Google surprisingly announced that it would reverse its long-standing plan to phase out third-party cookies.
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Googling announced a bold move on Monday that will have major consequences for advertisers and the future of the internet.
The US internet giant said late on Monday it was reversing a long-planned move to remove third-party cookies – the crucial text files that track users’ web activity for advertisers.
But what exactly are cookies? And what does Google’s decision mean for the way you interact with the Internet — or, for that matter, the advertising industry — in the future?
CNBC goes through what you need to know.
What are cookies?
Cookies are small pieces of code that websites deliver to a visitor’s browser. They remain when the person visits other sites.
These pieces of code silently track our online activities and collect information about things like what we search for and the types of products we often buy. They have become an important way for advertisers to refine the way they target people online with ads.
The practice of using third-party cookies to track web activity has helped fuel much of the digital advertising ecosystem, and advertisers remain heavily dependent on cookies as a tool to collect data about their customers.
According to data from W3Techs, a web technology research firm, approximately 40.9% of websites worldwide use cookies to collect data about users.
“Third-party cookies are the backbone of online behavioral advertising. They are how products or brands track you online,” Matthew Holman, partner at law firm Cripps, told CNBC.
“If you’ve ever wondered how you can search online for a new pair of shoes and five minutes later find the same shoes advertised on your favorite social media platform, the answer is: third-party cookies.”
But cookies are not just a method to track users’ surfing behavior. They are also an important part of how the modern web functions. They play a crucial role in keeping a user logged in while browsing from one web page to another.
One argument for keeping cookies live on the internet is convenience. Simply put, they can make it easier for users to navigate the web because the ads displayed on shopping devices are better tailored to a user’s interests.
They also ensure that the Internet remains free to use: many publishers have introduced paywalls and invested in sponsored content in response to the expected phase-out of cookies.
In some ways, cookies have also become annoying for many users.
Privacy regulations in Europe require websites to display boxes asking users which cookies they want to store on their devices. This results in the checkboxes we are now all too familiar with asking us to consent to cookies.
What alternatives has Google suggested?
Initially, Google tried to introduce an alternative to cookies that was more privacy-oriented.
The company launched its ‘Privacy Sandbox’ initiative in 2019 to find a solution that protects user privacy while keeping content freely available on the open internet.
And in 2020, Google said it would end support for these cookies once it found a solution that works for users, publishers and advertisers alike. The company had targeted early 2022, the year this new alternative would be launched.
One of the proposals included so-called ‘Federated Learning of Cohorts’, which would essentially place people into groups based on similar browsing behavior, meaning only ‘cohort IDs’ and not individual user IDs would be targeted.
Google previously said it was “very confident” in the progress of its proposals.
But the company has pushed back the timeline for phasing out cookies several times, citing feedback from the advertising industry on the implementation of these changes, which may have led to less effective ad campaigns.
This issue is the main reason why Google has now decided to end the planned deprecation of third-party cookies.
“Essentially, it comes down to Google’s acknowledgment that the marketing industry was not ready for this change,” Cripps’ Holman told CNBC.
“It also believes it can develop a feature in its Chrome browser that will give consumers more choice.”
What is Google introducing now – and how will it work?
Google says it now plans to keep cookies. Instead of discounting them, the tech giant will introduce “a new experience in Chrome that helps people make informed choices that apply while browsing the web,” the tech giant said in a blog post.
“We are discussing this new path with regulators and will work with the industry as we roll this out,” the company said.
Google did not provide specific details about what this new approach would look like, but said it is “discussing the new path with regulators and will work with industry as we roll it out.”
For now, Google’s move will likely mean that the way you interact with the Internet will look more or less the same. Users will still see checkboxes at the top of a web page asking whether they want to accept all cookies, or just essential cookies.
The implications are likely to be greater for advertisers, as the valuable data marketers gain from tracking users across the web will remain.
“The biggest impact is that the Internet will remain free,” Steve Silvers, executive vice president of Global Creative, Media and Ecosystem at Kantar, told CNBC in an emailed comment on Tuesday.
“Without third-party cookies, website owners struggled to figure out how to monetize their audience and this is one of the reasons why there has been such an increase in private or paywall content in recent years.”
Ironically, some media publishers could even drop content and paywalls, Silvers added.
Don’t expect ‘business as usual’
Not everyone is happy with the changes that Google is proposing.
On Tuesday, the UK Information Commissioner’s Office said it was “disappointed” that Google had changed its plans.
The regulator had worked closely with Google – along with the Competition and Markets Authority – to ensure that the alternative proposals to cookies sufficiently protected users’ privacy, while also not being too damaging to companies that rely on cookies for their advertising .
The ICO said it will “monitor how the industry responds” to Google’s decision and “consider regulatory action where systemic non-compliance is identified for all companies, including Google.”
Still, Google’s move doesn’t mean it will be “business as usual,” said Vasiliki Makou, a digital strategist at London-based marketing agency Axicom.
“While this may seem like a delay to some, businesses should not confuse this decision with a return to business as usual,” Makou told CNBC via email.
“The push for greater online privacy is not going away,” she added, citing the impact of privacy laws such as the EU’s General Data Protection Regulation.
– CNBC’s Jennifer Elias contributed to this article
