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Google changes the ad game

Cookie

Good morning! This Thursday, Google's anti-tracking stance is a big deal for the ad world (but not really for Google), Safari looks like the future and Snap is poised to grow like crazy.

Also, we have a new episode of the Source Code podcast! I talked with Google's Javier Soltero about Google Workspace, calendars, the future of work and what it means to run a team going forward. It's a fun one; Javier has some strong feelings about calendar events.

(Was this email forwarded to you? Sign up here to get Source Code every day. And you can text with us, too, by signing up here or texting 415-475-1729.)

The Big Story

What's behind Google's ad shift

It sounds like a win-win, at first. Google announced that as it phases third-party cookies out of Chrome, it won't replace them with any other way to track individual users across websites. "We will not build alternate identifiers to track individuals as they browse across the web, nor will we use them in our products," the director of product management, ads privacy and user trust, David Temkin, wrote. Hurray, privacy! Sort of.

Google can obviously still collect data as you use Google products — which almost everyone does, all day every day — and use that data to target ads. (The new decision also doesn't apply to mobile, which I'm told a few people use.)

  • The tech Google will use to replace cookies? Federated Learning of Cohorts, or FLoC, which collects data to put users in interest-based "flocks" that advertisers can target. So you become a face in a crowd full of slippers-wearing Linkin Park fans, rather than a one of one. (Here's the FLoC white paper, if you want to get in the weeds.)

This isn't a white-knight move from Google, but rather a simple way to get rid of something that users hate and Google doesn't really need.

  • A number of tech folks I spoke to think all Google's doing is shoring up its own digital-ad supremacy, rather than doing the right thing for the sake of doing the right thing.
  • Google says FLoC is great for privacy. The Electronic Frontier Foundation says otherwise. Here's Bennett Cyphers, an EFF staff technologist, from 2019: "A flock name would essentially be a behavioral credit score: a tattoo on your digital forehead that gives a succinct summary of who you are, what you like, where you go, what you buy, and with whom you associate."
  • And besides, third-party cookies have been on the way out for a while. "About half of internet traffic today has no third-party cookie on it," Quantcast CTO Peter Day told me recently. And the ones that do exist tend to expire in a few days. He called it "a slight misconception," the idea that cookies are chasing everyone around the web all the time.

In reality, the future is first-party data. And to those with the largest scale go the spoils. Quantcast, for one, is trying to aggregate its way there: It launched the new Quantcast Platform yesterday, designed to bring together lots of publishers and websites to compete with Google and Facebook.

  • "We think if you can level the playing field a bit — by having the same large-scale data sets through data cooperatives, through high-precision targeting and ease of use — it feels natural to me that advertisers can do what they want to do," Day said.
  • "None of the customers I speak to really want to spend more money with Google or Facebook," Quantcast CEO Konrad Feldman said. "And search and social, they recognize limitations of that. But that technology is easy to use, and it works." The only way to win is to beat the giants on their own terms.

What's Next

Safari is the future

Where are these changes in tracking ultimately headed? Well, Feldman told me, there's an easy way to figure out how the internet might work in the future: Just turn on your MacBook. "Most of us are using Safari as a predictor for how the whole internet is going to look in a couple years' time," he said.

Safari was way ahead of the game in blocking cookies, and Apple has been using what it calls Intelligent Tracking Protection for the last couple of years to make it much harder for advertisers or anyone else to track Safari users. It also tries to send less user data to search engines such as Google.

  • "Basically, other users are subsidizing Safari users," Feldman said, since a Safari impression without third-party cookies is worth much less to publishers. Quantcast and others are using Safari as a testing ground, looking for new ways to measure user behavior and ad performance without violating the privacy terms.
  • Safari has also been running a feature similar to the forthcoming iOS Tracking Transparency feature: It cuts off most trackers by default, and users have to allow websites to work with an extension or access the clipboard.

Apple's no white knight either, of course. "I think the walled gardens would be pretty happy if content could only be monetized through an app store," Feldman said. "That would suit them really well."

But if Google is the most consequential company in this space — and as the owner of the biggest online ad business and the most popular browser, it obviously is — Apple's probably still the most influential. So if you want to make sure you don't get caught napping, keep an eye on Safari.

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A MESSAGE FROM INTEL

Intel

In an interview with Tom Lantzsch, Senior Vice President and General Manager of the Internet of Things Group (IoT) at Intel Corp., Lantzach shares his take on edge computing: There are more innovations to come — and technology leaders should think equally about data and the algorithms as critical differentiators.

