At the beginning of 2020 Google announced that it will be blocking third-party cookies in Chrome browser within two years. Chrome’s user base is so large that the change will have significant impacts on the digital advertising ecosystem. Currently, third-party cookies have an important role for instance in targeting and measuring advertising and preventing ad fraud.
Shortly after the release, Google announced its plan to replace cookies with browser-based open standards, the “Privacy Sandbox” project has been launched to find their final forms.
Privacy Sandbox has unquestionably been said to be Google’s response to the growing pressure to improve privacy, ensure free advertising-funded content, and possibly block other parties’ cookies.
The Privacy Sandbox project aims to minimize the information that is shared between websites and advertisers and to store a larger part of the visitor information on the visitor’s device only. Google’s project envisions targeted advertising and measuring conversions through Application Programming Interfaces (APIs) in a browser environment. A total of at least five different interfaces have been designed, each meeting different needs.
In January 2021 Google confirmed Federated Learning of Cohorts (FLoC), one of the tools developed in its ‘privacy sandbox’, as a replacement for third-party cookies within its Chrome Browser. Now the project has progressed to the point that it will soon move on to more extensive testing.
What is FloC?
FloC is designed to allow interest-based advertising targeting in the browser. The central idea behind FLoC is that the browser feeds data on which websites a user visits into a machine learning algorithm, which operates within the browser. This algorithm decides which cohort that user should belong to, matching the user to a large group of other users with similar interests.
So if a user were to visit multiple sites related to cooking, dogs, and fashion, that user could be included in the same cohort as others with the same interests. Advertisers could do interest-based advertising by targeting ads based on these cohorts. The browsing information of an individual user would not be transferred out of the browser but the browser would only forward the Cohort ID to know which group the user belongs to.
FLOC should not replace the third-party cookies as such. The interface would only allow advertising to be targeted based on the general interest of users. However, it would not be sufficient to measure the advertising or prevent ad fraud, such as with third-party cookies. It would also not be possible to re-target advertising through FloC, but separate interfaces are being developed for each of these features.
Privacy is preserved or not?
If the cohorts were large enough, no individual users could be tracked and, according to Google, privacy is preserved. Of course, there are still risks in the air. One, acknowledged by Google, is that the machine learning algorithm could unintentionally build cohorts which reveal sensitive categories such as personal hardships. Google says that these kinds of cohorts have been blocked, or the algorithm has been reconfigured to avoid them being produced.
Whether the method would really preserve privacy has conflicting views. FloC has been said to potentially even make it difficult for an individual user to understand how their information is used and who is targeting them with advertising. Despite the challenges, Google has announced that it will soon be possible for stakeholders to test FloC’s strengths and weaknesses themselves.
Public testing will begin in March
Google says that the FloC, an API which enables ad targeting based on users’ general interests, has proven to be almost as effective in targeting advertising as third-party cookies measured by the number of conversions.
However, it is not yet clear how precise targeting could be made, but this will become clear in March when open testing begins. Google touting FLoC’s effectiveness, while also confirming that it will use privacy sandbox tools to power its own web advertising products once third-party cookies are no longer supported. Thus, it is clear that FloC will be an important part of digital advertising in the coming years.
Google will make FLoC-based cohorts available for the public in March. By Q2, advertisers can start testing FLoC-based cohorts in Google Ads. The Chrome 90 release in April will see the first controls for the Privacy Sandbox.
Throwing a spanner in the works
The UK will probe Google's plan to eliminate third-party cookies in Chrome. Regulators are concerned that the "Privacy Sandbox" changes may favor Google ads. In its investigation, the UK Competition and Markets Authority (CMA) found that the Google project could hamper publishers’ ability to generate revenue and weaken competition in digital advertising and strengthen Google’s dominant position.
The CMA also said it has received complaints from publishers and a group of technology companies that Google may be abusing its dominant position. Due to concerns, the CMA decided to conduct formal investigations, but at this stage no conclusions have been drawn about the violation of the law. The CMA will continue to work with Google to address privacy and competition issues as the process progresses.
Google has not given hints that the 2 years deadline to end support for third-party cookies will be extended. This would mean that different stakeholders would have a year to adapt to the use of Floc. Google also needs to refine other Privacy Sandbox interfaces by the deadline so that, for example, advertising can be measured and retargeted after the deadline. There are still no indications that other projects are as far advanced as Floc in terms of development.
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