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Google’s recent announcement that they would not replace cookies with an alternative tracking technology on their Chrome browser has sent a shockwave through the digital advertising industry. It was already known that Chrome would lose cookies in 2022, but the fact they aren’t replacing it with a new tracking technology is definitely news.
In its place, they’ve announced a “privacy sandbox” that would allow advertisers to target ads to consumers without the need for collecting and building a consumer profile sourced from browsing behavior on third party sites. The move essentially changes how the handling of consumer data used to target users with ads, then track whether they purchased a product. It would move from third party data aggregators, to the user’s own browser—letting Google collect the data for advertising purposes.
This comes on the heels of Apple’s recent announcement on increased privacy restrictions on mobile advertising. Their change asks iOS 14 users to opt-in (vs. opting out) of allowing advertisers to collect their data—a change which industry experts expect will result in billions in lost advertising revenue.
As consumers attempt to navigate an increasingly digital world, data privacy has become a top concern. Major players like Google and Apple are leaning in to this trend, but much of the modern infrastructure of ecommerce is built on advertising that can target and track consumers purchasing habits online. While Google’s and Apple’s moves benefit consumers concerned about privacy, there may be unintended consequences. The current approach to eliminating anonymous data in the name of personal privacy could result in consumers paying more for things they want.
Consumers’ push for more privacy is justified, but it needs to be conducted in a way that doesn’t bring about a net negative for everyone involved. Targeting anonymous third party cookie data could be misguided.
Here’s an analogy to explain why. You go to a fancy restaurant with a coat check, and you hand them your coat. They tag your coat and put it with the rest of them. What does that coat check attendant know about you? You own a coat. They don’t know your social security number, your home address, or any personal identifiers. They just know the type of coat you wear.
Third party cookies operate in much the same way. Data is anonymized to where an advertiser will only know that you like to wear a certain type of coat, and they can use that information to sell you another one you’d like. That’s the limit of that advertiser’s insight; an anonymous piece of information that will include you in an ad campaign’s targeting pool.
This speaks to the importance of privacy policies toeing a line of cost and benefit. There should definitely be privacy controls for consumers, but the specifics matter and a blanket elimination of third party cookies is likely not it. The Federal Trade Commission has examined privacy policies’ economic impact, with their report The Economics of Privacy stating, “privacy regulation may have both positive and negative effects on economic growth and efficiency, depending on the specific attributes of the laws.”
If the policies aren’t the right ones, there’s going to be negative impacts on consumers.
Advertisers rely on a system that allows them to efficiently target consumers and track conversions, and the efficiency of that system allows them to price their products a certain way. The cost of a product factors in marketing costs—and if costs rise due to less available targeting and tracking data, it could result in consumers paying the difference.
Google’s privacy change will still share consumer data with advertisers, but it could result in more difficulty as the internet loses its usual tracking system. If other browsers don’t adopt Chrome’s approach, there could be a disparate mesh of tracking systems that would hinder reliable targeting and measurement. This can affect consumers in negative ways they haven’t considered—from paying more for products they’re interested in, to missing out on innovation because startups can’t afford to reach them with ads pitching their wares.
The recent moves from Google and Apple show there is willingness from major digital players to make policy changes with privacy in mind. And that’s a positive. But how they go about it is more important—there are entire industries built on anonymous third party data that can see negative consequences. It’s paramount that major tech players who can sway the privacy debate one way or the other act responsibly, otherwise consumers may end up footing a bill they didn’t expect.
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