbox and the alternatives outside of it.”

What’s Next?

If you’re an avid reader of this newsletter, you know that despite dull terms and mundane appearances, advertising and ad tech are a realm of chaos and uncertainty. Just like in real life, we’d advise you to be stoic and have a cold head about Google’s decision.

The years of gaslighting didn’t just go by unnoticed. There has been noticeable progress in the development of third-party cookie alternatives from Google’s own privacy Sandbox to alternative identifiers and authenticated web. 

Maybe someday, we’ll have a world where companies respect our web privacy, but until then, let’s work towards making it possible, even if it’s writing news articles on underground ad tech newsletters. Stay in tune for more!