Google Chrome plans to phase out cookies that track your online activity in the name of protecting privacy.
But big tech also has its own interests in mind.
Today, On Point: How the death of third-party cookies could grow Google's advertising empire.
Patience Haggin, reporter at the Wall Street Journal covering digital advertising and broadband.
Alan Chapell, president of Chapell & Associates, a consulting firm that helps marketers build customer trust through privacy practices.
Todd Parsons, chief product officer of the ad tech firm Criteo.
MEGHNA CHAKRABARTI: Here's an experience you might be familiar with. You're online browsing the web, and you go to your favorite store's website. You notice a nice shirt, or a pair of shoes. And you click on them just to check it out, but you decide after some deliberation that maybe you don't need the new shirt.
Maybe you'll just come back to it later. You head over to another website, maybe Onpointradio.org, just to check in on the latest high quality news analysis that you rely on. Okay. Sorry, I had to do that shameful plug. But the point is, as you're at that other website, in the middle of it, as you're scrolling, suddenly you notice.
The same ad, or you notice the shirts and the shoes that you had just looked at on that clothing website. And it's in the middle of your article, that ad, and then you notice the same ad the next day on a completely different website, and then the next day and the next day and the next day, maybe even into the next week, that ad is stalking you all over the internet.
So Patience Haggin, first of all, welcome to On Point, and second of all, why do ads stalk us across the internet?
PATIENCE HAGGIN: Thank you so much for having me. So fascinating question. One, just an experience that probably everyone has had, this is why that shirt is stalking you across the internet. When you looked at it, the e-commerce that you were on dropped what's called a cookie on your browser, which is something you'll never see, it's a text file that basically contains the information that you looked at that shirt. And when you looked at it, that little file stays on your browser. When you go to another site, that site can see it and understand the information. That's why they hit you with it again.
And the reason this practice has gone on and become so pervasive is because each of the businesses involved gets something out of it. That e-commerce site gets to keep reminding you about that shirt. The ad exchange company gets to sell an ad to place it right there. And the website that you're looking at, maybe you're reading the Wall Street Journal, and you see, where you see this ad for that shirt.
That site gets to sell the ad. And because that ad is targeted really specific to you personally, that website actually gets to charge more for the ad. So it's created a system where all of those companies can make a little money based on sharing information about you.
CHAKRABARTI: And by the way, Patience, I truly appreciate your plug for the Wall Street Journal. (LAUGHS)
HAGGIN: I had to, you had to and I had to.
CHAKRABARTI: Exactly. So let me give you your full intro here. Patience is a reporter at the Wall Street Journal, and she covers digital advertising and broadband, and she's reported extensively on some pretty big changes in the world of cookies that have to do with Google.
And we're going to get to that in a second, Patience. But the whole, I'm old enough now to remember when cookies were a new thing decades ago and we're like, wow, what is this thing doing? And it's amazing. It's called cookies. So I just want to actually talk a little tiny bit of history here for a second. Because back in the day when the internet was a young place full of possibility. There was no way for websites to remember you or your preferences when you visited them. Things like, if the site offered multiple languages and you changed it to a non-default setting for your preferred language, the site couldn't remember that, and you'd have to do it every time you went back to that website.
LOU MONTULLI: It was a known problem that we had yet to address but all of the prior solutions that had been proposed essentially could be used as a tracking mechanism. The core concept of cookies and the eureka moment was, what if we just created a identifier that was only associated with individual websites that was not shared between websites?
And then cookies were made a little bit broader and that they can store small bits of information rather than just a unique identifier.
CHAKRABARTI: So that's Lou Montulli. He is best known as a founding member of Netscape and the inventor of cookies. So as you heard, they were supposed to be useful and user-friendly and help you have a better experience on the internet.
That was the original vision. We also asked him though, why are the cookies called cookies? And Montulli says that might have just been an accident.
