On Google's Q4 earnings call yesterday, chief business officer Nikesh Arora was asked a question about "cookies," which digital privacy advocates will examine very, very closely. Google is known to be working on a plan to replace cookies — but little is known about how far along that plan is.
Cookies are the little bits of tracking software that record your internet browsing activity, and make that data available to advertisers who want to target you. The data is anonymous and delivered in aggregate, but privacy advocates don't like cookies because they track what individual users are looking at.
The suspicion is that Google wants to replace cookies with a system that will give it — as the world's largest supplier of digital advertising — a virtual monopoly over ad data. And Google isn't likely to create a system that delivers less data about what people are doing on the internet.
So privacy advocates ought to be on alert. Because the tracking devices that will replace cookies are going to be much more effective than cookies ever were.
On the earnings call, Wall Street analyst Mark May of Citigroup asked what Google was up to. Arora replied:
... there is a lot of stuff going on in terms of how do we continue to evolve this area of technology and make sure that we give the users more control and also make sure that users have security in terms of what data gets transferred for them right and increase the transparency. So, our teams are working on this. There are some early concepts ... But I think it's too early to talk about what those precise solutions are likely to be.
We already have an idea of where Google is headed in terms of cookie replacement. Android phones have already been seeded with "Advertising ID," which tracks your specific device. It can be turned off or reset by the user however. AdID is an improvement on its predecessor, which tracked Android phones and could only be reset by wiping the entire device.
What makes AdID more powerful, however, is Google's push to have everyone log in, and stay logged in, to Gmail, Google Calendar, Google+, and YouTube. Android phones are great because the integration of these accounts is seamless, but combined with AdID, users are giving away a ton of detailed info to Google about what they're doing on their phones — on the web and in apps.
Cookies, by contrast, didn't do much in apps, are not device specific, and can be reset, deleted, or blocked at any time.
And then there is Facebook. On that company's earnings call, one analyst started talking about the "Holy Grail" of advertising:
Tom Forte - Telsey Advisory Group: On contextual advertising, this is essentially the Holy Grail for Facebook, and I think you understand this. Can you talk about where we are as far as innings on getting contextual ads?
That sounds innocuous, but "contextual" is basically industry jargon for ads that are targeted at you based on the "context" of what you're doing online. Cookies used to be the kings of "contextual" advertising, but the tide has turned against them as more and more users block them. Facebook COO Sheryl Sandberg answered the question:
... targeting is a huge, huge issue for us, and a huge opportunity and challenge. Our goal is in a privacy safe way to get information we can about what consumers want, and then help connect marketers, so that the ad experience is great for users. We’re serving relevant ads. Whether that information comes from the kind of things people like on Facebook or other websites they visit, or contextual statements they might make in their status updates, our goal is to use that information in a privacy safe way to improve the targeting of the ads on Facebook.
Note that Sandberg talked about serving ads "on other websites they visit," not just Facebook. We reported back in December that Facebook is slowly gearing up to serve ads on websites other than its own. "The most important thing is Facebook plus Atlas, and how we’re able to focus on people and not cookies," Facebook's head of Atlas Erik Johnson told us.
"Facebook plus Atlas ... and not cookies" is another clue to where this is going. Atlas is Facebook's cookie-tracker. Everyone has Facebook on their phones and no one ever logs out. Few people on their computers remember to log out of Facebook. And that login tracks where you go, all over the web, especially on pages that have the Facebook "like" icon — which is to say every page on the web.
So in the future, you've got Google's Advertising ID plus Google logins, and Facebook's login plus its Atlas cookie-tracker. Some advertisers will doubtless want to combine or cross-pollinate all that data to really get high-level targeting. It's a powerful combo.
Almost certainly, the data being thrown off from those logins will be hashed — that is, anonymized — and used in bulk. Advertisers won't literally be tracking you personally. But it will feel that way.
The difference is that the tracking will be much more accurate, and much more personal, than it was when the web was filled only with cookies.
From a privacy point of view, it will make cookies look tame by comparison.
On February 28, Axel Springer, Business Insider's parent company, joined 31 other media groups and filed a $2.3 billion suit against Google in Dutch court, alleging losses suffered due to the company's advertising practices.
