Just as a reminder, Google is also planning to drastically improve privacy through a sandbox in Chrome: https://www.chromium.org/Home/chromium-privacy/privacy-sandb... FLoC (and FLEDGE, and PARAKEET, and a million other bird proposals) is being used as a way to mitigate some of the loss that publishers and advertisers will see when those privacy measures are put into place.
This is a very loose definition of "privacy." It is more accurate to say that they plan to create a sandbox for privacy, to limit the amount of privacy you are allowed to have. As the article describes, all of these techniques are additional signals for tracking purposes.
Dropping third party cookies is just one small piece of it.