MONTULLI: The idea was really very similar to something I had learned in a operating systems course while still in college. And my memory, although I was never able to find the textbook that I thought I got this out of, was that this concept was called a cookie or a magic cookie.
And it's really akin to a fortune cookie in which you have a message written into a cookie, and then that is held by somebody and then the cookies returned back to that person and the message is read.
CHAKRABARTI: So that's Lou Montulli. He is best known as the founding member of Netscape and the inventor of cookies.
So Patience, how did something that was intended to make a user experience easier on the internet. How did it turn into this hidden critical part of online advertising?
HAGGIN: Fantastic question. And it's just, Lou who we just heard from, he developed a technology that was so flexible and so, so simple that it could be used for so many other things, right?
And as the web grew, people found other things to use it for. It's, the cookie has played a huge role in the history of the web in developing it. But so many of these sites that were springing up, and providing like fascinating content online and opening up the way we communicate, those sites needed a way to make money off their site. So this is, yeah. They developed this whole new ecosystem of advertising.
This whole new, I guess you could say, this whole new way of advertising that's targeted to the individual. And they realized that cookies, they were so flexible. They were just a good way to do this, to slap that user with information about what they'd done, and then know a lot of very personal, detailed information about that user, when you came to the site.
CHAKRABARTI: Now, I'm not a super huge fan of cookies. Full disclosure, I use a browser that killed off third-party cookies a while ago. We'll talk about that in a second. But I do know, many people actually don't mind them, right? Because it does facilitate not just advertising, but maybe people finding things they want.
Those browser settings. Etc. So I don't want to malign them entirely, but there has been enough concern over especially third-party cookies that Google has announced it's going to make a major change to the Chrome browser. So what is that change?
HAGGIN: Google is planning to deprecate or kind of block third party cookies from working in the Chrome browser.
And like you were just explaining, like there's a big difference between what the techies call first party cookies and third-party cookies. First party cookies are the ones that belong to that website itself. You could say, those tend to be the ones that are necessary to make the site function.
If you don't accept those, then you might have some problems with the site. Third-party cookies. Those, so those cookies, they make it possible for companies to send data about you to other companies. They're the ones that are sending your data around the web to different companies involved. In an ad auction, for instance, those are the ones that have become so crucial to this whole advertising ecosystem. Those are the ones Google's going to block.
CHAKRABARTI: Okay. No w you have written in several articles in the Journal about the magnitude of this change, which this is what I think the surprising thing was to me.
Like in one of your articles, you said the changes are among the biggest in the history of the $600 billion a year online ad industry. Why?
HAGGIN: Because just there's so many companies, B2B companies that most people would never have heard of, that have built their entire very profitable business on participating in these digital ad auctions, with this highly targeted data about you.
Once it becomes, it's about to become a lot harder to get that highly targeted data, it's really going to change those companies' business models drastically, there's going to be a period of adjustment. A lot of companies are figuring out ways to do what they do without the cookie, to do what they do without with less of this data.
CHAKRABARTI: Okay. But people might say what's the big deal? As even as I mentioned earlier, I'm a Firefox user. Firefox killed off third-party cookies a long time ago. So it's not that there's anything anti-competitive about doing it. Why are people paying so much attention to Google wanting to do the same thing in Chrome?
HAGGIN: Great point, great question. It's because Google also has a giant digital ad business of its own, right? So Safari, which is Apple's browser. And Firefox, both of them just blocked third-party cookies, said we're doing it to protect users' privacy.
No one batted an eye, right? But when Google starts talking about blocking third party cookies the whole ad industry is quick to jump up and complain about it. People are raising concerns that by doing this, Google might, by making this change in Chrome, Google might do something that hands its digital ad business, a big boon.
It might benefit them over other digital ad businesses.
CHAKRABARTI: Okay. I guess this gets to the point that whenever we talk anything regarding Google, we're talking big, right? Because in terms of, I don't remember if it's percentage of browsers used worldwide, but Chrome has 65% of the of the market in terms of browser traffic.
Is that right?
