If you are involved in
the IT
or Internet industry, you often hear the term “third party.” Third party has many different meanings, but in recent years the term “third party
cookie
” has become a hot topic.
This time, we will explain third-party cookies as well as the differences in how they are used by industry.
What is a third party?
“Third Party” means “Third Party.”
Third party refers to a person other than the party concerned. A person who is not directly involved in the subject matter. For example, when a contract, transaction, or trouble occurs between two parties, it refers to a person who does not fall under either of the two parties.
Of the two parties involved, one is called the “First Party” and the other is called the “Second Party.” Even if there are three or more parties involved, the persons and organizations other than the direct parties may be collectively referred to as third parties.
Third parties in the IT industry
Let’s expand our understanding of the concept of a third party by looking at its more general meaning and examples. Third party is used as a business term in various industries, but we will explain third party in the IT industry, which is particularly commonly used.
1.Manufacturers who develop and sell products and services related to first parties
Not only in the IT industry, but in business in general, the companies that create products and services, such as development companies, sales companies, operating companies, and providing companies, are defined as “first parties”. A company that develops, sells, or operates products and services compatible with this is called a “third party.”
For example, let’s say there is a computer released by a certain manufacturer. The manufacturer that developed the computer is the first party, and the company’s customers and computer users are the second party. Furthermore, manufacturers of software compatible with the computer and manufacturers of peripheral devices connected to the computer are considered third parties.
To give an example, manufacturers such as NEC, Toshiba, and Fujitsu that develop Windows PCs are the first party, and users who use Windows PCs from each company are the second party, and they develop and provide the OS installed on Windows PCs, Microsoft Office, etc. Microsoft is a third party. In addition, third parties include manufacturers such as Buffalo and IODATA, which develop and provide external hard disk drives.
In the IT world, a variety of software and peripheral devices are required, and first-party manufacturers cannot supply them alone, so third parties are often responsible for developing and providing accompanying products.
2. Manufacturers selling products that are compatible with first-party original products
In the IT industry, manufacturers who develop, manufacture, and sell products that are not original products but are compatible with the original are sometimes called third parties.
For example, while printer manufacturers such as Epson and Canon sell ink exclusively for their own printers, there are also inks developed and sold by companies other than printer manufacturers. Such companies and manufacturers are called third parties, and the products developed by those manufacturers are sometimes called third-party products.
Third-party products are also called “non-genuine products” or “compatible products.”
Third-party products, as described above, are products provided and sold by third-party manufacturers.
Third-party products are sometimes called “non-genuine products” or “compatible products” as opposed to “genuine products” from the first-party original manufacturer.
In addition, compatible products are often used for consumables such as ink and toner.
Third parties in other industries
The term third party is used in many industries outside of the IT industry. Let’s also look at usage examples in other industries.
Third parties in the gaming industry
In the game industry, manufacturers who develop, manufacture, and sell game consoles are called first parties, and manufacturers who plan, develop, manufacture, and sell game software that can be played on game consoles under the instructions and requests of the first parties are called second parties. It’s called a party.
On the other hand, manufacturers that plan, develop, manufacture, and sell software on their own, regardless of instructions or requests from the first party, are called third parties. Game software developers that fall under the category of third parties can create and sell software that is compatible with game consoles developed by multiple first parties.
Manufacturers who develop game consoles, such as first-party companies, create game software themselves or commission second-party companies to create game software, but they rarely develop other first-party game software. . On this point, third parties can develop and manufacture game software across multiple game consoles, allowing them to flexibly develop and manufacture strategies while monitoring market trends.
Typical third parties in Japan include Square Enix, Capcom, and Konami.
In the case of Sega, which sold home game consoles such as the Sega Saturn and Dreamcast, it used to exist as a first-party company, but now it develops game software for the Nintendo Switch and PlayStation®5. , is better known for its activities as a third party. Even among people who like games, the image of Sega may differ depending on the generation.
Third parties in the Internet industry
The term third party is also used in the Internet industry. One of these is the meaning given to websites.
If the business providing the website is the first party, the users who visit that website are called the second party. Furthermore, when
Internet advertisements
are posted on a website, the distributor of those advertisements is called a third party. This is because Internet advertisements are served from a server different from that of the website provider. Therefore, they are referred to as third party operators.
Another term frequently used in the Internet industry is “third-party cookies.”
Cookies
are pieces of information that are stored in the browser you are using when you visit a website.