Read more

People Are Talking

"Us against the world" doesn't work in the modern tech biz, Satya Nadella said:

  • "Just saying, 'Well, my team is great and everybody else sucks,' that's not leadership. In a multi-stakeholder, multi-constituent world, you've got to bring people across your enterprise and outside together."

Snap's investments in ad tech set it up to make more money even if it doesn't keep growing, Evan Spiegel said:

  • "Because we have so much engagement on our platform, we have a lot of advertising inventory, and that abundance of inventory has meant that the price per impression, the CPM, is relatively low compared to other platforms."

Pandora was early to the music game, and Tim Westergren said that might have been why it lost to Spotify:

  • "The industry had us in their crosshairs and after a while it's hard to be at war with your suppliers. There was too much potential for publishers to do monkey business and we had less and less confidence in the security of some of these statutory structures. We were vulnerable."

Twitter's planning to take it slow on Apple's new anti-tracking features, Twitter CFO Ned Segal said:

  • "You only have one chance to ask somebody if you can have access to their device ID to show them more relevant ads. You want to ask in a really thoughtful way, and you want to take time to learn from the industry and the broader ecosystem before you ask a question like that."

Z Holdings is looking for an Instagram-esque acquisition opportunity, Kentaro Kawabe said:

  • "We will be looking for opportunities to acquire an epoch-making global service."

Making Moves

Kevin Mayer is the new chairman of DAZN, replacing John Skipper. Presumably he'll keep this title longer than he held on to the CEO gig at TikTok.

Okta bought Auth0 for $6.5 billion, bringing another form of sign-in into the Okta fold.

Frances Townsend is the new head of compliance at Activision Blizzard, tasked with navigating what's become a fast-moving gaming regulatory world.

Intel named more of the exec team for its new managed infrastructure company, including Elly Keinan as group president and Maria Bartolome Winans as CMO.

In Other News

  • On Protocol | Policy: The Arizona House passed its app store bill. The bill, which will now go to the Republican-majority Arizona Senate, would allow app developers to use third-party payment systems to circumvent the 15% to 30% cut that Apple and Google take from app sales.
  • Apple now lets users transfer iCloud photos to Google Photos, which looks like an attempt to get ahead of antitrust concerns. Meanwhile, Apple denied Dustin Curtis' account of his Apple ID getting disabled, saying that it had nothing to do with his Apple Card, and was instead because the trade-in process for a new MacBook Pro wasn't completed and his account went into debt.
  • On Protocol | Policy: Facebook is lifting its political ad ban. The ban's been in place since before the 2020 election, and groups on the left argued the political ad ban was hurting them disproportionately.
  • The U.K. announced an Apple antitrust investigation. Its Competition and Markets Authority is investigating Apple over "complaints that its terms and conditions for app developers are unfair and anti-competitive."
  • Amazon is in talks to carry "many" NFL games exclusively, The Wall Street Journal reported. It could reportedly pay $1 billion a year for the deal.
  • Parler dropped its antitrust lawsuit against Amazon, but filed a new lawsuit alleging defamation and breach of contract.
  • ThredUp filed for an IPO. It brought in $186 million of revenue last year, but lost $48 million.
  • SpaceX successfully landed a rocket. Then it blew up.

One More Thing

'Let's Basic this bad boy'

It is absolutely undeniable that the AmazonBasics Camera Bag looks suspiciously like the Peak Design Everyday Sling. (If the picture isn't enough evidence, how's this: Amazon's was initially called the Everyday Sling. Subtle!) But instead of just harumphing and moving on, Peak Design released an amazingly sick burn in YouTube form: "If you're tired of supporting companies who innovate, and just not willing to pay for responsibly made products, don't!"

I have a feeling Peak Design is about to sell a lot of Everyday Slings.

A MESSAGE FROM INTEL

Intel

In an interview with Tom Lantzsch, Senior Vice President and General Manager of the Internet of Things Group (IoT) at Intel Corp., Lantzach shares his take on edge computing: There are more innovations to come – and technology leaders should think equally about data and the algorithms as critical differentiators.

Read more

Today's Source Code was written by David Pierce, with help from Anna Kramer and Shakeel Hashim. Thoughts, questions, tips? Send them to david@protocol.com, or our tips line, tips@protocol.com. Enjoy your day; see you tomorrow.

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