Google’s Self-Regulation: Privacy Triumph or Antitrust Dodge?

April 20, 2021

Have you ever googled a gift only to have the future recipient see it later advertised on your web-browser? Chances are your covert efforts fell victim to third-party cookies – or bits of data that your computer receives when browsing websites, that are then stored on your web-browser to track your online activity. These “tracking cookies” are typically used for online advertisements and are responsible for those targeted and eerily-individualized ads.

Although individualized Google Ads have certainly been a cause for concern for more than just ruining surprises, it seems at least some of those concerns may be short-lived, since Google recently announced that it will no longer be selling ads based on users’ specific browsing data. Instead, targeted individualized ads will be replaced with Google’s new “Privacy Sandbox” that will create “a new way for businesses to reach people with relevant content and ads by clustering large groups of people with similar interests.” In this “Privacy Sandbox,” third-party cookies would be replaced with a clustering algorithm that groups users by interests so that individual users’ data stay private on their web-browser. This proposed change is significant, given that Google currently controls over 50% of the online advertisements, and could have profound impact on the future of data privacy.

On the one hand, Google’s switch to a “Privacy Sandbox” sounds like a triumph for users everywhere. Without third-party tracking cookies, advertisers will no longer have cumulative data on individual users, such as an individual’s age, gender, and particular search history. Although advertisers would still have access to data of a “cohort,” the idea is that individuals’ privacy is more protected because it would be lost in the digital crowd. One would hope that Google’s increased commitment to anonymizing users’ data would also extend to other aspects of sharing user data that have been criticized in the past, such as allegedly selling access to millions of users’ photos and WhatsApp messages to Facebook, or continuing to collect users’ data while they browse in the private “Incognito” mode.

On the other hand, Google’s new privacy rollout could further reinforce its online advertising monopoly and create a trickle-down effect in market competition for businesses that rely on online advertising. For example, many are concerned that Google’s new model would effectively give Google a greater monopoly on first-party data (i.e., individual users’ data) to target users more precisely. If Google only provides “cohort” data to advertisers, smaller companies that have relied on third-party cookies to track and target individual users may be inherently disadvantaged when promoting their products compared to larger companies that already collect plenty of their own first-party data. In fact, the U.K.’s Competition and Markets Authority has already begun formally investigating Google’s planned cookie-removal, which Google has promoted as an enhanced commitment to consumer privacy, as a covert form of anticompetitive behavior to control the online advertising market. Considering that Google is already facing multiple lawsuits in state and federal courts for its alleged anticompetitive practices in online search and advertisement industries, it seems reasonable to wonder whether Google’s “Privacy Sandbox” is just a clever tactic to leverage its stronghold in online advertising, under the guise of consumer privacy protection, in order to dodge antitrust scrutiny and regulation.

Although individualized Google Ads have certainly been a cause for concern for more than just ruining surprises, it seems at least some of those concerns may be short-lived, since Google recently announced that it will no longer be selling ads based on users’ specific browsing data.

Regardless of the motives behind Google’s new privacy plan, the question remains as to whether the fate of users’ data should ultimately be up to Google at all. While it may be encouraging to see Google engage in self-regulation of its own use of consumer data, not all countries leave the allocation of consumer data up to Big Tech. For example, the Australian Competition and Consumer Commission is proposing a regulatory plan that would allow users to limit the data that Google can share for advertising purposes, in hopes that putting the power to share data back into the users’ hands will help promote competition and curb Google’s online advertising monopoly.

Ultimately, Google’s dominance in online advertising and seeming-monopoly over consumer data appears to be a chicken-or-the-egg kind of problem. Google dominates online advertising because of (to some degree) its massive cache of consumer data, and Google has a massive cache of consumer data because it dominates online search platforms. While there is no question as to the utility the suite of Google products supplies to consumers, it seems that increased government regulation over consumer data privacy could help curb some of Google’s alleged anticompetitive practices, simultaneously making room for more online ad market competition and consumer choice. Consumer data privacy should not be Google’s choice by default.

Alexandra Farquhar