HAGGIN: Yeah. Yeah. It's more than half, it's still the dominant browser for so many people. So when they do it ... even as Safari and Firefox blocked them and the ad industry had to adjust to that, it was an impact for them. It's like it's going to be so much of a greater impact when they lose most of the audience when Chrome does it.
CHAKRABARTI: Okay. So just to reiterate, we're going to talk about the deeper concerns and potential consequences a little bit later in the show, but it sounds like fundamentally what people are worried about is that if Google successfully completes its mission to block third-party cookies in the Chrome browser, that just leaves Google as the collector of that information. And is that the problem?
HAGGIN: Yes, that's the problem. It might create a new paradigm where Google still can have tons of data about you, but other companies won't. It might create a paradigm where Google is so much richer in data than so many other parties.
And that data equals money.
CHAKRABARTI: Today we're talking about Google's plan to phase out third party cookies in its Chrome browser. And why that matters to you. I'm joined today by Patience Haggin. She's a reporter at the Wall Street Journal, and she covers digital advertising and broadband, and I want to bring Alan Chapell into the conversation now as well.
He is president of Chappell & Associates, a consulting firm that helps marketers build customer trust through responsible privacy practices. And he also serves as outside counsel and chief privacy officer to digital media companies. Alan, welcome to On Point.
ALAN CHAPELL: Thanks for having me, Meghna.
CHAKRABARTI: Okay, so first of all explain to me or to us in greater detail what exactly advertisers say they're going to lose if Google does phase out third-party cookies from Chrome.
CHAPELL: Sure. So I think to put all of this into some context, every time there is a a significant change to the privacy landscape. So you go into GDPR and the general data privacy regulation in Europe. You look at some of the California regulations coming down now, you look at some of the rules that Apple has imposed on their marketplace.
Every single time there's a change to these rules, what ends up happening is that the small to mid-sized companies have a much more difficult time reaching their target customers. And the larger companies have a more and more difficult time understanding the efficacy of their media spend. And then the third thing that happens is that larger, the walled gardens, such as Google gets a larger and larger share of the market and a larger and larger share of the data.
CHAKRABARTI: So let's take that one step further though, because ultimately our concern here at the show is why does it matter to in individual people, and so do they stand to lose anything if Google prevents third party cookies from embedding themselves into Chrome?
CHAPELL: I think there's some downstream impact here, for one thing there's a whole bunch of small to midsize niche products that probably would not have made it into the market over the last several years, in part because it's just prohibitively expensive to advertise. And you become more and more reliant on the proverbial walled gardens in order to advertise.
And the consumers are arguably robbed of products that they currently enjoy. The second thing is that it makes it more and more difficult for publishers to monetize their revenue, and they become more and more reluctant or more reliant on the walled gardens like Google and when that happens, there are downstream pressures on the amount that those publishers can charge. Because if you're operating a monopoly, historically speaking, anyway, once you make $1 billion, you're going to want to figure out how to make $1.5 billion. And over time the best way to do that is to squeeze everybody else in the supply chain. So you are going to have a situation where advertisers aren't happy, and consumers are going to be deprived of access to certain products and services. And then there's going to be a negative impact on CPMs that publishers can charge.
And as a result, I think you're going to see fewer and fewer digital content choices available to consumers. I know that's a long-winded way and consumers sometimes have trouble understanding and recognizing that they're often downstream impacts to decisions that they otherwise think might impact them.
It might not impact them.
CHAKRABARTI: Okay, so I'm glad to hear that means this means a lot more than when someone clicks on a pair of crazy shoes they saw in Zappos and those shoes just follow them around the internet. But Patience, I think this is a good time for us to take a step back and reacquaint ourselves with really Google's position in online advertising. This is the company that when they decided to bring ads and ad searches to Google, really completely revolutionized online advertising. So how would you describe Google's size and importance to these days? And actually, also the money that it's making when it comes to online advertising.
