GOOGL Alphabet Inc

By Bowdeya Tweh and Sahil Patel 

Google plans to restrict the use of third-party cookies in its Chrome internet browser, a move it says is aimed at bolstering users' privacy while they visit websites.

The Alphabet Inc. unit has been signaling for months that it had interest in adding more controls on the small data files that help website operators, and potentially other entities including advertisers, gain information about visitors. But it has stopped short of actions taken by Apple Inc.'s Safari and Mozilla Corp.'s Firefox to roll out broader restrictions on tracking cookies.

As Google takes the step, publishers and advertisers argue the changes will make the tech giant's own ad business even stronger as the company will still be able to use data culled from its own internet-search and other properties to target ads to users. Separately, a group of state attorneys general and the Justice Department are probing whether Google, which hauled in $97.24 billion in revenue through three quarters of 2019, engaged in anticompetitive behavior as it grew to become a dominant presence in the U.S. ad business.

Google said Tuesday that it would phase out support for third-party cookies in its browser within the next two years, according to a blog post by Justin Schuh, director of Chrome engineering. Third-party cookies, which can be used by ad-tracking or analytics services, are designed to follow users across the internet to learn their browsing habits. Those insights can be valuable to advertisers but have generated consumer privacy concerns for years.

"First-party" cookies, for example, can be directly collected by a website through some form of consent or direct relationship with a user. These types of cookies can be used for purposes such as saving login information, allowing a user to avoid re-entering a password at each visit.

Google collects data from users when they browse websites on Chrome, use its search engine or other products. By using Google's products, the company can argue that it can track that activity as first-party data, said Jason Kint, chief executive of Digital Content Next, a trade association for publishers whose members include Atlantic Media, Walt Disney Co. and Wall Street Journal parent Dow Jones & Co.

"Google is defining first-party cookies the way they want to define it," said Mr. Kint.

Google's two-year phaseout, Mr. Schuh said, is designed to give users, publishers and advertisers an adjustment period. It will also provide time for the development of new tools such as a "privacy sandbox," which would allow users to be served personalized ads while minimizing advertisers' access to certain data that makes it easier to identify individuals.

"Users are demanding greater privacy -- including transparency, choice and control over how their data is used -- and it's clear the web ecosystem needs to evolve to meet these increasing demands," Mr. Schuh said in his post. "Some browsers have reacted to these concerns by blocking third-party cookies, but we believe this has unintended consequences that can negatively impact both users and the web ecosystem."

A Google Chrome update to be released next month is designed to tighten security for third-party cookies before they can no longer capture data when using the browser.

Google dominates the world-wide browser market, with Chrome accounting for about 56% of browser usage in December, according to online statistics service W3Counter. The nearest competitor, according to W3Counter data, was Apple's Safari browser at 18%.

Google has been slower to adopt and implement anti-tracking technology within Chrome partially because of its considerable heft in digital advertising, ad industry representatives say. Google is the world's biggest ad-seller, and combined with Facebook Inc. forms the so-called digital ad "duopoly," which takes in more than 60% of digital ad spending in the U.S. alone, according to eMarketer estimates from last November.

Rival web browsers including Safari and Firefox don't have advertising businesses to protect, said Mr. Kint. "Google's business is based on advertising as the customer, and users as the product," Mr. Kint said. "It has been successful by being able to take in as much data as possible and not allowing it to leave."

Some advertisers fear that Google's move, as well as other efforts to remove cookies from web browsers, could result in millions of wasted dollars invested in data-management platforms, which marketers have long used to store different sets of audience data. Vendors that offer ad-retargeting solutions and other third-party services will also be affected, said Doug Rozen, chief media officer of ad agency 360i.

Marketers are concerned that Google's move gives it greater control over audience data while making it more difficult to track and measure campaigns across different platforms.

"The walled gardens will have higher walls," Mr. Rozen said.

Write to Bowdeya Tweh at Bowdeya.Tweh@wsj.com

(END) Dow Jones Newswires

January 14, 2020 17:22 ET (22:22 GMT)

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