Google (NASDAQ:GOOGL)'s (GOOG) efforts to deprecate cookies in its Chrome browser have resurfaced in trade press discussions, with recent articles in Adweek and Digiday reigniting the conversation.
Google's announcement of a delay in cookie deprecation until early 2025 has led some market participants to halt their testing of the replacements in Google's Privacy Sandbox.
This pause comes at a critical juncture when the additional time should ideally be used for further testing. Various independent tests have revealed limitations within the Sandbox, particularly in digital advertising.
Macquarie Equity Research noted that while the Sandbox performs adequately for display ads, it falls short for video ads and direct deals between publishers and advertisers, which are becoming more common.
Furthermore, auctions within the Sandbox experience significant latency in the browser, and Google restricts the ability of users to run these auctions on the server side, compelling them to use Google or Amazon's cloud services instead.
The challenges faced by Google’s Sandbox are underscored by the performance drops reported by companies like Criteo (CRTO) and Index Exchange, which saw declines of 60% and 33% respectively in publisher revenue and ad pricing during their tests.
Adding to the complexity, Apple recently stated in a blog post that APIs, including the Sandbox’s Topics API, breach its private browsing rules.
"Google is stuck between a rock and a hard place, defending its ad tech business on both anti-trust and privacy grounds," said analysts, adding, "Privacy Sandbox tries to walk a fine line between these, but evidently isn’t good enough yet."
As Google prepares to face a DOJ lawsuit on September 9 aimed at breaking up its ad tech business, the inevitable deprecation of cookies looms large. The shortcomings of the Privacy Sandbox are expected to highlight the advantages of first-party data-based targeting solutions offered by competitors such as Criteo, The Trade Desk, Magnite, and LiveRamp.