On Thursday, a group of Senate Republicans and Democrats introduced a new bill that could force Google and Facebook’s parent company, Meta, to spin off their online ads businesses, as first reported by The Wall Street Journal.
The Competition and Transparency in Digital Advertising Act — co-sponsored by Sens. Mike Lee (R-UT), Ted Cruz (R-TX), Amy Klobuchar (D-MN), and Richard Blumenthal (D-CT) — would ban companies processing more than $20 billion a year in digital ad transactions from running more than one portion of the digital advertising ecosystem.
The restrictions would directly impact Google, which tech antitrust hawks have long seen as a vertical monopoly in display advertising. Omidyar Network advisor David Dinielli made the case directly to Congress in testimony to the House Judiciary Committee in 2020. “Google — through its various ad tech tools – represents both the suppliers and the purchasers,” Dinielli said, “and also conducts the real-time auctions that match buyers and sellers and determine the price.”
Reached for comment, Google spokesperson Julie Tarallo McAlister said the proposed law would ultimately hurt users. “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,” Tarallo McAlister told The BlueHillco on Thursday. “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 Journal reports that a similar measure is expected to be introduced by Reps. Ken Buck (R-CO) and Pramila Jayapal (D-WA) this week.
For Google, the bill could require the company to divest majorities of its digital advertising business. Google’s advertising marketplace rakes in billions each quarter for the company, pulling in $54 billion across Search, YouTube, and its ad networks in the first quarter of this year alone.
Big Tech’s dominance in the online advertising space has drawn criticism from lawmakers and law enforcement officials across the country for the last few years. In 2020, Texas Attorney General Republican Ken Paxton led a lawsuit with more than a dozen state attorneys general accusing Google of misleading publishers and advertisers about its processing and pricing of ads.
Meta, Facebook’s parent company, would likely have to divest large portions of its ads operations as well. The measure would also put new rules in place for smaller companies, processing more than $5 billion in digital ads annually, like providing transparency around pricing and acting in the best interest of consumers.
In a Thursday statement, Google called the measure “the wrong bill, at the wrong time, aimed at the wrong target,” accusing “low-quality data brokers” of the most harmful behaviors in the industry.”