By James Rosewell, Co-Founder, Movement for an Open Web
The conversations in Cannes last week were notable not for what they were about, but for what wasn’t discussed. In panels and roundtables, at bars and on boats, people talked about AI, about diversity, about creativity and much, much more. But what no-one seemed to be speaking about was the biggest issue facing our industry today – Google and its future role in digital advertising.
What’s the point in talking about Google, you might ask? It’s like discussing rocks, or the air – it’s an inevitability. A massive permanence at the heart of our world about which we can make little difference.
But that would be to miss the point. Google remains the key player in digital advertising, both through its 50%+ share of UK digital advertising revenue but also – and perhaps more importantly – its control of around 60% of web traffic through the Chrome browser.
What difference, you may ask, does that make to the price of a pint? Well, the CMA has found that “the costs of digital advertising, which amount to around £14 billion in the UK in 2019, or £500 per household, are reflected in the prices of goods and services across the economy.” Including advertising by brewers and, indirectly, their costs and so the price of a beer.
And Google’s permanence is perhaps more threatened at this time than at any other in recent years. It faces two key challenges that could fundamentally change the balance of the industry, and that digital advertising companies have a real opportunity to influence.
Privacy Sandbox
Notable by its absence from discussions on the Croisette was the progress of Google’s Privacy Sandbox project, the most fundamental change to the plumbing of the digital advertising world since its inception.
I heard several reasons why this topic wasn’t being discussed. First, it’s too hard – the technology is complex, the definitions are ambiguous and it’s – frankly – all a bit too complicated and unsexy for a panel on a yacht.
Second, no-one wants to be anti-privacy – but those objecting to Privacy Sandbox aren’t pro-intrusion, we’re against the idea that a single, private business should be in charge of the data plumbing for 60% of web traffic. We believe that privacy is foremost, it must just be facilitated in a way that is transparent and interoperable.
The final reason is that they think it’s all over. Helped by Google’s claims that it will be removing third party cookies in H2 2024 “full stop”, many have assumed that there’s no chance to avoid the incoming identity crisis. But they’d be wrong.
The introduction of Privacy Sandbox (and the removal of third party cookies) is subject to a series of commitments agreed by the Competitions and Markets Authority in 2021. Under these commitments, Google cannot block third-party cookies and release its Sandbox API Products until it has satisfied the CMA that its products are as useful as existing products and don’t damage competition. And they haven’t.
Google has admitted that its proposed alternatives are slower and less effective than the cookies they will replace and that’s before they’ve even done any proper testing at scale. Moreover, companies like Mozilla have pointed out that they don’t even clear the basic privacy hurdle of protecting personal data.
Google has delayed its testing programme until the beginning of next year, giving them just six months to prove the effectiveness of its products. Many, myself included, do not see how they can hope to satisfy the CMA within such a short timeframe and so believe that the removal of cookies will be delayed beyond yet another of Google’s self-imposed timelines. The CMA process runs until at least 2028 so – in theory – the Sandbox could remain unlaunched for another five years.
Breaking up Google?
The even more fundamental issue that went largely unsaid in Cannes was the forthcoming breakup of Google by the EU.
In June this year, The European Commission announced a Statement of Objections to Google that concludes that the company distorts competition in the digital advertising market and that the only effective remedy is a breakup of the business. It argued that Google’s vertical integration across Chrome, Android, search and its advertising exchanges DoubleClick and AdX is structurally anti-competitive, in that it leads to inevitable discrimination against rivals as it creates incentives to prefer its own vertically integrated products. As a result, they argue, it needs to be broken up to remove the economic incentive to prefer itself.
When speaking to people in Cannes, the general response was ‘it won’t happen’ or ‘it’ll take years’, but that misunderstands the seriousness of the EC when it comes to this sort of thing. They don’t use such significant remedies very often but when they do they follow them through and deliver on their promises. Barring an extraordinary change of heart, Google will be broken up by the EC and within a surprisingly tight timeframe.
It’s also important to note the US Department of Justice’s parallel case, that analyses Google’s vertical integration problem in the same way. The European Commission has been working closely with the DOJ and it can be expected to take the same approach to the remedy. So what has been announced is not an EU remedy but an EU announcement of a EU and US agreement on break up as a remedy.
The exact shape of this breakup remains to be seen but it will certainly involve some significant divestitures of Google-owned businesses. It should also – I believe – address the competition issues raised by Chrome’s dominance and Google’s attempts to leverage that through the Privacy Sandbox.
But what can I do?
All of this brings us back to the question of ‘why should I care?’ These things are occurring but this is big picture legal games and power politics, what influence can I have?
The answer is a lot. The authorities rely on evidence and input from businesses of every level, from the smallest to the largest. They need proof of harm, in whatever form that may come, to justify their decisions.
At the moment, the CMA is looking for more information about the economic impact of the removal of third party cookies and the costs of developing solutions to fit in with the proposed Privacy Sandbox solutions. The EC, meanwhile, will be taking evidence and running hearings around its statement of objections as part of its regulatory process. Our entire industry is at stake here and every company, every person has the chance to take part in these processes and influence the outcome one way or another.
My organisation, the Movement for an Open Web (MOW), has been helping businesses to monitor and contribute to these processes since 2020. We were the original complainant in the CMA Privacy Sandbox case and are a complainant in the EU proceedings. Our membership is anonymous to enable us to be fully open with the authorities without fear of reprisals from Google, a structure which is encouraged by authorities to help them in their search for evidence.
Whether it’s on your own or via a group such as MOW, every company in the digital ecosystem can and should understand and be involved with this process. Whether you’re for or against Google, too much is at stake here to sit back and hope that it will come right in the end.
