Privacy, ad tech and third party cookie changes are birds of a feather

Google is now testing FLoC and Fledge to replace third party cookies as government regulatory changes continue. Here’s an update.

In 2021, the simple four-letter word ‘data’ is entangled in three massive change forces:

1. The review of Australia’s Privacy Act’

2. The ACCC’s digital advertising services inquiry review, along with the digital platforms inquiry’

3. The end to third party cookies

These changes are intertwined and could lead to two very different industry outcomes:

DATA NIRVANA: where a fair and privacy-compliant data market evolves and the marketing industry flourishes in a diverse and competitive ecosystem.

DATA CHAOS: where regulation and technology change inadvertently give citizens and governments a false sense their data is ‘private’ when in reality data is monopolised and monetised by a select few players.

The winds of change are howling as regulators clamp down on the big tech at a time when citizens willingly allow large-scale data collection through their smartphones. So what should the industry know in April 2021?

What the FLoC is Fledge?

The bird metaphors fly high as Google develops technology alternatives to the third party cookie, which the $9.1 billion Australian advertising and marketing supply chain currently relies upon.

Google’s describes its technology replacements for third party cookies as a “privacy sandbox” - which technically includes more than a dozen different programs - many of which are now being tested in beta mode.

The two biggest projects replacing third party cookie technology in Chrome - which 65% of internet users use - include:

FLoC: The Federated Learning of Cohorts program which groups users into a ‘cohort’ based on their browsing behaviour. The idea is that these cohorts are large enough to prevent user identification and therefore protect privacy. The fear is that this technology could enable ‘browser fingerprinting’ and predatory targeting.

Fledge: This is a retargeting API that sends two independent requests to a server for ads. It was initially based on Google’s Turtledove project but is now in early testing with advertisers under a ‘Bring Your Own Server’ model which means advertisers and publishers potentially connect their first party data into Google’s ecosystem.  

There is currently no confirmation as to whether these two technologies will replace third party cookies in Chrome permanently, or whether these will merely be “tests” or “betas” until better solutions emerge.

The 6 big proposals for the future of ad tech in Australia

The federal government regulator, the ACCC, has been reviewing Australia’s advertising and marketing services, mostly in isolation to the changes to third party cookies and the review of the Privacy Act.

(Note, this advertising review is separate to the larger digital platforms inquiry, of which one component led to the News Media Bargaining Code  which then sparked all the headlines of Facebook pulling news and Google threatening to leave Australia.)

The proposed reforms the regulator has proposed for ad tech include:

1. Data portability
   This concept potentially allows individuals to control their personal data, letting them to move it to other businesses (for example, taking their banking data to a bank that can give them a better interest rate).

2. Data separation
   The ACCC proposes that separating large datasets and breaking them up could help competition but it’s unclear how this might work at a practical level.

3. Preventing anti-competitive self-preferencing
   Putting rules in place across the industry to avoid conflicts of interest.

4. Voluntary verification of demand side platforms
   New standards on demand side platform services could help make the industry more transparent and accountable.

5. Common transaction ID
   An industry-wide system to identify each transaction such as web clicks or advertising clicks which must also protect consumer privacy.

6. Common user IDs
   Creating common user IDs could help track behaviour in a more privacy compliant way.

The privacy act changes

Regulating the concept of ‘privacy’ has been thrown open to challenges now that our data footprint grows exponentially as we browse the internet, use government services online or go to the doctor who updates our My Health Record.

Rapid tech change has forced the federal government to review Australia’s 1988 Privacy Act - along with its accompanying privacy principles.

The federal government has acknowledged that this review is being done as part of the government response to the Australian Competition and Consumer Commission’s Digital Platforms Inquiry, which is a positive start to the interdependence of the landscape being considered.

Why all changes must be taken into considerations

It’s ADMA’s view that Google’s move to deprecate third party cookies - and the Digital Advertising Services Inquiry - should also be considered in line with any changes to the Privacy Act.

An understanding on how Australian regulators define ‘personal information’ - a term crucial to privacy laws - will impact:

• The way data holders protect their intelligence and IP to collect, process and generate insights from data,

• How the ad tech industry values the data (for example, if it’s more onerous to collect, will that make it more valuable in market?),

• The scope of regulators to create governing frameworks that ensure open access to the global digital economy,

• Consumer trust in data collection and ‘opting in’

There is a very real danger that instead of improving competitiveness and privacy compliance, more power ends up in the hands of monopoly players.

We must consider the broad landscape of privacy, advertising technology and third party cookie deprecation to design the privacy-compliant and flourishing ecosystem we all desire.

The industry - and regulators - cannot afford to strangle innovation and efficiency and cut Australian citizens off from the global digital economy.

A complete reimagining of digital advertising is already underway and consumer rights, choices and ethics must remain top of mind.

At the very least, the industry needs Privacy Act Review and Digital Advertising Services Industry reviews to be done simultaneously to avoid creating accidental outcomes.

ADMA’s submission to the Digital Advertising Services Inquiry Interim Report will be published at the ACCC’s discretion and, when available, can be found on the ACCC website.