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This article compares the use of deep packet inspection (DPI) technology to the use of cookies for online behavioral advertising (OBA), in the form of two competing paradigms. It seeks to explain why DPI was eliminated as a viable option due to political and regulatory reactions whereas cookies technology was not, even though it raises some of the same privacy issues.

The paradigms draw from two-sided market theory to conceptualize OBA. Empirical case studies, NebuAd's DPI platform and Facebook's Beacon program, substantiate the paradigms with insights into the controversies on behavioral tracking between 2006 and 2009 in the USA. The case studies are based on document analyses and interviews.

Comparing the two cases from a technological, economic, and institutional perspective, the article argues that both paradigms were equally privacy intrusive. Thus, it rejects the generally held view that privacy issues can explain the outcome of the battle. Politics and regulatory legacy tilted the playing field towards the cookies paradigm, impeding a competing technology.

Shifting the narrative away from privacy to competing tracking paradigms and their specific actors sheds light on the political and the regulatory rationales that were not considered in previous research on OBA. Particularly, setting forth institutional aspects on OBA – and DPI in general – the case studies provide much needed empirical analysis to reassess tracking technologies and policy outcomes.