Alphabet : Google to Stop Selling Ads Based on Your Specific Web Browsing

By Sam Schechner and Keach Hagey

Google plans to stop selling ads based on individuals' browsing across multiple websites, a change that could hasten upheaval in the digital advertising industry.

The Alphabet Inc. company said Wednesday that it plans next year to stop using or investing in tracking technologies that uniquely identify web users as they move from site to site across the internet.

The decision, coming from the world's biggest digital-advertising company, could help push the industry away from the use of such individualized tracking, which has come under increasing criticism from privacy advocates and faces scrutiny from regulators.

Google's heft means that its move is also likely to stoke a backlash from some competitors in the digital ad business, where many companies rely on tracking individuals to target their ads, measure their effectiveness and stop fraud. Google accounted for 52% of last year's global digital ad spending of $292 billion, according to Jounce Media, a digital-ad consultancy.

"If digital advertising doesn't evolve to address the growing concerns people have about their privacy and how their personal identity is being used, we risk the future of the free and open web," David Temkin, the Google product manager leading the change, said in a blog post Wednesday.

Google had already announced last year that it would remove the most widely used such tracking technology, called third-party cookies, in 2022. But now the company is saying it won't build alternative tracking technologies, or use those being developed by other entities, to replace third-party cookies for its own ad-buying tools.

Instead, Google says its ad-buying tools will use new technologies it has been developing with others in what it calls a "privacy sandbox" to target ads without collecting information about individuals from multiple websites. One such technology analyzes users' browsing habits on their own devices, and allows advertisers to target aggregated groups of users with similar interests, or "cohorts," rather than individual users. Google said in January that it plans to begin open testing of buying using that technology in the second quarter.

Google's abandonment of individualized tracking across multiple sites has the potential to reshape the industry, given the market power of its ad-buying tools. About 40% of the money that flows from advertisers to publishers on the open internet -- meaning the part of digital advertising outside of closed systems such as Google Search, YouTube or Facebook -- goes through Google's ad-buying tools, according to Jounce.

Google says its announcement on Wednesday doesn't cover its ad tools and unique identifiers for mobile apps, just for websites. But its plan is the latest sign that the tide might be turning on user tracking more broadly.

Apple Inc., is pursuing its own plans to limit tracking of app usage by requiring developers to get opt-in permission from users before collecting an advertising identifier for iPhones. At the same time, European Union privacy regulators have fielded multiple complaints about the information that websites share with third parties about what content users are viewing as part of such tracking.

One set of complaints comes from Brave Software Inc., maker of a privacy-focused web browser, where Google's Mr. Temkin was chief product officer until last summer. Google says Mr. Temkin's involvement in its plan demonstrates its commitment to user privacy. Brave didn't immediately respond to a request for comment.

Google's changes come as big tech companies face multiple antitrust investigations. Smaller digital-ad companies that use cross-site tracking have accused Apple and Google of using privacy as a pretext for changes that hurt competitors. And Facebook Inc. Chief Executive Mark Zuckerberg in January said in an earnings call that " Apple has every incentive to use their dominant platform position to interfere with how our apps and other apps work."

In the U.K., the Competition and Markets Authority, the country's top antitrust regulator, last month opened a formal probe into Google's phasing out of third-party cookies from its Chrome browser. The probe stemmed from a complaint from a group of marketers that argued Google's plan would cement the company's heft in the online advertising space.

A Google spokesman said the company has been briefing the U.K.'s CMA on its plan to end its own use of unique tracking across multiple websites.

Google's announcement complicates advertising-industry efforts to come up with an alternative, more privacy-friendly technology for targeting individual consumers, such as the one being led by the Partnership for Responsible Addressable Media, a group of advertisers and advertising technology companies, that would rely on new identifiers, like strings of numbers and letters derived from users' email addresses. Without mentioning the partnership's effort directly, Mr. Temkin referred to identifiers "based on people's email addresses" as examples of tools Google won't use.

Google acknowledged that other companies may push ahead with other ways to track users. Companies that use parts of Google's advertising infrastructure, such as its ad exchange, could potentially still sell ads that use their own unique identifiers, Google said. But the company said it won't use or invest in such tools for ads it sells.

"We realize this means other providers may offer a level of user identity for ad tracking across the web that we will not," Mr. Temkin wrote in the blog post. "We don't believe these solutions will meet rising consumer expectations for privacy, nor will they stand up to rapidly evolving regulatory restrictions."

There are exceptions to Google's plan. The company's limit on unique tracking identifiers doesn't extend to so-called first-party data -- information a company gets directly from a customer. For instance, websites will be able to sell ads based on users' activity only on that specific site.

It also means Google will continue to allow advertisers to aim ads on Google services like YouTube at specific clients for whom they already have contact information. But when the changes go into effect, Google will stop targeting such ads at those people when they are browsing other websites.

Nestlé SA, a large advertiser that Google had briefed on the changes, said it welcomed the initiative on privacy grounds.

"We have long since recognized and advocated for the importance of first-party data, and it'll become even more vital in a privacy-first world," said Aude Gandon, Nestle's global chief marketing officer.

Write to Sam Schechner at [e-mail] and Keach Hagey at [e-mail]

(END) Dow Jones Newswires

03-03-21 0915ET