Google's Privacy Sandbox initiative, which tries to make targeted advertising online less invasive, is hurting smaller ad-tech companies, Reuters has reported. The main issue for smaller players is that they don't have the engineering teams or financial resources to build Privacy Sandbox platforms at scale, putting them at a disadvantage.
There were about 11 ad execs who told Reuters that the new setup creates an uneven playing field because large companies have no problem adapting to Privacy Sandbox. The report states that smaller ad-tech firms are facing uncertain timelines and costs rising above the initial $5 million to $10 million they expected to invest. One of the companies, Audigent, has annual revenues of $150 million, so the costs are a decent chunk of that.
On the flip side, large businesses like Raptive and Index Exchange are investing less than 3% of their revenue, according to people familiar with the matter.
Another potential problem with Privacy Sandbox is that it could give Google too much control over the digital advertising market, which could hurt competition. Ad-tech companies can't ignore Google's new system and just stick with cookies either because it controls a lot of the market with Android and Chrome.
Given that big tech is now facing a lot more scrutiny from regulators in the US and EU, it's probable that they will question Google's Privacy Sandbox set up and try to make it fairer in some way.
On Monday, the US Department of Justice launched an antitrust case against Google accusing it of monopolizing the digital ad industry through "a series of ruthless anticompetitive maneuvers". The DOJ says that Google is using its alleged monopoly to overcharge advertisers and underpay publishers. If the DOJ gets its way, then Google could have to break up its ads business to help make the digital ad space more competitive.
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