“The predominant business model for commercial search engines is advertising… We expect that advertising funded search engines will be inherently biased towards the advertisers and away from the needs of the consumers… Furthermore, advertising income often provides an incentive to provide poor quality search results…”
These are excerpts from the footnotes of a paper that Google founders Sergey Brin and Larry Page wrote over two decades ago. The perils of an advertising-funded model are lucidly detailed in an appendix with Brin and Page’s paper, ‘The Anatomy of a Large-Scale Hypertextual Web Search Engine’, written in 1998 when both of them were in Stanford University.
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Alphabet Inc’s announcement on Wednesday that its ad tools would no longer support individual tracking of users across websites from 2022, alongside its January 2020 statement that announced an intent to end support for third-party cookies in its Chrome browser, mark a half-step in the direction of the ad-insulated model for search engines that the Google founders had propounded in their paper.
The Google proposal
Google has said it plans to wean itself off user-tracking “cookies” that, while allowing it to deliver personalised ads to users, has also triggered a strong pushback from privacy activists. Cookies are strands of code that websites deliver to a visitor’s browser and these tag along as the visitor moves on to other websites. These cookies can then be leveraged to target advertisements. Google has said it would end support for cookies in Chrome by early 2022 once “it figures out how to address the needs of users, publishers and advertisers” and comes up with tools to “mitigate workarounds”. The company said in a blog post Wednesday it will only use “privacy-preserving technologies” that rely on methods like anonymisation or aggregation of data.
In January 2020, Google had said it would end support for third-party cookies in Chrome. A blog post from David Temkin, director of product management for ads privacy and trust, said Google had received questions about whether it will “join others in the ad tech industry who plan to replace third-party cookies with alternative user-level identifiers.”
“Today, we’re making explicit that once third-party cookies are phased out, we will not build alternate identifiers to track individuals as they browse across the web, nor will we use them in our products,” the Google post said. To achieve that, Google said it has launched its “Privacy Sandbox” initiative “to find a solution” that protects user privacy and lets content remain freely available on the open web. “This approach effectively hides individuals ‘in the crowd’ and uses on-device processing to keep a person’s web history private on the browser,” Google product manager Chetna Bindra explained in unveiling a proposed system called Federated Learning of Cohorts. FLoC, according to Google, proposes a new way for businesses to reach people with “relevant content and ads” by clustering large groups of people with similar interests, as opposed to deploying cookies that track individual users.
The new approach effectively hides individuals “in the crowd” and keeps their web history private on the browser. By creating simulations based on the principles defined in Chrome’s FLoC proposal, Google’s ads teams claim to have tested this privacy-first alternative to third-party cookies. “Our tests of FLoC to reach in-market and affinity Google Audiences show that advertisers can expect to see at least 95% of the conversions per dollar spent when compared to cookie-based advertising,” Google said in its blog.
As things stand, almost 90% of Google’s revenue is derived from advertising. The same goes for most other big search engines. There are some such as DuckDuckGo, which works in broadly the same way as Google by combining data from sources with its own web crawler, to sort out and display results. But it does not store IP addresses or user information, and describes itself as “the Internet privacy company” and thereby pitches Google as an “Internet advertising company”.
Interestingly, Brin and Page’s 1998 paper specifically illustrated the conflict by way of an example, something that is relevant even now. “For example, in our prototype search engine one of the top results for cellular phones is ‘The Effect of Cellular Phone Use Upon Driver Attention’, a study which explains in great detail the distractions and risk associated with conversing on a cell phone while driving… It is clear that a search engine which was taking money for showing cellular phone ads would have difficulty justifying the page that our system returned to its paying advertisers.” With this example in focus, the paper concludes “that advertising funded search engines will be inherently biased towards the advertisers and away from the needs of the consumers’ ”. All of this combines well with Google’s old motto: “Don’t be evil”; but things haven’t exactly gone as per the ideals espoused by its founders.
While Google Search is a great product from a consumer point of view and is free at the point of use, the company rakes in over $100 billion annually from advertising based on cookie-based user tracking — something that has come in for increasing amounts of flak from privacy activists and in jurisdictions such as the EU. The new approach signifies a change in track that broadly aligns with what the founders had espoused before Google was launched. This attempt at self-regulation clearly comes at a time when Google and other tech majors are under fire across geographies. But in an industry where many companies rely on tracking and targeting users, the move by the market leader in digital advertising is expected to put pressure on other players.
Facebook seems to have turned the other direction by indicating that it is launching a new campaign aimed at proving the need for personalised advertising, amid an ongoing battle with Apple. Apple had begun to roll out privacy changes to iOS 14 that will require users to opt in to allow this kind of tracking, something that has Facebook seeing red. Earlier this month, Facebook unveiled an initiative, titled ‘Good Ideas Deserve to be Found’, that makes the case that personalised ads help Facebook users discover small businesses, particularly during the pandemic. “Every business starts with an idea, and being able to share that idea through personalised ads is a game changer for small businesses,” Facebook said in a blog post announcing the theme. “Limiting the use of personalised ads would take away a vital growth engine for businesses.”
Whichever side they’re on the privacy debate, a lot of money is riding on the changes in the formats of how consumers are tracked. Google, Facebook and Amazon are the top three digital ad platforms across most markets, with the three together capturing between 50-70% of all digital ad dollars, according to data from agencies such as eMarketer and IAB. Morgan Stanley analysts had late last year said they believe online advertising can grow 20% in 2021, with Facebook, Google and Pinterest leading the pack. In India too, Google had made a filing in November that showed its revenues from India had grown 35% to about Rs 5,594 crore in 2019-20 while Facebook India’s revenues grew by 43% year-on-year to about Rs 1,277.3 crore in that year, according to figures estimated from their regulatory filings that were shared by companies data platform Tofler.
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