Google is facing mounting pressure over its proposed Privacy Sandbox changes in the UK after two reports found the plans would decrease publisher revenue and place small media companies at significant risk.
French advertising company Criteo and non-profit consortium IAB Tech Lab yesterday published separate reports claiming that the current version of the Privacy Sandbox is not fit for purpose.
Criteo’s testing and feedback from stakeholders found that publisher revenues would decrease by an average of 60% if Google removed third-party cookies today and implemented the Privacy Sandbox proposal in its current state.
IAB Tech Lab found that the Privacy Sandbox in its current form will restrict the digital media industry’s ability to deliver relevant, effective advertising, placing smaller media companies and brands at significant risk. The lack of functionality will “throttle” their ability to compete, which will ultimately impact the industry’s growth, it added.
The reports come as the end of June deadline approaches for stakeholders to submit testing results for the Privacy Sandbox to the CMA. The results will form part of a wider evidence base that the CMA will use to assess the effectiveness of Google’s proposals to remove third-party cookies.
In February 2022, the UK’s Competition and Markets Authority made binding a set of commitments to ensure Google’s market position in online advertising is not unfairly strengthened by its Privacy Sandbox initiative.
As part of the commitments, Google agreed to collaborate with third parties on the Privacy Sandbox’s development and publish test results.
Both the CMA and the UK’s Information Commissioner’s Office are involved in developing and testing Google’s proposals to ensure competition and privacy are protected.
The technology company can only remove third-party cookies with the CMA’s approval. It had originally aimed to remove them entirely by 2023 but in its quarterly update in April, the CMA said that it had agreed with Google on a new date of early 2025 given the time needed to resolve outstanding issues and take account of testing results.
Criteo’s chief product officer, Todd Parsons, said in a statement yesterday that the Privacy Sandbox shows “shortfalls” that violate Google’s commitments to the CMA.
Parsons said this falls short of Google’s commitment to limit publishers’ revenue losses to a maximum of 5%.
Google also promised the CMA that it would not self-preference its advertising service Google Ad Manager (GAM), but Criteo said that the current Privacy Sandbox creates an advantage for GAM by increasing its market share from 23% to 83%. This 360% hike would lead to a significant increase in publisher reliance on Google for ad revenue, he said.
Criteo also said the Sandbox would harm publisher revenue due to degraded viewability, click-through rates as well as consumer experience due to long page load times.
The company made several recommendations to improve the Privacy Sandbox, such as implementing a reasonable rollout schedule to help it become a sustainable alternative to third-party cookies.
The delay is subject to the tech giant addressing the enforcer’s competition concerns, which include a commitment not to design, develop or use the Privacy Sandbox tools in ways that reinforce the existing market position of its advertising products and services, including GAM.
“We believe that the Privacy Sandbox is not yet ready for full implementation, and therefore support Google and the CMA’s decision to delay cookie deprecation until 2025,” Parsons said, but warned publishers will “struggle with lower yields and decreasing revenue, as well as inability to measure performance” if the search engine giant does not take further action to significantly improve its proposals.
IAB Tech Lab said its task force, which includes individuals with extensive experience in product, engineering and data science, also found that the Privacy Sandbox “falls well short of what is needed to support a robust open web” by balancing advertising utility for brands against media companies’ ability to maximize revenues.
In February, IAB Tech Lab issued its first report outlining concerns about the impact of the Privacy Sandbox.
The CMA opened an investigation into Google’s privacy changes in January 2021 after Movement for an Open Web (MOW) filed a complaint to the authority in November 2020.
A spokesperson for MOW told GCR that Google tried to dismiss IAB Tech Lab’s original report, claiming it contained “many misunderstandings and inaccuracies”.
“Here we are four months later and – following a thorough reassessment by the Tech Lab in collaboration with Google – we find out that very little has changed,” they said, adding that the original report was right to identify the Sandbox is not fit for purpose.
Google’s original response was “clearly bluster and lies in an attempt to obfuscate this truth,” the spokesperson added.
“Google’s response typifies their attitude throughout the Privacy Sandbox process,” they said, adding that the tech giant has “tried to bulldoze” its way through, hiding its motivations by “spreading uncertainty and doubt”.
In its quarterly update in April, the CMA also said that it believed Google complied with the commitments from 1 January 2024 to 31 March 2024.
“This means that in our view Google has followed the required process set out in the commitments and is engaging with us, and the ICO, to resolve our remaining concerns ahead of third-party cookie deprecation,” it said at the time, adding that “further progress is needed” by Google to resolve competition concerns ahead of deprecation.
The enforcer also said that it would encourage market participants taking part in testing to submit their results directly to the enforcer by the end of June.
“The test results will form part of a wider evidence base that we will use to assess the effectiveness of the Privacy Sandbox changes,” the CMA said at the time.
A Google spokesperson said that the company is “encouraged” to see companies building with the Privacy Sandbox and other privacy-enhancing technologies.
“We expect performance numbers to evolve, and they currently don’t reflect how the overall ecosystem will perform in a true marketplace – which won’t exist until adoption expands alongside third-party cookieless traffic,” it said.
Counsel to Google
Hogan Lovells
Partners Christopher Thomas and May Lyn Yuen and counsel Francesco Pili in Brussels, assisted by Alex Latham
Cleary Gottlieb Steen & Hamilton
Partners Thomas Graf and Conor Opdebeeck-Wilson in Brussels, assisted by Emmi Kuivalainen
Counsel to Movement for an Open Web (complainant)
Preiskel & Co
Partner Tim Cowen in London