Search giant’s reversal on cookies has industry preparing for battle over phrasing of a prompt to users
By Suzanne VranicaFollow and Patience HagginFollow
July 28, 2024 5:30 am ETSAVESHARETEXT
Google abandoned efforts to eliminate tracking cookies in its Chrome browser, but the snippets of code that have fueled the lucrative digital-advertising economy for decades might disappear anyway.
Instead of killing cookies itself, Google will leave that up to the consumer. And if history is any lesson, people might just do it.
Google plans to introduce a prompt asking users to opt in or out of cookies in Chrome, according to U.K. regulators overseeing the process. The strategy shift followed a four-year effort to sunset and replace the tracking technology, a process mired in delays and pushback by the ad industry.
Online publishers and ad-tech companies are hungry for details about how Google’s user-choice prompt will work. The precise wording and timing will drastically affect how many users opt in and how much data the industry gets.
The ad industry is concerned that the Alphabet GOOGL -0.45%decrease; red down pointing triangle unit will adopt a sternly worded prompt similar to the “Ask App Not to Track” language Apple rolled out in 2021 as part of its privacy push, which hurt many in the digital-ad business. Apple’s prompt asks if the user will allow the app owner to track their activity across other companies’ apps and websites. U.S. users opt out of tracking about 74% of the times they encounter the language, according to mobile-analytics firm Adjust.
Google’s Chrome is the most popular web browser in the world and the only major one that still supports cookies. That makes it essential to the global digital-ad industry, which is expected to bring in $677 billion in annual spending this year, according to Insider Intelligence.
“An opt-out mechanism paired with a foreboding prompt could eliminate cookies through the guise of consumer choice,” said mobile-marketing analyst and venture capitalist Eric Seufert.
Previous outcomes
Other approaches have resulted in different outcomes. When California in 2020 required websites to let consumers opt out of having their data sold, many publishers simply placed a link saying “Do Not Sell or Share My Personal Information” at the bottom of their home page. Fewer than 1% of site visitors clicked it, according to large publishers.
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The ad industry hopes Google “will consider the lessons and challenges already learned through previous efforts, such as Apple’s,” said Rajeev Goel, chief executive of ad tech firm PubMatic.
“While the industry innovates to enable user choice and protect privacy, we have to ensure the solutions maintain the economics that support a free and open internet,” Goel said.
If a swath of Chrome users opts out of cookies, that would have major repercussions for ad-tech companies and web publishers lacking access to consumer data. When Apple introduced its tracking prompt, Facebook lost $10 billion in revenue in 2022 alone.
Goel said his company will be less affected because advertisers would likely shift money to other areas that offer targeting such as streaming and retail media, sectors where PubMatic has been growing its business.
Google still plans to develop a suite of alternative technologies to the cookie. PHOTO: BEN STANSALL/AGENCE FRANCE-PRESSE/GETTY IMAGES
Google hasn’t decided on the wording and timing for rolling out the new option, Google executive Alex Cone told a conference call of ad-tech executives Wednesday, according to the meeting minutes viewed by The Wall Street Journal.
Cone told attendees that Google would still develop and test its “Privacy Sandbox,” a suite of alternative technologies to the cookie, according to the document.
A Google spokesman declined to comment beyond the company’s blog post this past week, which said it was exploring an “approach that elevates user choice.”
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The cookies in question are bits of code that log the activity of internet users across websites so marketers can target them with relevant ads and track their effectiveness. Other kinds of cookies, known as first-party cookies, collect basic details such as login credentials for specific websites.
Chrome users already can opt out of cookies—but only about 8% do so, according to estimates from ad-tech company Index Exchange. To take this option, users have to hunt it down in their browser settings.
The U.K.’s competition regulator, which is overseeing Google’s cookies policies, has said it would carefully consider the company’s new approach and solicit feedback from the industry. Google has agreed to work with the regulator on any changes and said it would apply them worldwide.
“We could end up in a world where cookies are effectively deprecated because consumers opt out,” said Anthony Katsur, chief executive of IAB Tech Lab, an ad-tech trade group.
Effect on Google
Ad-tech executives also want to know whether Google will make it just as easy to opt out of allowing Google to collect data on users’ web searches or YouTube viewing. If not, this move could benefit Google, they said.
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“It’s hard to predict what Google will do next,” said Jeff Green, chief executive of ad-tech company The Trade Desk, a Google competitor. “They are caught between trying to champion privacy while also monetizing their owned content such as YouTube, while trying to appease regulators.”
Google has said it promised not to give any preferential treatment to the company’s own products as part of its agreement with the U.K. regulator, the Competition and Markets Authority. The CMA didn’t respond to a request for comment.
For their part, web publishers have invested in systems and strategies for collecting information about their customers in preparation for cookies going away.
Publishers that rely heavily on ad revenue have the most on the line, said Matt Prohaska, CEO of Prohaska Consulting, a firm that works with web publishers and brands. They are trying to determine the impact on their revenue should Google adopt the Apple-like prompts.
“It’s a lot of frustration about time, money, energy spent creating something for a new world that now is going to be different again,” Prohaska said.
Alexandra Bruell contributed to this article.
Write to Suzanne Vranica at Suzanne.Vranica@wsj.com and Patience Haggin at patience.haggin@wsj.com