The Real Story Behind Chrome Manifest v3: Google is protecting their revenue at the expense of users

Gary Portney

Expect to see tech-savvy users leading the migration to more private browsers.

Google is leveraging the control it has over Chrome, the market-leading web browser it owns, which accounts for 70% of the 2019 global desktop web browser market, to protect its core business: ad revenue. Specifically, Google is changing Chrome in such a way as to cripple ad blockers, allowing more Google ads through. They cripple ad blockers by deprecating the chrome.webRequest API and replacing that with their manifest v3 API. They claim this change is necessary for security reasons because some Chrome web extensions abuse the webRequest API to create malware. This gives them plausible deniability both internally and externally, to cover the real reason for this change.Manifest v3 needs time to bake in the developer community before it goes live worldwide, which I would estimate will be early 2020, but if they continue with manifest v3 as it is now, it’s likely a significant number of users who rely on ad blocking will migrate to another browser, such as Firefox or Brave.

Where does Google’s revenue come from?

Google’s 2018 yearly advertising revenue of $136.8 billion accounted for 86% of all of the revenue of its parent company, Alphabet. All other Alphabet business units combined accounted for only 14% of total revenue.

How is Google’s ad revenue threatened?

As Alphabet stated in it’s 2018 SEC Form 10-K filing:New and existing technologies could affect our ability to customize ads and/or could block ads online, which would harm our business.In 2018, the U.S. ad block rate was 25%. In Europe and Asia, ad block rates are significantly higher. Because Google pays the parent company of AdBlock Plus, Eyeo, millions of dollars a year to let some Google ads through AdBlock Plus and AdBlock unless you know enough to opt-out of the acceptable ads program, this effectively reduces Google’s actual losses to the extent that ad block users don’t know enough to opt-out of acceptable ads. This is the same way that Facebook has treated privacy issues for many years and you can see how that has worked out for them.Acceptable ads are only a part of Google’s overall advertising revenue, the remainder of which will be blocked because they are not “acceptable ads.”

Taking this into account, we might estimate that Google’s effective ad block rate is approximately 20%. With a 20% effective ad block rate estimate, you can see ad blockers reduced Google’s ad revenue by an estimated $34 billion for fiscal year 2018, from what could have been $170B, down to what they actually made which was $136B. These losses are growing every quarter because the ad block rate is growing every quarter, and more and more people are using ad blockers that do not participate in the acceptable ads program, or they learn to disable acceptable ads.

What steps is Google taking to stem these losses?

Clearly the acceptable ads program is one area where Google is investing because this significantly reduces their effective ad block rate. These include the ads that show up at the top of the Google search page with AdBlock Plus enabled, as shown below.

On the good-guy side, Google is investing in making ads “better” through the Coalition for Better Ads. They even modified Chrome to include it’s own Google ad blocker that is turned on by default, that blocks all ads — even their own — on websites that have especially annoying ads as described by their Better Ads standards. In theory, this reduces one of the primary reasons people use ad blockers in the first place: reducing annoying ad clutter. And thus, this would slow down the growth of ad blockers. However, this does nothing to address the other reasons people use ad blockers, which are: protecting their privacy, blocking malvertising, and speeding up the web, especially on mobile.

The Future

Early-adopters are the ones who lead the charge before the general population follows. While your average internet user probably has no inkling of what these changes in an API actually mean to them, the developers and other tech-savvy people do. They will not stand for such a blatant disregard for our privacy which has grown significantly as an issue in the last few years. If Google does not provide a workaround, this could be just the push that browsers like Brave need to really take off.

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Permission-based Advertising?

Adtoniq technology allows for ads to be served to ad block audiences with their permission which results in higher engagement and more conversions.

We only serve ads to an ad blocker when they have given some form of consent to do so. We do not force ads on ad block users, nor do we ask them to white-list or turn off their ad blockers. Users can revoke their permission at any time and we strive to make their experience fully transparent.