Google delays cookie phase-out following regulatory pushback

Google said Tuesday it would no longer be able to eliminate third-party cookies on its original timeline. (REUTERS)
Google said Tuesday it would no longer be able to eliminate third-party cookies on its original timeline. (REUTERS)

Summary

The move has major ramifications for the $600 billion online ad industry.

Google will miss its end-of-year target for changing the way advertising is delivered in its dominant Chrome web browser, a setback in its yearslong efforts to improve consumer privacy on the internet.

Google said Tuesday it would no longer be able to eliminate third-party cookies on its original timeline, citing “ongoing challenges related to reconciling divergent feedback from the industry, regulators and developers." The changes have been eagerly anticipated by advertisers because almost two-thirds of internet traffic flows through Chrome, making it an important gateway for reaching consumers.

Third-party cookies are bits of software that follow users around the internet. Advertisers use them for everything from targeting ads to measuring the effectiveness of marketing campaigns, making them the basis for much of a $600 billion-a-year industry.

Google’s announcement came days before an expected status report from the U.K. Competition and Markets Authority, which is overseeing the company’s global efforts to eliminate cookies.

The U.K.’s privacy regulator, the Information Commissioner’s Office, has told Google its proposed changes don’t go far enough, and it plans to provide the same feedback to the CMA, The Wall Street Journal reported this month.

Google said it now plans to begin phasing out cookies in 2025 if it receives the CMA and ICO’s approval.

A CMA spokeswoman said it welcomed Google’s announcement. “This will allow time to assess the results of industry tests and resolve remaining issues," she said in a statement. The ICO didn’t respond to a request for comment outside of working hours.

Google has spent years preparing to get rid of cookies following similar moves by Apple and Mozilla, the developer of the Firefox browser. It has promoted the change as a way to improve consumer privacy and developed an alternative set of technologies known as the Privacy Sandbox to replace many of their features.

The plans have encountered several roadblocks from industry participants. Google first announced plans to block cookies in early 2020, targeting the end of 2022 for their elimination.

The CMA, which opened an investigation into Google’s efforts in 2021, has the power to order changes to Google’s plans for eliminating cookies before it moves forward.

In January, Google began restricting cookies for 1% of Chrome users as part of what it called a limited test before moving forward with plans to eliminate them entirely by the end of the year.

Ad-tech companies complained to Google and the CMA that the company’s replacement technologies didn’t do enough to make up for lost features from cookies. They have also voiced concerns Google’s plans would reinforce its dominant position in the digital advertising ecosystem.

Alphabet’s Google has called some of the criticisms inaccurate and said some features will be degraded on purpose to improve privacy. The company has said it won’t give preferential treatment to its products during the transition.

The ICO wrote in a draft report this month that Google’s Privacy Sandbox tools left gaps that advertisers could use to identify users who should be kept anonymous, according to a copy reviewed by the Journal. Google said last week the tools were designed to deliver meaningful privacy improvements and the company would work closely with the ICO.

The CMA spokeswoman said the regulator expected to work with the ICO to finish its review by the end of this year.

Write to Miles Kruppa at miles.kruppa@wsj.com and Patience Haggin at patience.haggin@wsj.com

Catch all the Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
more

MINT SPECIALS