HAGGIN: Google is an absolute behemoth in online advertising. They, maybe the part of Google that might be best known to consumers is things like Search and Maps. Both of them, they sell ads there based on what you're searching for, what kind of businesses you're searching for on maps.
Then they have YouTube where they have videos about everything you could possibly imagine, and they sell ads on that. But the part that's at play here is it's not even those businesses you might know them for. It's their B2B business that consumers probably have never heard of. Where they basically help websites across the web sell ads. And they have several different pieces of software that are used both for the brands who buy the ads and the publishers who run the ads. This is a huge part of Google's business. And they're like such an 800-pound gorilla in the market that whatever they do they can really drastically change the rules of the road for every other company in that industry.
CHAKRABARTI: So when we said that $600 billion annual size of the online advertising industry, Google has what, a ginormous chunk of that.
HAGGIN: Yes, they absolutely do.
CHAKRABARTI: Okay. I'm sorry. I used the word ginormous. My kids are getting in my head right now.
HAGGIN: What's wrong with words like that?
CHAKRABARTI: I do try to maintain some degree of professionalism, but I slip every now and then.
But the idea of third-party cookies, even prior to Google's decision. Again, just for background here, it had already been raising an incredible amount of concern amongst digital privacy advocates, right? I Isn't that what led to or contributed to Firefox and Apple deciding to block those cookies?
HAGGIN: Yes, absolutely. And that's what's leading browsers to take this step. It's the privacy pressures. When those cookies get left on your browser and then those cookies get seen by all the sites you go to, they're essentially leaking data about you. It's sending data about you out to any website you go to, right?
So when you get to that site that they already know a lot about you. That's the privacy violation, in some people's eyes, that's at play here. That's why Safari and Firefox have already done it. That's why Google is doing it now. They're coming under, they've been coming under pressure from privacy advocates and from governments to do something about the way that data is sent out all over the web.
CHAKRABARTI: Can you tell me more about that? About the government part. And Alan, I'm going to come back to you in a second, but because look, cynically speaking I'm always surprised when Google says it cares about privacy, right? Because basically their business model, like other giant online companies, is founded on not giving you privacy. So what kind of pressure has Google been under again politically and even through regulatory means to want to make this big change in Chrome? Patience, go ahead.
HAGGIN: They're coming under pressure from new privacy laws that are being passed. Privacy regulations in Europe are one of the big reasons why you have to opt into cookies on so many websites.
And other, a lot of U.S. states are passing regulations that create more and more restrictions about how, what you can do with the user's data, how freely you can transmit it to other companies. So if they can rein in cookies, that can really like ease up on the liability here. And if they don't do it now, it's easy to imagine that it'll just become harder and harder to use these cookies as more and more privacy laws come down.
CHAKRABARTI: Okay. Alan. So on that point, first of all, if you want to add to what Patience is saying, go ahead.
But I also want --
CHAPELL: I do.
CHAKRABARTI: Oh yeah, go ahead. Go ahead.
CHAPELL: Yeah so I think first you have to take a look at some of the underlying business models. So your Firefox browser. How does Firefox make money? They make money on search traffic. They don't make money using cookies in the digital advertising world. You look at Apple.
How does Apple make money? They're essentially a consumer electronics company who happens to have a very lucrative mobile app store where they get 15% to 30% of VIG on everything going through that, the iPhone. Bringing this back to Google, yes, they are certainly under some pressure, but one thing to really keep in mind about cookies is they do provide a certain amount of transparency.
And I'm sharing that in this context because if you look at the European Union, where anytime you place a third-party cookie, and you don't get a consent, the European Union will fine the company. Okay, so your Google you're getting, 25 and 50 million Euro fines because you're placing cookies.
Perhaps one way to avoid those fines is to remove the cookie. And so the broader point I'm making here is that removal of third-party cookies doesn't, it doesn't erase online tracking. What it does is it eliminates a certain constituency from online tracking, and it puts power into the hands of a small handful of companies who were able to continue online tracking. And in a way, that's even more covert than the current system.
