Google ready to toss cookies as ground shifts for online ad rules

Google(s goog) is the world’s biggest online advertising company so anytime it makes a policy change, the ripple effects are felt far and wide. That would be the case if the company goes forward with a reported plan to move away from so-called third-party cookies as a way to identity consumers as they move across the internet.

According to USA Today, Google plans to abandon third party cookies (mini programs that track your web browsing) in favor of an anonymous ID system that it will share with those advertisers and ad networks that abide by its guidelines.

The news comes on the same day as an industry-working group dedicated to a “Do Not Track” standard effectively collapsed. The group was supposed to develop a standard for how online marketers collect consume data, but the process has gone nowhere; last month, an influential privacy advocate from Stanford gave up on the group and, today, the┬áDigital Advertising Alliance did the same.

As the Hill reported, the failure of this industry attempt to come up with a “Do Not Track” plan means that Congress is likely to step in and pass a plan of its own. If this is the case, Google’s reported move away from cookies may help it stay ahead of the regulatory curve.

But the plan also raises the question of how Google, in the absence of third party cookies, intends to preserve the flow of consumer data that is the lifeblood of the online ad economy.

The USA Today report is vague on what Google plans to do instead, but a good guess is that it will rely heavily on its vast collection of so-called “first party” data — information it collects directly from consumers who visit sites like Gmail or YouTube or use Google+ to log-in to another website (thanks to privacy policy changes, Google can mash all this together).

And, in any case, third party cookies have become less important in the age of mobile. Marketers and startups are instead relying on other “signals” such as location or cross-device comparisons in order to identify consumers.

The upshot is that even if Congress outlaws third party cookies, Google and other major portals (like Twitter and Facebook) will be in a stronger position than ever in the online ad market; they will control the most valuable pools of first party and mobile data, which they can make available to marketers and ad networks on the terms of their choosing.

To understand more of the realpolitik here, see “How to Talk about Banning Third Party Cookies” on Digiday. For the super-advanced class, see “We Don’t need no Stinkin’ Third Party Cookies” on AdExchanger.