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Google Will Make It Harder to Track Consumers. It’s a Blow to Facebook
By: Barron's | February 16, 2022

Adding new pressure to Facebook parent Meta Platforms , Google on Wednesday unveiled new steps to make it harder for advertisers to track consumer behavior across apps on phones and other devices based on the Android operating system.

While Google will take two years to roll out the new approach, the move nonetheless provides the latest challenge to advertisers, online publishers, and ad networks who rely on signals of consumer behavior to target advertising.

Asked to comment about Google’s move, Meta (ticker: FB) pointed to a tweet from Dennis Buchheim, the company’s vice president of advertising ecosystems. “Encouraging to see this long-term, collaborative approach to privacy-protective personalized advertising from Google,” he wrote. “We look forward to continued work with them and the ecosystem on privacy-enhancing tech through industry groups.”

In a blog post, the Alphabet (ticker: GOOGL) unit laid out an Android-based version of an existing initiative it calls the “Privacy Sandbox,” which is intended to both protect people’s privacy while giving companies and developers tools to support online businesses. The move echoes recent steps Apple (AAPL) has taken to reduce the ability to track user activity on iPhones.

“The Privacy Sandbox reduces cross-site and cross-app tracking while helping to keep online content and services free for all,” Google explains on a website about the program.

In detailing its plans, the company attempts to carve out a more advertiser-friendly position than the one Apple has taken. Apple’s approach, which it calls App Tracking Transparency, requires users to opt in to tracking on any apps on their iOS-based devices.

“Our goal with the Privacy Sandbox on Android is to develop effective and privacy enhancing advertising solutions, where users know their information is protected, and developers and businesses have the tools to succeed on mobile,” Google said in the blog post. “While we design, build and test these new solutions, we plan to support existing ads platform features for at least two years, and we intend to provide substantial notice ahead of any future changes.”

There’s no dancing around the fact that Google’s plans will make it tougher for Facebook and others to target advertising based on consumer activity on other apps and websites. Like Apple, Google is making the move in the spirit of consumer privacy, while no doubt taking into consideration pressure from legislators, regulators and activists who think current online privacy standards aren’t sufficient.

There’s no question that the push to protect consumer privacy—in particular on Apple iPhones—is already having an impact on Meta. Google’s own advertising business is less reliant on third-party activity to target advertising, as it’s the nature of search engines that consumer content is made clear by what they type into a search box. While Facebook has some self-provided data on users—think of the information you voluntary post on your social platforms—the company has historically been highly reliant on additional signals of consumer interest from their activity on other apps.

In reporting earnings earlier this month, Meta warned that its 2022 revenue would be reduced by about $10 billion due to Apple’s stricter rules on tracking consumer behavior on iPhones. Making it tougher to observe consumer activity improves privacy, but it also makes it harder for advertisers to both target advertising and figure out if the ads are actually spurring consumer purchases or other actions, a process the ad industry calls “attribution.”

The move to make it harder to track consumer behavior on Android devices follows a previous Google announcement of a plan to phase out third-party tracking cookies in its Chrome web browser, a measure that has the same goals: to boost consumer privacy while finding ways to allow advertisers to reach potential customers. In June 2021, Google said it plans to have key technologies deployed for the developer community by late 2022, with the phaseout of third-party cookies to start mid-2023.

Meta shares are down 2.6%, at $215.25, in recent trading, after touching a new 52-week low at $212.36. The stock has now fallen 33% since announcing fourth-quarter financial results. Among other ad-supported social networking companies, Snap (SNAP) is off 4.2%, while Twitter (TWTR) is down 3.1% and Pinterest (PINS) is1.4% lower.

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