CHAKRABARTI: A small handful of companies. So more than just Google.
CHAPELL: I would say you've got Apple; you've got Amazon. You've got the social networks.
CHAKRABARTI: Yeah. Yeah, okay. Understood. Now, I wasn't sure if you meant the people hosting the traffic or one of the B2B companies in that murky middle that most of us don't really understand.
But I also note though, Alan, that Google has said, or is saying they're going to offer other tools for advertisers to use, so calm down. What do you think?
CHAPELL: They are certainly offering other tools and they are claiming, to this day, absent really any evidence to the effect that these tools work.
Let's take a half step back. They are effectively building an advertising platform within the, forgive the pun, chrome of their browser. Now you're a Firefox user. I'm just curious how you might feel if Firefox had announced that they were all of a sudden going to be taking, building an ad platform within Firefox, I would imagine that would give you some concerns.
And in fact, the Firefox people, I believe the Mozilla folks have been rather critical of this. So Google is building this ad platform and they're saying, "Oh no, don't worry. It's going to be privacy protective." And to Google's credit, there are a number of really interesting ideas being discussed for doing more with less data using this tool set.
And from that perspective, it's a wonderful thing. Because Google has at least initiated some sets of discussions that are long overdue within the digital advertising world, around data minimization and trying to do more with less. But that said, there really is no evidence that this tool works, number one. And number two it's not really clear to what extent Google is actually going to leverage this tool, because as you rightly pointed out, Google's footprint in the number of browsers they're going to have, or users they're going to have access to, is only going to go down by something like 2% or 3%. Once third-party cookies are deprecated.
CHAKRABARTI: Okay, so Patience, elaborate on this, because in your reporting Google says that these tools that they're offering advertisers are going to both help the industry meet its goals, advertising industry, but also respecting consumer privacy.
How would that work?
HAGGIN: Fascinating question to talk about how it'll work. And there's a whole suite of very, very algorithmically advanced tools that are designed. Like Google's aim is to share just enough data about the user to make it possible for advertisers to do their thing and reach their audience.
And there's a big fight going on right now about whether those are going to work well enough, whether that is enough data to do what they need to do, and whether, and as we're talking about before, whether it tilts the playing field a little bit in a way that benefits Google's own ad business.
In this effort to create these tools, which Google is calling the Privacy Sandbox. One of the reasons it's been debated so much is because it's like some of the tools are quite complex, like they use sometimes, like there's been some proposals to use, like algorithmic modeling to understand someone's interests.
And some of the tools are more simple. But once you start like trying to share some data about that user's interest, but just enough then, just enough, not too much. It just becomes like a very kind of precise, it just becomes a very kind of complex and fascinating technological question.
CHAKRABARTI: And Google's also told you that it's working with the online advertising industry in rolling out these changes. Did they tell you more along those lines?
HAGGIN: Yes. They've told me plenty. They've for years, for a few years now, they've been trotting out their proposals in industry forums and they've been listening to very harsh feedback.
They've been tinkering and retooling their proposals in response to the feedback they get from other stakeholders in the ad industry. They also have a government regulator, maybe breathing down their neck or looking over their shoulder throughout the process.
The UK's competition regulator, which is called the CMA, but it's like the UK version of the FTC. Is, decided to open an investigation into this process while Google carries it out and gets industry feedback. So they're also dealing with a regulator who's doing their part to make sure these solutions promote a competitive industry. And don't, to try to keep Google from self-preferencing their own ad business.
CHAKRABARTI: Got it. We have about a minute before our next break, but I think I failed to really have us converse enough about what's in those cookies, right? Because we've been focusing on advertising right now, which is where a lot of the concern is coming from. But I was just looking back at some of your reporting Patience, and you remind us that the cookies can basically compile profiles as detailed as their creators want.
So it's not just what do you, are you interested in buying? It can even include things like medical history, right?
