A new bipartisan proposal takes aim at Google and would force it to break up its digital advertising business if passed.
Advertising is a huge part of parent company Alphabet’s business. In Q1, Alphabet reported $68.01 billion in revenue, $54.66 billion of which was generated by advertising — up from $44.68 billion the year prior.
The Competition and Transparency in Digital Advertising Act was introduced Thursday by a group of key Senators on the Judiciary subcommittee on antitrust: the ranking member and chair, Sens. Mike Lee, R-Utah, and Amy Klobuchar, D-Minn., as well as Sens. Ted Cruz, R-Texas and Richard Blumenthal, D-Conn.
The bill would ban companies that process more than $20 billion annually in digital ad transactions from participating in more than one part of the digital ad process, according to The Wall Street Journal, which first reported the news. Further details on the bill were not immediately available.
Google infamously has a hand in multiple steps of the digital ads process, a business that has become the focus of a state-led antitrust lawsuit against the company. Google runs an auction, or exchange, where ad transactions are made and also runs tools to help companies sell and buy ads. If the new legislation passed, it would have to choose in which part of the business it would want to remain.
“When you have Google simultaneously serving as a seller and a buyer and running an exchange, that gives them an unfair, undue advantage in the marketplace, one that doesn’t necessarily reflect the value they are providing,” Lee told the Journal in an interview. “When a company can wear all these hats simultaneously, it can engage in conduct that harms everyone.”
“Advertising tools from Google and many competitors help American websites and apps fund their content, help businesses grow, and help protect users from privacy risks and misleading ads,” a Google spokesperson said in a statement. “Breaking those tools would hurt publishers and advertisers, lower ad quality, and create new privacy risks. And, at a time of heightened inflation, it would handicap small businesses looking for easy and effective ways to grow online. The real issue is low-quality data brokers who threaten Americans’ privacy and flood them with spammy ads. In short, this is the wrong bill, at the wrong time, aimed at the wrong target.”
The coalition behind the bill underscores the way support for reining in tech power through antitrust reform cuts across ideological lines. It’s also notable that Lee, the top Republican on the subcommittee, led the bill, given he has opposed some of the other antitrust reforms on the table from Klobuchar and others.
Klobuchar, as chair of the subcommittee, has led an effort to get competition reforms passed this year. So far, two major bills have stood out as having a fighting chance of becoming law if Congress moves on them in time: the American Innovation and Choice Online Act, which would prevent dominant platforms from favoring their own products over those of competitors that rely on their services, and the Open App Markets Act, which would have a similar impact but focuses on app stores like those from Apple and Google. Lee supported the latter, but not the former, during committee votes.