Google's new privacy measures for Android to help users but not impact ad revenue

Google’s plans to gradually phase out its advertising ID system on Android devices in favour of one that will limit tracking and sharing of data with third parties will benefit individuals but may not impact its advertising revenue to the extent that Apple’s ‘Ask app not to track’ feature affected Facebook's bottomline.

Digital ads accounted for 43.2% of Google's total revenue in the third quarter of 2021, according to the company’s earnings reports. Facebook, on the other hand, earned 97% of its global revenue from ads in 2020, according to market research firm Statista. 

The scenario in India is not very different. Google India reported a 21.4% year-on-year (YoY) growth in gross advertisement revenue to touch Rs 13,887 crore, filings with the registrar of companies (RoC) in November 2021 reveal. In the same period, Facebook's gross ad revenue rose 41% YoY in India to touch Rs 9,326 crore.

Given its heavy reliance on advertising revenue, Facebook took a bigger hit with Apple’s 'not to track' feature that has "caused a major dent to Facebook’s ad business", according to Meta CEO Mark Zuckerberg. Early this month, Meta’s chief financial officer, Dave Wehner, too slammed Apple’s privacy changes, alleging it was a major reason the company lost $10 billion in ad revenue during Q4 2021.

Google may not feel the heat as much as Facebook because the difference between Google’s newly-announced privacy measures and Apple’s do not track tool is that users still have to disable tracking manually on Android, note experts.

“Google introduced a number of changes last year that allowed users to opt out of tracking. However, the difference here is that users had to go to settings and then disable it. But in Apple's case, users automatically see a standard prompt seeking their consent,” explained Isha Suri, senior researcher at Centre for Internet and Society.

Suri pointed out that when you are planning to build a privacy preserving operating system (OS), the changes Apple introduced last year must be examined. The iPhone maker introduced a clear interface to opt out of tracking across multiple apps and provided users knowledge of the data that apps are gathering and make more informed decisions. “It is not yet clear how the latest changes brought by Google will take user preferences into account. The default should be privacy preserving rather than the other way round,” she added.

Faisal Kawoosa, founder and chief analyst at techARC, is of the opinion that Google’s new privacy measures will not impact it’s or Facebook’s ad revenue. “Google will have to remain open. Apple is a closed ecosystem and can monetise in ten different ways as it has a captive audience. Google cannot do that as it's dependent on a partner ecosystem.  At the end of the day, Google also has to think of its ad business, just like Facebook,” he added. 

Google had made similar efforts late last year when it had announced that it would automatically remove the advertising ID of users who opt out of personalized ads, and app developers would only receive a string of zeros instead of an identifier. The new privacy measures will phase out advertising ID and limit sharing of user data with third parties. The advertising ID is used by app developers to measure app usage across all apps and target them with in-app advertisements.

Google's plans to curb intrusive advertising stems from the growing criticism the company has been facing for its data collection practices. Regulators in several countries, including India, are looking into the business practices of big tech companies such as Google and Facebook and its implications on users and competition.

Prasanto K Roy, a technology and policy consultant, pointed out that an ideal approach is to remove information that can allow personal targeting, by anonymizing and aggregating the information. For instance, with its cookie-replacement tech called ‘Topics’, Google is grouping users under broad topics of interest on their device itself, so personal preferences aren’t shared even with Google’s own servers, let alone advertisers.

According to Suri, the problem lies with the fundamental approach to tracking for advertising. “We have normalized behavioural tracking and profiling to an extent that we are unable to imagine alternative privacy preserving methods. For instance, there isn’t enough discussion on how you could use contextual ads instead of behavioural ads,” she rues.

Roy noted that while innovative advertisers and app developers will continue to look for workarounds to improve targeting this at least raises the bar. “Google has an enormous role in implementing baseline privacy and safety standards for all apps on its ecosystem, and would have to continuously refine the system against targeting workarounds,” he added.