Alphabet’s (GOOGL - Free Report) division Google recently decided to restrict third-party cookies in its Chrome web browser in a bid to address users’ privacy concern.
We note that these web cookies are very crucial for the advertisers on Chrome as they help them to track online surfers on the browser. Moreover, cookies allow website operators to save data about users.
Google intends to accomplish the task of stopping advertisers from connecting their browser cookies to the non-operating websites within two years.
With the latest move is in compliance with regulators who are strictly against sharing user data. Further, this reflects Google’s user-oriented focus.
We believe this major step of Google is likely to bolster the Chrome user base.
Google Joins the Trend of Restricting Cookies
In this data-driven world, instances of data breach are increasing at an alarming rate. Further, people have raised questions regarding the usage of user browsing data via cookies.
All these have resulted in framing and enactment of new privacy laws, which have been taking a toll on the technology companies.
Google with its latest move joins the companies like Apple (AAPL - Free Report) and Mozilla, which have already taken such initiatives.
Apple has restricted third-party cookies on Safari browser. Mozilla as also done the same thing on Firefox browser
Meanwhile, Microsoft (MSFT - Free Report) offers a setting called “Block only third party cookies” on its browser called Edge.
Moreover, Opera (OPRA - Free Report) offers a similar option on Opera Mini browser.
Impact on Ad Business, Google’s Initiatives
However, the move is likely to hurt sentiments of several advertisers on Chrome, which in turn will affect Google’s largest revenue generating business, advertising. Notably, advertising revenues accounted for 83% of total revenues in 2018.
Consequently, this does not bode well for the company’s top line.
Nevertheless, Google is making every effort to replace these cookies with new technologies, which it has already proposed in order to serve the interests of advertisers.
We note that these technologies are focused on providing a sort of anonymous tracking that will notify advertisers if their ads convert into sales. Moreover, these new advancements will enable advertisers to target certain demographics rather than specific people.
Additionally, the company’s Privacy Sandbox project, which was announced in the mid of last year, enables advertisers display personalized ads without requiring users giving much of their personal data.
Apart from all these, Google will not impose restriction on third-party cookies if it finds other alternatives viable.
Further, many are of the opinion that Google gathers user data in many other ways and hence, the latest move will hardly impact its ad business.
Currently, Alphabet carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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