Google's Decision to Keep Third-Party Cookies in Chrome: What It Means

Third-party cookies have been the foundation of online advertising for years. For those who are not familiar, these cookies are small pieces of code that websites place on a user's browser to track their activity across different sites. This tracking helps advertisers create targeted ads based on the user's browsing behavior. 

Despite their usefulness to advertisers, third-party cookies have raised significant privacy concerns.

As the leading search engine, Google has been under tremendous pressure to alter its policy. 

Google's Initial Plan

In January 2020, Google announced plans to phase out third-party cookies in its Chrome browser by 2022. This move was part of Google's Privacy Sandbox initiative, which aims to develop web standards that enhance privacy while still enabling online advertising. The decision was in line with actions taken by other major browsers like Safari and Firefox, which had already implemented stricter policies on third-party cookies.

Google's plan was met with mixed reactions. Privacy advocates welcomed the move, seeing it as a significant step toward better user privacy. However, advertisers and ad tech companies were concerned about the impact on their ability to target ads effectively.

Reversal of the Decision

In a surprising turn, Google announced in July 2024 that it would delay the phase-out of third-party cookies indefinitely. This reversal came after extensive industry feedback and the recognition that more time was needed to develop effective alternatives.

Implications of Google's Reversal

Google's decision to delay the removal of third-party cookies has far-reaching implications for different stakeholders in the digital advertising world.

Here’s a look into how it can impact each of them.

For Advertisers

Advertisers stand to gain the most with this reversal because they can continue using existing cookie-based strategies for user tracking and ad targeting. This extension provides more time to adapt to future changes. Moreover, the ad industry has been exploring alternatives to third-party cookies, like Google's Privacy Sandbox. The additional time allows further development and testing of these technologies.

As a side benefit, it can increase the demand for privacy-focused solutions. The continued use of third-party cookies means ongoing privacy concerns and users may still feel uneasy about being tracked across websites, which could lead to the adoption of privacy solutions. 

For Ad Tech Companies

Based on Google’s decision to remove third-party cookies, many ad tech companies have invested in developing cookie alternatives. With the latest reversal, they must now balance their current offerings with the ongoing reliance on third-party cookies. At the same time, these ad tech companies must continue innovating to develop privacy-preserving technologies that can eventually replace third-party cookies.

For Users

Users take the brunt of this decision as it can further their privacy concerns. As mentioned earlier, this could increase the demand for privacy-focused solutions like browsers and tools that offer better privacy protection. Also, users are likely to demand more transparency and control over how their data is collected and used.

In light of this impact, what to expect from online advertising in the coming years?

The Future of Online Advertising

First off, Google's reversal doesn't eliminate the need for change. The industry still needs to prepare for a future without third-party cookies. The focus will likely be on developing robust, privacy-preserving technologies that meet both user and advertiser needs. But the key benefit is that everyone will have more time to experiment with different technologies and solutions without feeling pressured to accept what’s available now. 

Some possible developments in this space are:

Alternative Privacy Tools

Google's Privacy Sandbox aims to create web standards for tracking users while protecting their privacy. Despite delays, it remains a critical component of the future ad industry. 

This sandbox uses Federated Learning of Cohorts (FLoC), a technology that groups users into cohorts based on their browsing habits. This segmentation enables targeted advertising without revealing individual user identities. 

Similarly, TURTLEDOVE and FLEDGE allow interest-based advertising without third-party cookies, using on-device data processing to protect user privacy. 

First-Party Data

Advertisers are likely to increase their reliance on first-party data, which is collected directly from users with their consent. This approach is seen as more privacy-friendly and sustainable in the long term. 

First-party data includes information gathered from:

1. Customer interactions from a company's website, apps, and other direct interactions.

2. Loyalty programs that incentivize users to share their data in exchange for rewards.

3. Subscriptions services, where users provide their information in exchange for access to content or services.

Besides these solutions, companies are also exploring the possibility of using blockchain and other technologies to maintain user privacy without impacting advertisers and ad tech companies. 

Final Thoughts

Google's decision to keep third-party cookies in Chrome has significant implications for the advertising industry. While it provides more time for adaptation, it also prolongs privacy concerns and uncertainty. The industry must continue to innovate and develop effective, privacy-preserving solutions to prepare for an eventual cookie-less future.