HAGGIN: Fascinating point. So this is an interesting part of the industry like that based on what cookies do, is they create, it's mostly a record of your browsing, right?
But sometimes your browsing can give away valuable information about what your medical conditions are, right? In terms of what sites you visited and what products you've looked at. So these cookies, in terms of collecting that data, like some players in the industry use that to infer what kind of conditions you might have.
And they can use that to market pharmaceuticals and other products to you.
CHAKRABARTI: We've been talking about Google's decision to phase out third-party cookies on its Chrome browser. And by the way, also that would apply to mobile browsing via Android and how that decision could have an impact not only on data privacy, but on Google's emerging online advertising monopoly. So hold that word in your mind. We're going to come back to that in a moment. So how do other advertisers feel about this change as it's rolling out?
Todd Parsons is Chief Product officer of the advertising technology firm, Criteo.
TODD PARSONS: We've been preparing for this eventuality for several years, and we feel confident that a total rollout is something that we can help our partners through. And because of our relationship with Google, we can work with them very closely to help them adapt the APIs to be successful.
CHAKRABARTI: Now, we've mentioned earlier that Apple's Safari and Mozilla's Firefox had already killed off third-party cookies quite some time ago, but some of the pushback now comes because Google Chrome, as we also mentioned, has a much bigger stronghold on overall web traffic, and Google generates substantial revenue from advertising, hundreds of billions of dollars, in fact.
But Parsons says that collaborative relationships or that collaborative relationship is another difference that's actually been positive.
PARSONS: Back when Apple phased out third-party cookie support in the Safari browser, it was something that was more or less announced and followed through on, and that left advertising tech companies in a bit of a lurch to find new ways to address consumers, right place, right time, right message.
But what's different today is it's actually more of a partnership with Google to balance between the promise of privacy, preserving replacement to third party cookie, with the utility that advertisers ultimately want to deliver through it.
CHAKRABARTI: But Parsons acknowledges that Criteo is in a unique position as one of the biggest names in advertising technology. And not every ad tech company had the opportunity to test out Google's Privacy Sandbox.
(Producer's note: Privacy Sandbox testing was available to other AdTech companies prior to Jan. 4, 2024. Criteo took proactive steps to partner with Google for early testing.)
That's what Patience had been talking about earlier. The lack of clear data could mean that those walled gardens of advertising can continue to grow.
PARSONS: I think what everybody is fearing here is that the ability of advertising to work at the same efficacy it did before on the open web will be compromised in such a way that only the platforms that are serving fully logged in consumers will actually be used more than the open web.
CHAKRABARTI: So what he's talking about, there are platforms like Facebook, Instagram, even Google, where companies have clear data about their users from first-party cookies and user-volunteered information. Now Google is currently testing Privacy Sandbox, its replacement for those third-party cookies with 1% of Chrome users, but it's still a huge number of people.
Parsons says it's too early to predict what the outcome will be once third-party cookies are fully phased out.
PARSONS: We will be learning a lot over the course of the year, and it's very easy to jump to conclusions and take an extreme view. It seems like the current narrative is very focused on Privacy Sandbox won't work or it will work.
I see it very much as a process, and I think it's one of these topics that should be revisited all year to check in and say, What do the gaps look like? How are we doing? How do we fill them? And that becomes a very productive conversation.
CHAKRABARTI: So that was Todd Parsons, chief product Officer at the ad tech firm, Criteo. Alan, I'd love to hear your response to what Todd said, because I think he's right. Whenever we talk about anything regarding Google, because of its enormity in our digital lives, there is a tendency to immediately go to extremes. I don't think that's an unfair tendency, by the way, but I just want to know what you think about his pushback against those extreme views regarding third-party cookies.
CHAPELL: So I'm a big fan of Todd's and I'm a big fan of Criteo. One thing is Criteo just announced that they were going to have a 30 to $40 million shortfall at the end of the year, in part as a result of the deprecation of third-party cookies. And to me that seems like a pretty significant amount of money.
