Thanks to Privacy Concerns, Google Is Caught Between a Rock and a Hard Place

The biggest company in media is on the precipice of decisions that could make or break its fate in its current guise

Chrome users will be able to delete cookies used for online ad targeting (typically third-party cookies) from their web browser without having to sacrifice the utility of first-party data stored there. Getty Images
Headshot of Ronan Shields

Google’s trapped.

The search giant finds itself faced with mounting calls to better protect users’ data. But by doing ‘the right thing’—placating those privacy concerns—it could expose itself to similarly vociferous calls for it to be broken up under antitrust rules.

One half of the digital duopoly has to choose whether it wants to cut off its hand or chop off its leg in order to survive. No matter which path Google goes down, it comes out different, if not weaker than when it started. And so does the entire media ecosystem. There used to be a phrase, ‘as goes GM, so goes the nation.” Today, it wouldn’t be completely wrong to say, “As goes Google, so goes advertising. And marketing. And email. And video. And ad tech.” And you get the idea.

Shockwaves

Just even the thought that Google is thinking about restricting third-party ad-targeting in its market-leading web browser Chrome caused a burp across the industry. Should Google actually go through with limiting this access, every single tier of the industry will experience considerable hardship in continuing to do their jobs. The impact could be specifically and especially cataclysmic for those ad-tech and mar-tech players whose value proposition is primarily based on third-party cookies. We need only look at the turbulent stock prices of publicly traded ad-tech companies since the reports first emerged as evidence of the concern.

The ITP precedent

Institutional investors are starting to see potential trouble down the line and (if fears are realized) the pain won’t be isolated either if Apple’s rollout of intelligent track prevention (ITP)–a similarly conceived measure with its Safari browser–is anything to go by.

Sources have indicated that post-ITP even the most premium of publishers have struggled to monetize website views coming via the Apple web browser and when we consider that Chrome’s market share is estimated to be three times of Safari, the trepidation is understandable.

Buyers won’t bid on inventory they can’t see and publishers across the industry, themselves faced with multiple prescriptions from a variety of browser providers, are starting to try to correct course in their digital revenue strategies.

And while marketers always have the option of doubling-down on Google in order to meet their advertising campaign KPIs, the strategic shortsightedness of such a decision is more widely known than ever before.

However, nothing is a fait accompli. But it is worth examining some of the issues that are likely to be governing Google’s decision making, a process that is seldom aired in public.

What governs Google’s thinking?

The internal conflicts of any company that can boast annual revenues of almost $137 billion and founders that can legitimately lay claim to have changed the world are unlikely to generate sympathy among those in the industry it dominates. Although, Google is often keen to voice how it is cognizant of the far-reaching implications of its policy decisions, even if many in the industry beg to differ.

Google, like its digital duopoly brother-in-arms Facebook, is beset with privacy issues, algorithm issues, and let’s call them “political headwinds.” At the center of the storm is the P word: privacy. Silicon Valley suffers from the privacy plague, which has seen the largest ‘big tech’ CEOs answering questions in front of Congress. Privacy issues have also pushed U.S. lawmakers and presidential candidates to take a cue from counterparts in the E.U. following the enforcement of General Data Protection Regulations as the 2020 elections draw near.

Cut off revenue to protect market share?

Doubtless, Google mulling such a move of choking off third-party access in order to mollify the legislators, as well as the public, is a maneuver to pre-empt any potential GDPR-like privacy regulations and stay clear of the very public criticisms that have marred the consumer-facing kudos of Facebook since early 2018.

Some point to the ITP rollout and similar moves by Firefox-creator Mozilla as a precedent that would vindicate potential Chrome tracking restrictions, but Google’s business heads will want to protect the largest ad business in the history of the industry.

Meanwhile, Google’s legal team must also be wary of how any decisions to bar third-party cookies within Google Chrome, a.k.a. competition to its lucrative display ad business, may invite antitrust scrutiny and grant succor to those calling for the divestiture of its ad tech offering that formerly went under the umbrella DoubleClick moniker.

The public emergence of such internal debates at Google may have sparked concern among the wider industry, but some have started to get past the hand-wringing stage and discussing an advertiser ID that’s tied to the browser, not unlike a mobile device ID.

Regardless of its final decision, the powers at Google are likely coming to the realization that it is likely to become a victim of its own success and that sacrifices will have to be made somewhere along the line. That said, the speculation will make next month’s Google I/O conference–one where it has historically made some key product and policy reveals–a hotly anticipated event.

If you’re Google, do you value your hand or your leg more?


@ronan_shields ronan.shields@adweek.com Ronan Shields is a programmatic reporter at Adweek, focusing on ad-tech.
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