This cookie is created by
the server
of the website you are viewing and sent to your browser. If the originating server is a website provider’s server, it is called a first-party cookie, and if it is a server run by an advertisement distributor that posts advertisements on a website, it is called a third-party cookie.
We will explain third-party cookies in more detail later.
Third parties in the logistics industry
In the logistics industry, an important keyword in recent years is “third-party logistics,” or “3PL.”
The logistics industry basically consists of three parties: the shipper who sends the cargo, the receiver who receives the cargo, and the transportation company. To take the example of transactions on
an e-commerce
site, the e-commerce site is the sender, the customer who made a purchase on the e-commerce site is the receiver, and Yamato Transport, Sagawa Express, etc. are the shipping companies.
Third-party logistics refers to third parties other than shippers, receivers, and transportation companies. Third-party logistics is a form in which a business that is neither a shipper nor a transportation company proposes logistics strategies and logistics reforms to shippers and undertakes comprehensive logistics operations.
In other words, the shipper outsources logistics operations to a third-party logistics company. By using third-party logistics, shippers can comprehensively outsource logistics operations, making operations more efficient and rational, and making it possible to improve logistics.
The e-commerce market is expanding due to the rapid spread of online purchasing behavior after the coronavirus pandemic. Nowadays, it is essential to overcome market competition due to labor shortages and improving operational efficiency, and reducing logistics costs is also being reconsidered. Against this backdrop, shippers are increasingly introducing third-party logistics. By utilizing third-party logistics, it becomes easier to resolve labor shortages and cope with busy periods, allowing you to focus on core operations such as promotional activities and
marketing strategies
.
If logistics reform is achieved through the use of third parties, it will be possible to optimize logistics costs. Improving the quality of logistics will also contribute to the satisfaction of customers who use e-commerce sites, creating a virtuous cycle such as increasing the number of repeat customers.
Third parties in corporate activities and strategies
There are many situations in which third parties appear in corporate activities. One example is something called “Third-party Risk Management (TPRM).”
Third-party risk management is the process of understanding and managing risks posed by third parties involved in a company’s management and business. Third parties here refer to partner companies, vendors, agents, affiliates, service providers, suppliers, and other business partners with which the company engages in its business activities. In order for a company to proceed with its business activities, it requires the help of many partner companies. It is fair to say that corporate activities are almost never completed by one company alone.
One of the reasons why third-party risk management has gained attention in recent years is that
DX
(digital transformation) is being promoted nationwide. When implementing DX, there may be opportunities to incorporate third parties into your network.
Introducing a new third party into your network may pose risks that threaten compliance, security policies, reputation, business continuity (BCP), etc., so how can you avoid risks and manage your relationships with third parties? What is important is whether it can be strengthened. To achieve this, we implement third-party risk management.
Specific risks include the risk of being unable to supply due to the bankruptcy of the outsourcing company, the risk of intellectual property infringement, the risk of system failure due to cyber attacks, and the security risk of information leaks.
Advantages and disadvantages of third-party products
I will explain the advantages and disadvantages of the third-party products I introduced earlier.
The biggest advantage of third-party products is that they are inexpensive and can reduce development costs.
The biggest advantage of third-party products is that they are cheaper than genuine products. This is because we can produce products based on original products, significantly reducing the development process and costs, and therefore being able to provide products at low prices. Many consumers say that even if it is not a genuine product, there is no problem as long as it provides the same performance.
Another advantage of generic products is that they are available in a wide variety of variations. In that case, consumers will have a wider range of choices, and from an industry perspective, it will also help prevent market growth from stagnating.
Disadvantages of third-party products
The disadvantage of third-party products is that consumers may need to be careful as there may be products that are not compatible. You should also be aware that failures caused by the use of third-party products may not be covered by the first party.
For example, let’s say a consumer purchases third-party printer ink, installs it in their printer, and is unable to print. Depending on the store or manufacturer where the item was sold, returns may not be accepted.
In addition, durability may be inferior to genuine products. As you can see, there are some concerns with third-party products.
Third parties on the website
Let me explain about third-party cookies again.
What is a cookie?
Third-party cookies are a type of cookie. A cookie is information that is stored in the browser the user is using when the user accesses a website for the first time. The server of the website you are viewing creates a cookie and sends it to your browser.
The contents of cookies are mainly information such as user IDs and passwords. For example, for an e-commerce site, this includes the contents of your shopping cart, and for a membership site, this includes registered personal information such as your name, address, and phone number. The data that the user previously entered on the relevant site will be recalled.
