Bipartisan legislation introduced Thursday takes aim at conflicts of interest in the online ads industry and would strike at the heart of Google's business model, forcing the search company to break up its dominant digital advertising business.
The Competition and Transparency in Digital Advertising Act, introduced by Sen. Mike Lee , would ban online companies with more than $20 billion in digital ad revenue annually from participating in more than one part of the digital advertising process.
The bill would affect Google and possibly Amazon. “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 Wall Street Journal in an interview. “When a company can wear all these hats simultaneously, it can engage in conduct that harms everyone.” The bill would likely require Google and others that violate the law to divest significant portions of their digital advertising business, thereby forcing such companies to break up.Furthermore, the bill calls for any company with more than $5 billion in digital ad revenue to have a duty to act in a customer's best interest and seek the most favorable terms for them, create transparency requirements, and have firewalls on data-sharing, which would likely affect a large number of Big Tech companies, such as Google, Facebook, Amazon, Comcast, Microsoft, and Yahoo. The bill, co-sponsored by Sens. Ted Cruz , Amy Klobuchar , and Richard Blumenthal , represents one of the most aggressive proposals in Congress aimed at reducing the power of Big Tech companies. One focus of the legislation is Google, which uses its dominant position in the marketplace to take a cut of 22%-42% on every ad bought in its system, typically double or quadruple what other digital advertisers charge, according to a lawsuit filed by 16 state attorneys general late last year. Google makes most of its money through its ad exchange, a marketplace for ad buyers and sellers facilitated by the search company's massive amount of user data, and the antitrust lawsuit claims that Google is abusing its position in the market. The company, which is the most visited website in the United States with billions of users worldwide, controls two of the biggest third-party ad companies on the internet, and Google's subsidiary YouTube accounts for 43% of the online video advertising market. Google, which would have a year from the passage of the bill to comply with the new rules, says the legislation would hurt consumers and advertisers. “Breaking [advertising] 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," Google said in a statement."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 company added.
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