Reporter and researcher Karina Montoya authors an article about how the battle over the future of digital advertising has intensified since Google announced plans to eliminate third-party cookies in 2023.

This article originally appeared in Open Markets’ The Corner newsletter on October 8, 2021.

A U.K. coalition of leading digital businesses filed a complaint last week to the EU Commission against Google’s “Privacy Sandbox,” an effort by the corporation to develop new technologies for its Chrome browser to replace third-party tracking code. Such “cookies,” as they are generally known, are still widely used by most of Google’s competitors to manage and target advertising to their readers.

The complaint sheds light on a battle over the future of digital advertising, which has intensified since Google announced plans to eliminate third-party cookies, beginning in 2023. Although advertisers and publishers have yet to agree on an alternative technology to cookie-based advertising, there is growing consensus that allowing Google to single-handedly impose a new system will only continue to increase the corporation’s monopoly power over advertising and make it that much harder for publishers to regain a foothold in the market. 

Cookies are small code files originally designed in the early 1990s to help websites “remember” unique browsers and their interactions, such as their logins or shopping carts. Privacy advocates, however, have long criticized cookies for enabling tech giants like Google and Facebook to spy on users by collecting data on how they interact with online sites, even across applications and devices. 

Under Google’s Privacy Sandbox system, the corporation is portraying the changes to its browser as a move toward a “more private web”. One of the proposed changes, for example, is a new technology by Google called Federated Learning of Cohorts, or FLoC. The new system would allow advertisers to target users that share similar traits without individually identifying them. Yet, it would also not restrict Google’s ability to collect its users’ behavioral data through the corporation’s many web services — such as search or maps.  

The new U.K. coalition, known as Movement for an Open Web, is asking the EU Commission to deem the Privacy Sandbox to be anti-competitive and to increase oversight over any future changes to Chrome. “We want [the Commission] to stop Google from making changes to its browser until new legislation comes in. Google should not be the one defining privacy,” Tim Cowen, legal adviser to MOW and chair of the antitrust practice at Preiskel & Co., told Open Markets. 

A recent report by the U.K. Competition and Markets Authority found that because of Google’s dominant position in the search and digital ads markets, blocking third-party cookies on Chrome could reduce publishers’ revenues by more than 70% in the short term. Although other browsers already offer the option to block cookies — notably Firefox and Safari — the regulator also warned that it is unclear what the long-term, marketwide effects would be of wiping out this technology entirely from the web ecosystem. 

The change is of particular importance to online publishers and advertisers, especially small- and midsized outlets. In the U.S. and Canada, six of 10 digital-native local outlets rely heavily on one source of revenue, usually local advertising supported by cookies, according to a 2021 report by Project Oasis, which surveyed members of LION Publishers. 

MOW first took its concerns to the U.K. CMA in November 2020, leading the regulator to open an investigation in January 2021. As a result, the CMA and Google struck a deal requiring the corporation to make further “commitments” before making any changes to Chrome. The new complaint, based on the CMA investigation, provides additional evidence to bolster the Commission’s current wide-ranging investigation into Google’s advertising business. According to a Reuters report last week, the tech giant is attempting to settle.