Shares of Criteo (NASDAQ: CRTO) were down 11.5% as of 3:30 p.m. EDT Monday after a report that Alphabet's (NASDAQ: GOOG)(NASDAQ: GOOGL) Google is considering implementing new restrictions on how it handles third-party advertisements.
More specifically, according to a report from Adweek over the weekend, "a number of different working groups across [Google] have been tasked in recent months with exploring how advertising will evolve" in both its popular Chrome web browser and the Google Marketing Platform.
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Google has made no final decisions on its potential changes. But Adweek's sources say the end result seems likely to "impact how ad-tech vendors operate within [Chrome]."
For investors, these changes understandably stoke fear that they could do outsized harm to ad-retargeting companies like Criteo. In late 2017, Criteo shares fell given headwinds created by Apple's rollout of new Intelligent Tracking Prevention (ITP) technology for its iOS platform and Safari web browser.
To be fair, Criteo has also worked hard in recent quarters to build its own multiproduct platform, and to capture incremental sales from what management describes as the ad industry's "virtual duopoly" of Facebook and Google. So investors can take some solace knowing Criteo is well aware of these industry dynamics, and is striving to reduce any dependency it has on these digital advertising juggernauts. As such, while shareholders should keep a close eye on the situation, I'm not convinced this knee-jerk reaction is merited.
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