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Louvain & Paris Online Seminar - Matt Shum, California Institute of Technology
By Fabrizio Ciotti

Matt Shum

California Institute of Technology

will give a presentation on

The Impact of Privacy Measures on Online Advertising Markets


Privacy protection measures in online markets have ramped up in recent years, typified by both government initiatives, as well as firm-level actions such as designing web browsers which block “third-party cookies” by default. We estimate a structural model of auctions in online advertising using bid-level auction data from Yahoo. Then we simulate several counterfactual scenarios, focusing on evaluating the likely effects of Google’s announced plan, starting in 2022, to block third-party cookies by default on Chrome, its market-leading browser. We find that such a ban would reduce publisher revenue by 45%, and bidder (advertiser) surplus by 35%. Moreover, our simulations also indicate that, amidst a third-party cookie ban, bidders who are able to leverage their informational advantage on users can gain surplus from the ban.
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