Google’s cookie substitute will strangle small businesses: the high costs of implementing Privacy Sandbox are unaffordable for many

Smaller tech companies in the advertising space have raised concerns about Privacy Sandbox, Google’s cookie alternative, which they say could hurt competition by giving big players too much of an advantage in the industry.

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According to Reuters, these concerns arose against the backdrop of close attention from US and UK regulators to the Internet giant’s advertising business. Regulators suspect Privacy Sandbox, five years in the making, could give Google too much control over the digital advertising market, hurting competitors.

Google’s presence on the Chrome and Android platforms, which account for a significant share of internet users, makes adaptation to the Privacy Sandbox vital for small advertising companies. However, ongoing investigations and possible delays in technology development are negatively impacting their operations. The increased costs associated with Privacy Sandbox implementation delays put these companies at a disadvantage compared to larger players with more resources. At least 11 advertising executives reported that “Privacy Sandbox could create an uneven playing field that favors large firms with more funding and technical capabilities.”

As a reminder, Privacy Sandbox is a set of technologies aimed at increasing user privacy by anonymizing data, introducing stricter access controls and targeting groups of users rather than specific individuals, as happens with a system that stores cookies on user devices. Google’s initial plan to phase out third-party cookies in Chrome and replace them with Privacy Sandbox met significant resistance from advertising companies and antitrust regulators, forcing the internet giant to back down.

«We designed and implemented Privacy Sandbox to support a competitive and thriving marketplace,” Google said. However, small companies say they cannot afford such investments. Drew Stein, CEO of Audigent, said, “Small advertising companies simply do not have the engineering teams or financial resources to effectively develop Privacy Sandbox platforms that can be used at scale.” Stein said Audigent, which helps advertisers improve ad targeting and publishers increase ad revenue, has already invested “several million dollars” in Privacy Sandbox over the past few years, an overly significant investment given its annual revenue of about $150 million

Experts say that while major advertising companies such as Taboola and Index Exchange may be less impacted by the introduction of new technologies, regulators’ efforts to ensure fair competition will be critical to preventing Google from further entrenching its dominance. “I don’t think Google will end up in the kind of boss role that some people are talking about,” said Dennis Buchheim, CTO of ThinkMedium and former CEO of the IAB Tech Lab. “I don’t think this will be allowed.”