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Google closes the cookie jar

Hello everyone, Alistair here. Google recently announced what looks like a major improvement in digital privacy. But it's mostly more of the same: Ads targeted based on our online activity. 

Here's the big change: Google currently uses third-party cookies to make more-relevant ads. The company is doing away with that in favor of a new system called Federated Learning of Cohorts, or FLoC

Right now, cookies collect information from your browser as you interact online. They are the technical underpinnings that pay for the web. But they've also become the poster child of an internet economy that scoops up massive amounts of information about us in ways most people don't understand.

The problem (and power) of cookies is that they help advertisers target so precisely that when you go online there's a unique identifier just for you. It's one-to-one marketing. 

Google's FLoC replaces these individual identifiers with a system that puts users into groups, or cohorts, based on common interests. The company's Chrome browser will track sites visited, the content there and other information. But that data will be kept on users' devices. Only the information about the larger groups will be shared for advertising.

The company will try to avoid sensitive categories such as race and sexuality. If a FLoC starts to mirror one of these categories, the system is designed to spot this and reconfigure it. Users can also opt out. 

Still, not everyone loves FLoC. The proposal has been roundly criticized by privacy advocates, many in the digital ad industry and even some on Wall Street. These people don't agree on much, so it pays to listen when they do. 

Neil Campling, an analyst at Mirabaud Securities, said the new system gets rid of cookies, "something users hate and Google doesn't need," but replaces them with "what could be described as a behavioral credit score."  The civil liberty nonprofit the Electronic Frontier Foundation thinks the system could exacerbate existing problems with behavioral ads, including discrimination and predatory targeting. 

"FLoC will never be able to prevent all misuse," Google said. "There will be categories that are sensitive in contexts that weren't predicted," and companies that use the technology "will need to ensure that people are treated fairly."

What irks the ad industry is that Google will continue to use powerful information about individuals to run ads on its own services. So when you log in to Google Search or YouTube, the company will know who you are, and can link your online behavior to your identity. 

One troubling example is Customer Match, according to Bennett Cyphers, an EFF staff technologist. Advertisers upload customer contact details to Google and the company anonymously matches that with anyone on the list who is also a Google user. These people can then be precisely targeted with ads.

Tom Kershaw, chief technology officer of ad-tech company Magnite Inc., said this is "exactly the kind of behavior" that got Google into so much trouble already. "They are telling everyone else not to do something that they are doing," he added.

Google argues FLoC is the way to keep the web free for everyone. And indeed, ad innovation was critical when the company was a startup cleverly distributing online information mostly for free and not making much money. Now, though, Google earns about $40 billion a year. Meanwhile, Google has increasingly packed the top of its search results with ads, forcing businesses to pay more to access consumers. Antitrust regulators have noticed.

Love or hate FLoC, it's not a profound change to the way the internet works. The system still runs on targeted ads—which may actually be bad for the web because they concentrate the money and power with a small number of companies. The more data these organizations collect, the more profitable their ads are, and the more unassailable their positions become.

But is this business model necessary for keeping the web up and running? Cyphers frames the issue with a simple question: If all targeted ads disappeared tomorrow, would all your favorite sites perish?  

"I had a lot of favorite websites before targeted ads took over. But the web is a lot bigger than it was back then," he said. "I don't know what the answer is. But FLoC isn't it." Alistair Barr

If you read one thing

A cyber-attack on Microsoft's email software is becoming a global security crisis. Hackers are racing to to infect as many victims as possible before companies can secure their computer systems. There are 60,000 known victims so far, according to one U.S. official.  

And here's what you need to know in global technology news

Last week was grim for tech stocks, which lost value for the third straight week—wiping out a cumulative $1.6 trillion. Some stocks that surged during the pandemic—including DocuSign and Peloton—were hit particularly hard. 

Joe Biden's White House appointed Timothy Wu, and advocate for aggressive antitrust enforcement, as an adviser—signaling what could be a harsh stance on tech giants. Wu will join the National Economic Council as a special assistant on technology and competition policy.

Entertainment software company Atari is setting up an online casino—aiming to tap into both nostalgia and the non-fungible tokens craze. 

Cybersecurity celebrity John McAfee was indicted for profiting from an alleged crypto pump-and-dump-style operation using social media

Reddit gets its first chief financial officer as the company contemplates going public

MacKenzie Scott, the ex-wife of Jeff Bezos, has remarried.  

 

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