Google claims almost no change in ad revenue from targeting proposals in its Privacy Sandbox — but privacy upside less clear

As Google's Privacy Sandbox remains under scrutiny over competition concerns, the tech giant has released an update claiming experimental ad-targeting techniques it's developing as part of the plan to depreciate support for third-party cookies on its Chrome browser show results that are nearly as effective as cookie-based approaches".

Google has been working on a technique - called Federated Learning of Cohorts (FLoC) - to target ads based on clustering users into groups with similar interests, which it claims is superior from a privacy perspective versus the current (dysfunctional) norm" of targeting individuals based on third parties tracking everything they do online.

It wants FLoCs to enable interest-based advertising to continue after it ends support for third-party trackers.

Google wants to phase out support for third-party cookies in Chrome within two years

However, the proposal has alarmed advertisers who argue it's anti-competitive. And earlier this month the U.K.'s Competition and Markets Authority (CMA) opened an investigation of the Privacy Sandbox proposal after complaints from a coalition of digital marketing companies and others from newspapers and technology companies alleging Google is abusing a dominant position by depreciating support for third-party trackers.

On the privacy front, Google's self-styled Privacy Sandbox isn't exactly attracting effusive plaudits, either.

The Electronic Frontier Foundation has, for example, dubbed FLoCs the opposite of privacy-preserving technology" - warning in 2019 that the approach is akin to a behavioral credit score". It said then that the proposals risk sustaining discrimination against vulnerable groups of people, whose online activity would be pattern-matched with others without their say-so; and could also lead to leaking sensitive info about them to third parties - without offering web users any way to escape being put in an interest based" ad targeting bucket.

With objections piling up on sides of the aisle (advertiser versus user) - and now active regulatory scrutiny of the competition issue - Google has its work cut out to sell its preferred replacement for tracking cookies to all the relevant stakeholders. Though advertisers (and competition regulators) currently seem front of mind for the tech giant.

In an update about the Privacy Sandbox proposals today, Google appears to be hoping to alleviate advertisers' concerns that the demise of tracking cookies will degrade their ability to lucratively target internet users - writing that tests of the FLoC technology suggest advertisers will continue to see at least 95% of the conversions per dollar spent when compared to cookie-based advertising".

It's not clear how much test data was involved in Google generating that percentage, however. (We asked and Google did not have an immediate response.) So there's zero meat on the bone of the 95% minimum" claim.

Its spokesman did note that it will be opening up public testing in March - and expects advertisers to join in kicking FLoC's tires then. So there's clearly going to be more detail to come on this front.

Chrome intends to make FLoC-based cohorts available for public testing through origin trials with its next release in March and we expect to begin testing FLoC-based cohorts with advertisers in Google Ads in Q2," writes Chetna Bindra, group product manager for user trust and privacy in the blog post, adding: If you'd like to get a head start, you can run your own simulations (as we did) based on the principles outlined in this FLoC whitepaper."

It's unsurprising that Google continues to emphasize the relative openness with which it's developing the Privacy Sandbox proposals - as that may help it fight antitrust accusations. But it's also noteworthy being as the adtech industry, which has been fighting to block/delay its depreciation of third-party cookies, is busy spinning up its own contenders to replace trackers - and developing those competing proposals typically with a lot less transparency than Google.

Google proposes new privacy and anti-fingerprinting controls for the web

Nonetheless, Google seems a whole lot more comfortable quantifying FLoC's potential impact on ad revenue (tiny, per its latest claim) versus articulating what privacy gains internet users might expect from the proposed shift from individual tracking to run behavioral ads to being stuck in labelled buckets to run behavioral ads.

Google's blog post has a few fuzzy mentions - like viable privacy-first alternatives" and hiding individuals in the crowd' " - but there's no metric or data offered on how much privacy users stand to gain if its preferred post-cookie future comes to pass.

Test results it published in October also focused on seeking to demonstrate to advertisers that FLoCs can deliver on other relevant ad metrics. Funnily enough, internet users' privacy - and what happens when degrees of privacy are lost - is rather harder for Google's computer scientists to measure.

"advertisers can expect to see at least 95% of the conversions per dollar spent when compared to cookie-based advertising". What's the per cent of privacy improvement? #GDPR #DigitalServicesAct #ePrivacy

- Lukasz Olejnik (@lukOlejnik) January 25, 2021

The idea is to make it so that no one can reconstruct your cross-site browsing history," said the company's spokesman when we asked about how the proposal will improve users' privacy standing.

We're trying to address non-transparent forms of tracking, across websites, with privacy-safe mechanisms for consumers, and make it so it can't happen. And to do so while still enabling opportunity and fair compensation for publishers and advertisers. So it's really not even a matter of trying to approximate a kind of privacy: We're trying to address a root critical concern of users, full stop," he added.

FLoCs are just one part of Google's Privacy Sandbox proposals. The company is working on a slew of aligned efforts to simultaneously replace various other key components of the adtech ecosystem. And it gives an overview of some of these in the blog post - covering proposals for (post-cookie) conversation measurement; ad-fraud prevention; and anti-fingerprinting.

Here it dwells briefly on retargeting/remarketing - referring to a new Chrome proposal (called Fledge) that it says it's considering for a trusted server" model specifically designed to store information about a campaign's bids and budgets". This will also be made available for advertisers to test later this year, Google adds.

Over the last year, several members of the ad tech community have offered input for how this might work, including proposals from Criteo, NextRoll, Magnite and RTB House. Chrome has published a new proposal called FLEDGE that expands on a previous Chrome proposal (called TURTLEDOVE) and takes into account the industry feedback they've heard, including the idea of using a trusted server" - as defined by compliance with certain principles and policies - that's specifically designed to store information about a campaign's bids and budgets. Chrome intends to make FLEDGE available for testing through origin trials later this year with the opportunity for ad tech companies to try using the API under a bring your own server" model," it writes.

Technology advancements such as FLoC, along with similar promising efforts in areas like measurement, fraud protection and anti-fingerprinting, are the future of web advertising - and the Privacy Sandbox will power our web products in a post-third-party cookie world," it adds.

Discussing Fledge's potential, Dr Lukasz Olejnik, an independent researcher and consultant, said there's still a lot of uncertainty over how it might impact user privacy. The Fledge experiment looks potentially interesting but it mixes in various proposals in this test. Such a mix would need to get a specific privacy assessment as the offered privacy qualities might be different than originally claimed. Furthermore, the current tests will have many privacy precautions intended for the future, turned off initially. It will be tricky to gradually turn them on," he told TechCrunch.

Google's plan to replace tracking cookies goes under UK antitrust probe