I agree with a lot of what Todd says in terms of reasonableness and check in periodically to see if the Privacy Sandbox is working. But the one thing I would take issue with from Todd is that I think that the comparison of Apple to Google is a bit of a false comparison. I would agree that Apple does what Apple does and they stick their middle finger up at everybody and just say, deal with it.
And Google is almost like the Ted Lasso of the world where he is very collaborative and they're certainly very friendly. However, Apple and Google are not starting from the same point. Apple has historically had a closed ecosystem, which Apple takes great pains to control. So Apple doing something that restricts their closed ecosystem should not be viewed in the same lens as something that Google is doing to an otherwise open ecosystem with a long history of interoperability.
Google is effectively pulling a moat around what was used to be a closed, I'm sorry, used to be an open ecosystem. And so again, I don't think Apple and Google are starting from the same place.
CHAKRABARTI: Interesting. Patience. Did you have some thoughts on that?
HAGGIN: I think Alan covered it in a kind of a fantastic way.
Honestly, I couldn't have put it better myself.
CHAKRABARTI: Including the combination of using metaphors of obscene gestures and Ted Lasso in the same analysis. I love it.
CHAKRABARTI: Okay. So here's what I wanted to get to. We had mentioned the word monopoly and Patience you had earlier described Google's in enormity in the online ad space. It is not technically a monopoly in that space yet, but Google has received a lot of federal scrutiny about its online advertising business and practices. A year ago, the Department of Justice filed a lawsuit against Google for monopolizing digital advertising technology.
So here's from back then. Here's Attorney General Merrick Garland.
MERRICK GARLAND: For 15 years, Google has pursued a course of anti-competitive conduct that has allowed it to halt the rise of rival technologies, manipulate auction mechanics to insulate itself from competition and force advertisers and publishers to use its tools.
In so doing, Google has engaged in exclusionary conduct to severely weaken, if not destroy competition in the ad tech industry.
CHAKRABARTI: Patience does Google's latest decisions, and I'm thinking particularly of the forcing advertisers to use its tools and insulating itself from competition, does its third-party cookies decisions fall into that pattern that the Attorney General had been talking about.
HAGGIN: Now that's a fascinating question, right? So and a lot of people are asking it. A lot of Google critics are asking that exact question. This, the lawsuit you referenced is, that suit itself is not about cookies, it's about previous actions that were taken in the past, right?
HAGGIN: But as Google embarks on this journey to deprecate third-party cookies. There's this overhang of this antitrust lawsuit, right? That's brewing over them, which, and critics would say that what they do with cookies might be part of the same pattern of anti-competitive actions that benefit their ad business, that have allowed their ad business to become so dominant.
They're, as they try to like play this chess game. They're being sued over like chess games they played in the past.
HAGGIN: Which weren't exactly the same. But of course, like all of that is on their minds. Like they know that they're under intense scrutiny for anything they do.
CHAKRABARTI: Well because the sort of view of antitrust has changed considerably, in the Biden administration and a lot of these huge digital companies are receiving more scrutiny than ever. So do you think that, has Congress thus far or anybody in Washington started saying similar things about the Chrome and third-party cookies decision? Or is it not quite yet on their radar?
CHAPELL: I think for better or worse the fact that the UK's Competition and Markets authority has taken on this issue many regulators around the world are feeling like, okay, they've got it. They're the ones addressing this. And so it really hasn't risen to the level within the FTC, at least as far as I know, and within, certainly within Congress.
I think it's, per the feeling is that the UK folks have it.
CHAKRABARTI: Okay. But I guess what I'm asking is because I know it's hard to feel sympathy for a trillion-dollar business, but couldn't Google feasibly argue that, hey, we're trapped in this difficult position because there's been a lot of pressure to protect data privacy.
So we're trying to honor that with the elimination of third-party cookies, but at the same time, like if we do that, advertisers are going to get mad, but we can't help it. It is not our fault that we're so successful that Chrome is regulating 65% of internet traffic Alan, what do you think about that?
