What you need to know:

• Google has pushed back its third party cookie phase out by around two years.
• The company has been trying to build and test an alternative, federated learning of cohorts, or FLoC.
• Google said FLoC testing will conclude in the next few weeks, after which it will "incorporate input" and update the product.

Google has delayed its planned deprecation of third-party cookies by two years, citing the need for more time for the industry to prepare for the change.

It will now kill off third-party cookies over three months in mid-2023, ending in late 2023. In late 2022, Google will give publishers and the ad industry nine months to migrate their services and give feedback.

In a blog post, Chrome’s Privacy Engineering Director, Vinay Goel, wrote that Google had the obligation to move at a “responsible pace” and thwart “covert” tracking methods like fingerprinting.

“While there’s considerable progress with this [Privacy Sandbox] initiative, it's become clear that more time is needed across the ecosystem to get this right,” he wrote.

“We believe the web community needs to come together to develop a set of open standards to fundamentally enhance privacy on the web, giving people more transparency and greater control over how their data is used. 

“In order to do this, we need to move at a responsible pace. This will allow sufficient time for public discussion on the right solutions, continued engagement with regulators, and for publishers and the advertising industry to migrate their services.

“This is important to avoid jeopardizing the business models of many web publishers which support freely available content. And by providing privacy-preserving technology, we as an industry can help ensure that cookies are not replaced with alternative forms of individual tracking, and discourage the rise of covert approaches like fingerprinting.”

Chrome and other industry bodies have offered more than 30 alternatives to third-party cookies, four of which are in trial periods.

FLoC that

Google's Federated Learning of Cohorts (FLoCs) has been in testing phase, except in Europe due to potentially breaching General Data Protection Regulations (GDPR). The ad industry has voiced concern about the readiness of FLoC and Google's claims that it achieves 95 per cent effectiveness versus cookies.

While it is reportedly behind on 26 out of its 30 Privacy Sandbox initiatives, Google says FLoC testing will end in the coming weeks, after which it will include feedback and advance to "further ecosystem testing". 

“We believe that the Privacy Sandbox will provide the best privacy protections for everyone,” Goel wrote.

“By ensuring that the ecosystem can support their businesses without tracking individuals across the web, we can all ensure that free access to content continues. And because of the importance of this mission, we must take time to evaluate the new technologies, gather feedback and iterate to ensure they meet our goals for both privacy and performance, and give all developers time to follow the best path for privacy."

Google is facing regulatory probes from all sides, including the EU's European Commission and the UK's Competition and Markets Authority (CMA). "Facing criticism from all sides and scrutiny from regulators, Google slowed down," International News Media Association researcher Greg Piechota wrote. 

Some industry and regulatory analysts believe the CMA's investigation is a key driver in Google's decision to delay.

Industry reaction

While many are dubious of Google's newfound concern for the rest of the ad industry, some were grateful for the stay of execution.

News Corp's GM for Data and Ad Product, Suzie Cardwell, said the reversal will not change brand and publisher strategies.

“All this does is give us a little more time to address any of the holes that third party cookies may have left,” said Cardwell. “Everyone has a bit more breathing space to make sure we are completely inoculated.”

Over the last 18 months, publishers have been evaluating and implementing a raft of alternative ID solutions – both email based and device/browser-based – in a bid to ensure they can track and target audiences after the cookie cull.

Cardwell agrees that alternative ID providers are unlikely to see a major drop off in demand as a result of Google’s flip-flop.

“We are still going to need multiple ID solutions, some probabilistic, some deterministic, some a mix of both. I don’t think that fundamentally changes,” she said.

Cardwell sees neither brands nor publishers slowing the march to first-party data models – though some may welcome the opening of the pressure valve.

“I’d be surprised if anyone took their foot off the gas. Everyone now has a clear sense that third party cookies are going and the impact that will have,” she said.

“Over the last six months, the value of first party data, working with it and not being tied into the walled gardens, has become much better understood. That momentum will not suddenly stop.”

Adtech stocks surge

Financial markets appear to reflect Cardwell's view. The Trade Desk, Criteo and Pubmatic saw double digit share price gains, while Magnite rose by more than 8 per cent. 

The Trade Desk, which is driving work on one alternative to cookies, Unified ID 2.0, welcomed the delay. 

“It’s clear that the privacy technology of the open internet, including CTV, needs to evolve in a way that gives the consumer more control. Let’s build technology that is understandable, then let customers decide how they want to use it,” stated Trade Desk CTOm Dave Pickles.

“With that approach, we can improve the consumer experience, while preserving the value exchange of relevant advertising for free content.”

Pubmatic's Director of Product Marketing, Alena Morris, however, feared that industry may switch off now that the deadline has been pushed back.

"We recommend that publishers, advertisers and the industry at-large use this time to double down on efforts to create solutions that satisfy both the requirements of consumer privacy and the performance needs of advertising on the open internet," she wrote. 

IAB Australia seconded that view.

"Even with this new timeline, we can’t underestimate the importance of the ongoing work that the industry must commit to in order to create an addressable future based upon consumer-led privacy and responsible accountability," per a blog post.

Andy Monfried, CEO of data firm Lotame, urged Apple to take similar steps, "rather than jamming through unproven, siloed proposals that favour the few but harm the vast majority".