This decision is still a step towards improved data handling and privacy as the Privacy Sandbox involves browser-based tracking that stores the data on your machine instead of sending it off to Google. If this is true, it will cut down on bandwidth usage and improve user privacy while continuing to provide relevant advertisements.
Cookies have already been reduced to a small part of the mechanisms used to collect and sell user data — especially since people started deleting cookies with a few clicks. This means that shutting them down would be a drop in the bucket. IP addresses, logged in users’ email addresses, device identifiers among other tools have been used to collect far more data than cookies ever did.