The Privacy Sandbox offers a set of APIs, or application programming interfaces, that aim to offer similar functionality to third-party cookies — in areas like ad targeting and measurement — without compromising user privacy.

Several adtech companies have been in deep testing mode with Google's so-called Privacy Sandbox for several months this year, after Chrome turned off third-party tracking cookies for 1% of its users. This gave those companies a glimpse at how the death of cookies could impact ad prices, website page loads, and publisher ad revenue. Some of those companies participated in a grant program, in which Google paid out single-digit millions of dollars to fund the investment required to test the technologies.

So far, the results have looked pretty bleak.

On Tuesday, Index Exchange, a supply-side platform that helps publishers monetize their web pages and a participant in the grant program, published a blog post outlining how it believes the Privacy Sandbox in its current form poses "major risks to publishers and the overall programmatic ecosystem."

Index Exchange's tests, which involved more than 100 publishers and 10 demand-side platforms, found that Privacy Sandbox-enabled impressions resulted in a 33% decline in CPMs — the cost to reach 1,000 impressions — versus those with a third-party cookie enabled. This compared to 36% decline when both cookies and Sandbox APIs weren't attached, Index Exchange said.

"So, while the Sandbox APIs did help, they're not closing the gap enough at the current scale, available feature set, and level of adoption," Index Exchange wrote in the blog post.

Index Exchange's findings and feature suggestions came days after the publicly traded adtech company Criteo published its own detailed blog post, calling out shortcomings it discovered through testing Google's Privacy Sandbox. Criteo, a demand-side platform that helps advertisers place their ads, was also a Privacy Sandbox grant participant.

Criteo forecast that if cookies were switched off today, publishers' Chrome ad revenue would decline by about 60% on average, according to a blog post it published Thursday. The company also asserted that the way ad auctions are configured using Privacy Sandbox in its current form gives Google's own advertising technology a "massive" advantage. Criteo offered a list of recommendations designed to help alleviate these issues.

"We are nearing the biggest release in adtech history of a product, and the fundamentals are not met," Criteo Chief Product Officer Todd Parsons said in an interview.

A Google spokesperson said of Criteo's and Index Exchange's findings that it wasn't possible for a single buying platform to predict publisher revenue performance because publishers typically work with dozens of different sources of demand.

"In addition, we expect performance numbers to evolve, and they currently don't reflect how the overall ecosystem will perform in a true marketplace — which won't exist until adoption expands alongside third-party cookieless traffic," the Google spokesperson continued in a statement.

Related stories

Separately, the IAB Tech Lab, an industry group that creates digital advertising standards, recently issued its own blistering takedown of Privacy Sandbox, an update to a report it previously issued earlier this year. A Google spokesperson said it was encouraged that the IAB Tech Lab is now turning its focus to discussing new capabilities and sharing integration guidance with the industry, with input from the Chrome team.

IAB Tech Lab Chief Executive Anthony Katsur said there's a general industry consensus that Privacy Sandbox doesn't yet properly support a host of advertising functions, ranging from targeting to ensuring users don't get bombarded with the same ads.

"We don't look at the cookie as the root cause of privacy issues in the ecosystem, but if Chrome thinks there's a better way, we'd love to see it," Katsur said. "It's not the current form the Privacy Sandbox takes. That doesn't work."

Privacy Sandbox needs competition regulator approval

A rising tide of negative ad industry feedback could present a setback to Google's plans. In 2021, Google pledged to give the UK's Competition and Markets Authority oversight of its Privacy Sandbox rollout and Chrome cookie removal.

The CMA is looking to ensure that the Privacy Sandbox proposals don't distort competition in the online ad market, self-preference Google's own adtech, and that they ensure users have sufficient control over how their data is used. It's been seeking feedback from adtech companies, publishers, and advertisers, some of which are expected to provide the antitrust watchdog with detailed reports about their Privacy Sandbox tests. The CMA is also taking into account recommendations from the UK data protection authority The Information Commissioner's Office, to ensure the Privacy Sandbox upholds adequate privacy protections for users.

The CMA wasn't available for comment ahead of the UK's general election, which is set to take place this Thursday. The CMA's latest quarterly update on the Privacy Sandbox process, published in April, reported that Google was complying with its commitments.

Business Insider contacted several adtech companies — including other grant recipients — who said they weren't yet ready to release the findings of their own Privacy Sandbox tests.

One adtech executive at an SSP, who didn't want to speak publicly until they had finalized their Privacy Sandbox report, said they agreed with Criteo's conclusions in its recent blog post and said the shift away from cookies is set to create a serious challenge for the entire industry.

"It is such a heavy lift on all sides," the SSP exec said. "There's such a tech lift, sure, but everyone will have to change buying patterns."

Adtech experts said many of the recommendations they require from Google in order to improve Privacy Sandbox could take months to implement — and may not come in time for the Chrome cookie cutoff deadline next year.

"We've seen that quarter over quarter these challenges are being resolved, but it's fair to say, the former timeline just wasn't quite long enough for the transition to run to completion," said James Colborn, global head of data at the adtech company Teads.

Still, he added, Privacy Sandbox already seems to be working better than a completely cookieless environment, "which is promising for an early-stage technology."

To be sure, Privacy Sandbox isn't the only alternative to the advertising ecosystem once cookies are finally discontinued. Targeting using third-party cookies on the Safari and Firefox browsers hasn't been available for years, and several other companies in the space have come up with alternatives like adopting new identifiers or increasing their use of first-party data.

RTB House, an adtech company that works with brands and agencies, has also been testing cookie alternatives alongside the Privacy Sandbox, and though it observed similar dynamics to Criteo, it's taking a different stance.

"Our evaluation suggests that when the time comes, the ecosystem will be adequately prepared," said Michael Lamb, chief commercial officer of RTB House.