The $600 billion digital advertising industry is built on a few words from Google

Instead of killing the cookie itself, Google will leave it up to consumers. And if history is any lesson, people might just do it.

Google plans to introduce a prompt asking users to opt in or out of cookies in Chrome, according to U.K. regulators overseeing the process. The change in strategy comes after a four-year effort to phase out and replace the tracking technology, a process marred by delays and resistance from the ad industry.

Online publishers and ad tech companies are hungry for details on how Google’s user-choice prompt will work. The exact wording and timing will dramatically impact how many users opt in and how much data the industry gets.

The ad industry is worried that the Alphabet unit will adopt a harshly worded message similar to the “Ask the app not to track” language Apple introduced in 2021 as part of its privacy policy, which has hurt many in the digital ad industry. Apple’s message asks whether a user will allow the app owner to track their activity across third-party apps and sites. U.S. users opt out of tracking about 74% of the time they encounter that language, according to data from mobile analytics firm Adjust.

Google’s Chrome is the world’s most popular web browser and the only one that still supports cookies. That makes it essential to the global digital advertising industry, which Insider Intelligence estimates will generate $677 billion in annual spending this year.

“An opt-out mechanism combined with a disturbing message can eliminate cookies under the guise of consumer choice,” said mobile marketing analyst and venture capitalist Eric Seufert.

Previous results

Other approaches have yielded mixed results. When California in 2020 required websites to give consumers a way to opt out of having their data sold, many publishers simply put a link saying “Do not sell or share my personal information” at the bottom of their homepage. Fewer than 1% of site visitors clicked it, according to major publishers.

The ad industry hopes Google will “take into account the lessons and challenges already learned from previous efforts like those undertaken by Apple,” said Rajeev Goel, CEO of ad technology company PubMatic.

“As the industry innovates to enable user choice and protect privacy, we must ensure that solutions maintain the economics that support a free and open internet,” Goel said.

If a group of Chrome users opts out of cookies, it would have major repercussions for ad tech companies and web publishers who don’t have access to consumer data. When Apple introduced the tracking prompt, Facebook lost $10 billion in revenue in 2022 alone.

Goel said his company will see less of an impact because advertisers are likely to shift money to other areas that offer targeting, such as streaming and retail media, sectors where PubMatic has been growing its business.

Google hasn’t decided what form or when to roll out the new option, Google Chief Executive Alex Cone said during a conference call with ad tech executives on Wednesday, according to minutes of the meeting obtained by The Wall Street Journal.

According to the document, Cone told attendees that Google will continue to develop and test its “Privacy Sandbox,” a set of alternative technologies to cookies.

A Google spokesperson declined to comment beyond the company’s blog post last week, which said the company is exploring “approaches that enhance user choice.”

The cookies in question are bits of code that record internet users’ activity on websites so that marketers can target them with relevant ads and track their effectiveness. Other types of cookies, known as first-party cookies, collect basic data such as login details for specific websites.

Chrome users can already opt out of cookies — but only about 8% do so, according to an estimate from tech firm Index Exchange. To use the option, users need to find it in their browser settings.

The UK competition regulator, which oversees Google’s cookie policy, said it would carefully consider the company’s new approach and seek industry feedback. Google agreed to work with the regulator on any changes and said it would apply them globally.

“We could end up in a world where cookies are essentially phased out because consumers are opting out of them,” said Anthony Katsur, CEO of IAB Tech Lab, an ad technology group.

Effect on Google

Ad-tech executives also want to know whether Google will make it equally easy to opt out of allowing Google to collect data about users’ web searches or YouTube viewing. If not, the move could benefit Google, they said.

“It’s hard to predict what Google will do next,” said Jeff Green, CEO of ad tech company The Trade Desk, a Google competitor. “They’re caught between trying to promote privacy and monetize their own content, like YouTube, and trying to appease regulators.”

Google said it had promised not to give preferential treatment to the company’s own products as part of an agreement with the U.K. regulator, the Competition and Markets Authority. The CMA did not respond to a request for comment.

Online publishers, for their part, have invested in systems and strategies to collect information about their customers in preparation for the demise of cookies.

Publishers that rely heavily on advertising revenue have the most at stake, said Matt Prohaska, CEO of Prohaska Consulting, a firm that works with online publishers and brands. They are trying to determine the impact on their revenue if Google were to adopt prompts similar to those from Apple.

“It’s a lot of frustration with the time, money and energy spent on creating something for a new world that’s going to be different again,” Prohaska said.

Alexandra Bruell assisted in the preparation of this article.