Google Delaying Phasing Out Of Third-Party Cookies On Chrome Will Benefit These Companies, Analysts Say

Earlier today, Alphabet Inc GOOG GOOGL Google announced delaying the phase-out of third-party cookies on Chrome until 2H24, an ~ one-year extension from its initial plan. 

It marked Google's second delay after delaying the deprecation of third-party cookies in June 2021 from early 2022 to 2H23 JMP analyst Andrew Boone noted. 

Given the political and technical difficulties of replacing third-party cookies with a privacy-safe alternative, he would not be surprised to see Google again delay the depreciation of cookies in 12-18 months. 

For context, Google decided to remove 3P cookies in January 2020. Boone pointed out that the delayed depreciation of third-party cookies most benefits open web advertisers. 

Google Chrome accounted for 66.9% of desktop browser share and 65.9% of mobile browser share per StatCounter, highlighting the importance of Chrome to the open web. 

Boone noted that nearly all other browsers have already eliminated third-party cookies' functionality. He believes the most significant beneficiary in his coverage universe is PubMatic, Inc PUBM, given its exposure to open web displays. 

Additionally, Boone highlighted AdTheorent Holding Company, Inc ADTH, Outbrain Inc OB, and Taboola.com Ltd TBLA, which still utilize cookies when available for targeting, though they primarily use contextual signals to drive ad performance. 

Lastly, he noted Meta Platforms Inc META Facebook, Twitter Inc TWTR, and YouTube still operate browser-based user experiences, which is a minority of their businesses today. 

Boone expected privacy headwinds to continue, albeit with lesser intensity. He had a Market Outperform on Google with a price target of $160.

RBC analyst Matthew Swanson saw another delay removed a near-term headwind from the open-internet space, including The Trade Desk, Inc TTD, Tremor International Ltd TRMR, PUBM, and Magnite, Inc MGNI more time to adapt. 

That said, a delay does not remove the overhang and may serve to extend the uncertainty in the market. Swanson believes that cookie loss could serve a long-term benefit for scaled players by enhancing differentiation and lessening worries about commoditization, effectively accelerating supply path optimization (SPO). 

For now, he felt a delay would benefit sentiment, giving advertisers, publishers, and the entire ecosystem more time to test their replacements for cookie loss. 

Price Action: GOOG shares traded higher by 0.51% at $114.18 on the last check Thursday.

Image by Deepanker Verma from Pixabay