How does Google win? Their business is search -- advertising on other sites is more of a side gig for them, and from their own description of their privacy sandbox, even they would not be able to track people across sites.
The changes to the web platform necessary to protect user privacy will require reinventing the industry (which will naturally pick winners and losers).
I expect that Google will come out in the end doing well, but that's not because they have a competitive advantage here, but instead because these changes don't really affect their core business (at least no where near as much as the proliferation of paywalls and app-ification have).
Yes, but their business is search advertising. You can get really good targeting with just 1st party data (what the current user has searched for).
That's completely different from display advertising. For most sites on the web there's not enough information about a user's interests on that site alone to get a lot of different bidders for the ad slot. Fewer bidders generally means the a list auction price, so less money for the publisher.
It's not just search advertising, that was in the early 2000s. Their business now is to profile you anywhere, anytime. That's why they bought Youtube, Android, Fitbit, and the reason for their every move.
Regarding Google's business model; this problem gets fairly complicated in fact when it comes to the question that "what makes Google search alive?". Yeah, people go Google to search something and this loses its point without the open web ecosystem. Google's Display ads business certainly contributes to only a small fraction of its overall revenue but that's not the point of this business. Instead, its very existential reason is to remove paywalls from the web so Google search can remain useful.
The changes to the web platform necessary to protect user privacy will require reinventing the industry (which will naturally pick winners and losers).
I expect that Google will come out in the end doing well, but that's not because they have a competitive advantage here, but instead because these changes don't really affect their core business (at least no where near as much as the proliferation of paywalls and app-ification have).