CHAPELL: I think this is mostly theater.
CHAKRABARTI: Oh, okay. Tell me more.
CHAPELL: And Google. I think Google is creating a set of tools that has, incorporates fairly a number of very interesting pro-privacy tools that I don't think Google as a larger company has any intention of honoring for themselves. And so right there, that's a bit of a problem.
When you talk about the impact of, or what's driving some of Google's decisions, I actually agree with you Meghna, that you have to look at some of the DOJ suits and the AG case that's coming online in a year or so. Because the way that I look at it, I think all of this stuff is related. Because Google is effectively trying to upend the poker table of digital advertising by getting rid of cookies right before the DOJ is going to start seeking remedies for past bad behaviors.
CHAKRABARTI: And so I feel like there's another half to that thought there. Is this, is it basically, again, the question of if the third-party cookies aren't allowed on Chrome, people are still pouring user data, whether they know it or not, into their internet usage.
And it's Google that now has the greatest access to that data. Is that what the monopoly fear is?
CHAPELL: Correct. And then I'll even go one further. Google has historically had a third-party ad tech stack that's been rather profitable. I think what Google's larger plan is to offer that up as part of a preemptive breakup, or at least as part of their strategy.
And so if that ad tech stack is wildly less valuable, it becomes a chit that they can offer as part of what many of us think will be an eventual breakup of Google.
CHAKRABARTI: Tell me more about that. You just said the word breakup twice and Google.
CHAPELL: Whenever a antitrust enforcer is looking for remedies, so what, once, and maybe I'm taking a couple of steps ahead, but I think there's a decent chance that the DOJ is going to prevail at least on some of their claims.
And if they don't, the AG, the attorneys general led by Texas. And so when an antitrust enforcer is looking for remedies once they've found evidence of bad practices, there's really two things. One is a fines, and I'm sure there will be fines. And the second remedy is a breakup.
And you can go back to the old days of I guess AT&T and I don't think we're going to have that level of a breakup, but I do think you're going to see some spin-off within Google. And if I were Google I would be thinking about which entities can we afford to lose? Because they are going to do everything they can to keep the browser and they're going to do everything they can to keep YouTube and a number of their owned and operated.
Their ad tech stack becomes much, much more palatable for them to spin off. If that ad tech stack, which historically has relied mostly on third-party cookies, becomes significantly less valuable.
CHAKRABARTI: Yeah. You know what's really fascinating about that is it's not ludicrous at all to think ahead to a world in which the federal government could possibly force the breakup of some of these enormous technology companies. We did quite a bit of coverage on Amazon a few years ago. And Amazon being forced to spin off web services, for example, came up quite, quite frequently. But Patience, I want to turn back to you on that. And let me just be a little philosophical here.
I'll ask you a philosophical question because I think Shoshana Zuboff, she's the deep, great thinker about technology in the twenty-first century, and in her book, Surveillance Capitalism, I think she wrote one of the most important disease on the true power in our lives of these big companies. And I wonder if that's also being played out here, that maybe we're talking about advertising and shoes and t-shirts and whatever. And it might seem like a problem for just the advertising space, but truthfully, what we're talking about is the power to control and to use and to perhaps data on the internet and perhaps even Zuboff talks about behavior shaping. Is that the kind of thinking that is also warranted when we're discussing something as seemingly straightforward as third-party cookies and Chrome?
HAGGIN: Yes. It absolutely is because as you were getting philosophical and quoting Dr. Zuboff, it does get into it just, it rewrites the whole internet and the ad ecosystem, the, like the ad industry love it or hate it as much as people criticize it, it does actually have a lot of power in shaping how people think, right?
So when you rewrite the rules for the ad industry, whether you like it or not, you rewrite the rules for persuasion. And that's one of the reasons this is so important, not just for business reasons, but it's so important for the future of society.
This program aired on February 12, 2024.