By Sam Schechner and Keach Hagey
Google plans to stop selling ads based on individuals' browsing
across multiple websites, a change that could hasten upheaval in
the digital advertising industry.
The Alphabet Inc. company said Wednesday that it plans next year
to stop using or investing in tracking technologies that uniquely
identify web users as they move from site to site across the
internet.
The decision, coming from the world's biggest
digital-advertising company, could help push the industry away from
the use of such individualized tracking, which has come under
increasing criticism from privacy advocates and faces scrutiny from
regulators.
Google's heft means that its move is also likely to stoke a
backlash from some competitors in the digital ad business, where
many companies rely on tracking individuals to target their ads,
measure their effectiveness and stop fraud. Google accounted for
52% of last year's global digital ad spending of $292 billion,
according to Jounce Media, a digital-ad consultancy.
"If digital advertising doesn't evolve to address the growing
concerns people have about their privacy and how their personal
identity is being used, we risk the future of the free and open
web," David Temkin, the Google product manager leading the change,
said in a blog post Wednesday.
Google had already announced last year that it would remove the
most widely used such tracking technology, called third-party
cookies, in 2022. But now the company is saying it won't build
alternative tracking technologies, or use those being developed by
other entities, to replace third-party cookies for its own
ad-buying tools.
Instead, Google says its ad-buying tools will use new
technologies it has been developing with others in what it calls a
"privacy sandbox" to target ads without collecting information
about individuals from multiple websites. One such technology
analyzes users' browsing habits on their own devices, and allows
advertisers to target aggregated groups of users with similar
interests, or "cohorts," rather than individual users. Google said
in January that it plans to begin open testing of buying using that
technology in the second quarter.
Google's abandonment of individualized tracking across multiple
sites has the potential to reshape the industry, given the market
power of its ad-buying tools. About 40% of the money that flows
from advertisers to publishers on the open internet -- meaning the
part of digital advertising outside of closed systems such as
Google Search, YouTube or Facebook -- goes through Google's
ad-buying tools, according to Jounce.
Google says its announcement on Wednesday doesn't cover its ad
tools and unique identifiers for mobile apps, just for websites.
But its plan is the latest sign that the tide might be turning on
user tracking more broadly.
Apple Inc., is pursuing its own plans to limit tracking of app
usage by requiring developers to get opt-in permission from users
before collecting an advertising identifier for iPhones. At the
same time, European Union privacy regulators have fielded multiple
complaints about the information that websites share with third
parties about what content users are viewing as part of such
tracking.
One set of complaints comes from Brave Software Inc., maker of a
privacy-focused web browser, where Google's Mr. Temkin was chief
product officer until last summer. Google says Mr. Temkin's
involvement in its plan demonstrates its commitment to user
privacy. Brave didn't immediately respond to a request for
comment.
Google's changes come as big tech companies face multiple
antitrust investigations. Smaller digital-ad companies that use
cross-site tracking have accused Apple and Google of using privacy
as a pretext for changes that hurt competitors. And Facebook Inc.
Chief Executive Mark Zuckerberg in January said in an earnings call
that " Apple has every incentive to use their dominant platform
position to interfere with how our apps and other apps work."
In the U.K., the Competition and Markets Authority, the
country's top antitrust regulator, last month opened a formal probe
into Google's phasing out of third-party cookies from its Chrome
browser. The probe stemmed from a complaint from a group of
marketers that argued Google's plan would cement the company's heft
in the online advertising space.
A Google spokesman said the company has been briefing the U.K.'s
CMA on its plan to end its own use of unique tracking across
multiple websites.
Google's announcement complicates advertising-industry efforts
to come up with an alternative, more privacy-friendly technology
for targeting individual consumers, such as the one being led by
the Partnership for Responsible Addressable Media, a group of
advertisers and advertising technology companies, that would rely
on new identifiers, like strings of numbers and letters derived
from users' email addresses. Without mentioning the partnership's
effort directly, Mr. Temkin referred to identifiers "based on
people's email addresses" as examples of tools Google won't
use.
Google acknowledged that other companies may push ahead with
other ways to track users. Companies that use parts of Google's
advertising infrastructure, such as its ad exchange, could
potentially still sell ads that use their own unique identifiers,
Google said. But the company said it won't use or invest in such
tools for ads it sells.
"We realize this means other providers may offer a level of user
identity for ad tracking across the web that we will not," Mr.
Temkin wrote in the blog post. "We don't believe these solutions
will meet rising consumer expectations for privacy, nor will they
stand up to rapidly evolving regulatory restrictions."
There are exceptions to Google's plan. The company's limit on
unique tracking identifiers doesn't extend to so-called first-party
data -- information a company gets directly from a customer. For
instance, websites will be able to sell ads based on users'
activity only on that specific site.
It also means Google will continue to allow advertisers to aim
ads on Google services like YouTube at specific clients for whom
they already have contact information. But when the changes go into
effect, Google will stop targeting such ads at those people when
they are browsing other websites.
Nestlé SA, a large advertiser that Google had briefed on the
changes, said it welcomed the initiative on privacy grounds.
"We have long since recognized and advocated for the importance
of first-party data, and it'll become even more vital in a
privacy-first world," said Aude Gandon, Nestle's global chief
marketing officer.
Write to Sam Schechner at sam.schechner@wsj.com and Keach Hagey
at keach.hagey@wsj.com
(END) Dow Jones Newswires
March 03, 2021 09:15 ET (14:15 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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