For example, on a membership site, you log in by entering your user ID and password, but if the membership site’s cookies are saved in your browser, you will be able to log in without having to re-enter your information. If you have entered information such as your name, address, and phone number in the past on an e-commerce site, there are advantages such as not having to enter information when you visit the site at a later date.
Cookies are used not only by consumers, but also by website operators, advertising distributors, etc. By checking the history of a user’s visits to a website, it is possible to provide information and deliver advertisements tailored to the user’s characteristics.
What is a first party cookie?
There are two types of cookies: first-party cookies and third-party cookies.
First-party cookies are cookies that are issued directly by the server of the website you visit. As mentioned above, it records your user ID, password, visit date and time, etc.
What are third-party cookies?
Third-party cookies are cookies that are issued by a third-party server rather than by the website’s server. For example, advertisements may be posted on a website, but they are not served by the website’s server, but by the server of the advertising provider. Third-party cookies are issued by the ad distribution server.
Third-party cookies are mainly used by advertising distributors to record and track user behavior history across multiple sites.
Third-party cookies can serve cookies across multiple websites. When a user visits one website and then visits another website, if an advertisement from the same advertising company is being distributed, the advertisements will cross between the first website and the second website. It is possible to utilize the behavior history of users who have done so.
Third-party cookies can also be used for
retargeting
advertising. Retargeting advertising is a mechanism that delivers optimal advertisements based on the user’s behavior history based on information from third-party cookies.
For example, let’s say that while shopping on an e-commerce site, a user puts some cosmetics in their shopping cart, but decides not to purchase them due to hesitation. If the ad distribution side can obtain third-party cookies at this time, when the user visits another website, it can serve advertisements related to cosmetics that the user did not purchase. The user can be reminded, “Now that I think about it, I didn’t buy that cosmetics,” and be encouraged to consider purchasing it again.
What is third-party cookie regulation?
Since the retargeting ads mentioned above track the user’s behavior history, many users feel uncomfortable and have their privacy violated.
Against this background, there is a growing movement both domestically and internationally to regulate third-party cookies. Apple included a tracking prevention function in its Safari browser from an early stage, and completely
blocked
third-party cookies in 2020. Google has announced that it will phase out third-party cookies in its Chrome web browser starting in 2024.
In Japan, content regarding third-party cookies has been included in the Revised Personal Information Protection Law that came into effect in April 2022 and the Revised Telecommunications Business Law that was promulgated in June 2022. When using third-party cookies, it is now mandatory to notify users and obtain their consent.
What are alternatives to third-party cookies?
Advertisers who have traditionally profited from third-party cookies are turning to other methods in response to regulatory trends. For your reference, here are some alternative methods.
Utilize zero-party and first-party data
The use of zero-party data and first-party data is being considered as an alternative to third-party cookies.
Zero-party data is data that users actively provide in exchange for something provided by an advertiser, and first-party data is data that is collected directly by a company. First-party data includes member information registered on e-commerce sites, purchase history, behavioral data such as website access history, etc. This data is used to deliver advertisements.
Common ID solution
The “common ID solution” is a method of
targeting
using an ID that is generated by encrypting information such as email addresses obtained with the user’s consent. However, due to privacy concerns with the common ID solution, some ad distribution companies (
platforms
) have announced that they will not support it.
contextual advertising
Contextual advertising is when AI automatically determines the context of the information on the website the user is viewing and delivers advertisements that match that context. Since we have a certain degree of understanding of the user’s interests, we may be able to deliver information that is useful to the user.
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summary
◆Third Party means “Third Party.” A third party refers to a person other than the parties concerned and who is not directly involved in the subject matter. Of the two parties involved, one is called the “First Party” and the other is called the “Second Party.”
◆Manufacturers who develop and sell related products and services, as well as manufacturers who sell products that are compatible with the original product, are sometimes called third parties.
◆Third parties in the game industry refer to manufacturers that independently plan, develop, manufacture, and sell game software.
◆In the Internet industry, if the business providing the website is called the first party, the advertisement distributor on the website is called the third party. Cookies distributed by an ad distributor’s server are called third-party cookies.
◆Third-party logistics in the logistics industry refers to a format in which the company proposes logistics strategies and logistics reforms to shippers and undertakes comprehensive logistics operations.
◆Third-party cookies have been increasingly regulated in recent years. Apple’s Safari already blocks third-party cookies, and Google’s Chrome has announced that it will phase out third-party cookies starting in 2024. Legal regulations have also begun in Japan.