Google Chrome will stop using third-party cookies sometime next year. It's a move that has major implications for your privacy and could reshape the global advertising industry. 

Google isn't going to leave the advertising industry hanging. The Privacy Sandbox is a set of API’s that serves as a replacement for third-party cookies. With less than a year to go, however, there are still a lot of big questions to be answered. Here's everything you need to know.

What’s Google actually changing about third-party cookies?

If you’re using Chrome at the moment then the websites you visit will add cookies to your device. There are two types of cookies: first-party cookies and third-party cookies. First-party cookies are set by the website you're visiting and are generally useful; for example, they keep track of whether you're logged in or not.

Third-party cookies are added to your device by other parties the website you’re visiting has made agreements with. Third-party cookies, which can be placed in ads, can track you as you move around the web. They build a profile of you by gathering data on your browsing history and linking it to an identifier that’s attached to your name.

This highly personalised, intrusive approach is then used to show you targeted ads – which is why those trainers you liked last week are now following you around the internet, or why a store can know you're pregnant before you've told your family. Both Firefox and Safari have introduced blockers that actively prevent these cookies from working.

Google is following in the footsteps of its competitors. It announced in January 2020 that it would begin phasing out cookies in favour of something new. When the announcement was made, Justin Schuh, director of Chrome engineering at Google, said, “Privacy-preserving and open-standard mechanisms like the Privacy Sandbox can sustain a healthy, ad-supported web in a way that will render third-party cookies obsolete.”

What’s a Privacy Sandbox?

The Privacy Sandbox is a collection of technologies that Google is developing to replace third-party cookies while consulting with the advertising industry and other developers. The proposals are more privacy-friendly than third-party cookies, but they are designed to avoid crippling the advertising industry.

There are suggestions for how web browsers can combat spam, how people log into websites, and how the online advertising industry can be changed. There are tools that track how many people click on ads and then buy products, as well as various methods for displaying ads online.

Currently, online advertising works in three ways: contextual ads, where a system looks a the page you’re on and shows you ads based on its content (if you are reading about cars you might want to see ads for cars); interest-based ads, where what you like is inferred from your browsing and then you see ads related to that (seeing a certain type of ad because you like classical music); and ads that involve remarketing (those trainers that follow you around).

Each of these types of advertising will be affected differently if third-party cookies are taken away. As a result, Google's competitors are developing alternatives that better understand the web page content. You may expect a lot more websites to prompt you to log in, for example. This shift might give website owners access to data that was previously only available to Google.

Interest-based advertising is arguably the most significant area where removing third-party cookies will have an impact. And it's here that Google proposes the Federated Learning of Cohorts system or FLoC for short. 

And what is FLoC?

In March 2021, Chrome began real-world testing of FLoC and covertly deployed the technology in millions of web browsers. Google uses FLoC to show you ads for stuff it thinks you might be interested in. According to Google, the technique is 95% as effective as third-party cookies. Advertisers are sceptical about this.

Chrome is positioned at the centre of the advertising process with FLoC. Instead of utilising your browser history to target you with adverts, FLoC puts you in a group with other individuals who it thinks to share your interests. This is still based on your browsing history, but rather than transmitting information to third parties via cookies, the browser examines your past to determine what you might be interested in. You'll then be added to a cohort, which will vary every week and include tens of thousands of other people.

According to Google's FLoC information, “an ad tech platform may learn from an online shoe store that browsers from cohorts 1101 and 1354 seem interested in the company's hiking gear. The ad tech platform learns about additional interests of those cohorts from other advertisers.” Advertisement-serving websites can then utilise this information to serve you ads that you might be interested in.

This is all done on your phone or computer, according to Google, and your browsing data isn't transferred back to its servers or anybody else's. According to Google, this strategy makes it more difficult for advertisers to target you with adverts based on your particular browsing history and minimises your chances of being recognised. However, not everyone sees the system in this light.

Depending on whoever you ask. Privacy advocates and regulators have criticised several aspects of the FLoC proposals, as well as the Privacy Sandbox as a whole. Critics argue that the trend away from third-party cookies is long overdue, but Google's modifications might bolster the company's dominance.

First and foremost, FLoC. The Electronic Frontier Foundation's Bennett Cyphers comments, "Instead of reinventing the tracking wheel, we could create a better world without the myriad problems of targeted marketing." According to Cyphers, the method might aid third parties in identifying who belongs to a particular cohort, possibly revealing sensitive information about individuals.

This isn't the only issue expressed towards FLoC. So far, Google's competitors have developed techniques to prevent FLoC from operating, major websites have stated that they would not participate in the FLoC experiment, and data protection regulators have expressed worries about how much (or little) control the system offers individuals. When FLoC is sent out to everyone, Google will very certainly provide individuals with the option to opt out. It may, however, face more serious issues.

There are concerns that the revisions would merely help to bolster Google's already dominating position in the internet advertising market. The European Commission is looking into whether removing third-party cookies, as well as Google's FLoC proposal, is anti-competitive.

On January 8, the UK's Competition and Markets Authority said that it, along with the UK's data protection authority, will conduct a review of the Privacy Sandbox. The investigation is looking into the new system's overall influence on the advertising industry. While there is no deadline for the investigation, a recent report on digital advertising identified several potential risks. According to the CMA, blocking third-party cookies in Chrome might give Google more control over the whole ecosystem. In July 2020, the CMA stated, "Those proposals will also turn Chrome (or Chromium browsers) into the key bottleneck for ad tech." “As a result, Google's position at the centre of the ad tech ecosystem is likely to stay.”

Yet, Google claims that "we are more confident than ever that the Privacy Sandbox is the best path forward to improve privacy for web users while ensuring publishers can earn what they need to fund great content and advertisers can reach the right people for their products," citing the initial FLoC results, ongoing development of the APIs, and encouraging dialogue with the industry.

To learn more about Google’s Cookie Ban, get in contact today.