Shares of ad-retargeting tech company Criteo (CRTO 0.11%) fell 15.9% today after Alphabet (GOOG -2.06%) (GOOGL -1.94%) subsidiary Google announced plans to phase out support for third-party "cookies" -- packets of data on which advertisers rely to track and analyze users' web activity -- in its Chrome web browser.
In a blog post this afternoon, Google unveiled a new initiative called "Privacy Sandbox" with the goal of developing "a set of open standards to fundamentally enhance privacy on the web." As part of that goal, Google says it wants to phase out support for third-party cookies in Chrome within two years.
Of course, on the surface this seems like terrible news that could hamper the effectiveness of Criteo's flagship ad-retargeting capabilities. But this move lower shouldn't be shocking considering Criteo stock fell more than 20% last year in part due to reports last spring indicating Google was considering new restrictions on its handling of third-party ads in Chrome.
But before you go clicking that sell button, note this isn't necessarily a deal-breaker for Criteo shareholders.
For one, Criteo management pointed out last year that given Chrome's dominance (and for antitrust reasons), it wouldn't be in Google's best interest to implement crippling restrictions that would hinder the ability of third-party advertisers to compete.
Indeed, Google elaborated in its blog post today (emphasis added): "After initial dialogue with the web community, we are confident that with continued iteration and feedback, privacy-preserving and open-standard mechanisms like the Privacy Sandbox can sustain a healthy, ad-supported web in a way that will render third-party cookies obsolete. Once these approaches have addressed the needs of users, publishers, and advertisers, and we have developed the tools to mitigate workarounds, we plan to phase out support for third-party cookies in Chrome."
In short, it seems Google is aiming to find a better way to implement a privacy-centric, ad-supported web platform that addresses the needs of everyone involved, including third-party advertisers like Criteo. And that platform apparently doesn't involve using cookies.
Even so, I suspect Criteo management will have plenty to say on the matter when the company releases fourth-quarter results next month.