News/Commentary

Bipartisan bill takes aim at Google’s ad business amid accusations of questionable practices

May 21, 2022 | | Print Article

Lawmakers and Google are about to face off yet again, as a bipartisan effort to force the Big Tech giant to break up its advertising business is launched in the U.S. Senate.

Led by Senator Mike Lee (R-UT) and co-sponsored by Sens. Ted Cruz (R-TX), Amy Klobuchar (D-MN), and Richard Blumenthal (D-CT), the Competition and Transparency in Digital Advertising Act, introduced on Thursday, would “prohibit companies processing more than $20 billion in digital ad transactions annually from participating in more than one part of the digital advertising ecosystem,” according to the Wall Street Journal.

Under parent company, Alphabet Inc., Google dominates every aspect of connecting online advertising sellers with buyers.

“Google operates tools that help companies sell and purchase ads, as well as the auction houses, or exchanges, where transactions happen in split seconds,” WSJ explained.

 

As Alphabet’s earnings topped $54 billion in the first quarter alone, Google would be forced to split all that business up in order to stay compliant with the proposed federal requirements, according to Fox Business.

“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, on that doesn’t necessarily reflect the value they are providing,” Sen. Lee told the Journal.

“It’s just a massive, massive business they’ve got going,” said Lee of Google’s “network” business, which, in 2021, generated $31.7 billion in revenue.

If passed, companies would have one year from the legislation’s enactment to comply.

According to a Google spokeswoman, the bill would only harm publishers, advertisers, and online consumers.

“Advertising tools from Google and many competitors help American websites and apps fun their content, help businesses grow, and help protect users from privacy risks and misleading ads,” the spokesperson said. “Breaking those tools would hurt publishers and advertisers, lower ad quality, and create new privacy risks.”

“And at a time of heightened inflation,” added the spokesperson, “it would handicap small businesses looking for easy and effective ways to grow online. The real issue is low-quality data brokers who threaten American’s privacy and flood them with spammy ads.”

The bill represents only the latest in a string of challenges to Google’s questionable advertising practices, Fox reports.

 

In 2020, the Department of Justice (DOJ) launched an antitrust lawsuit claiming that Google controlled competition through exclusive deals with wireless carriers and makers of smartphones. Then-Attorney General William Barr alleged that Google maintained a “grip over the internet for millions … beholden to an unlawful monopolist.”

As BizPac Review reported at the time, Texas Attorney General Ken Paxton had, in December 2020, launched an antitrust complaint alleging collusion between Google and Facebook to rig digital ad auctions.

And while no lawsuit has yet been filed, “Biden’s Justice Department started new investigations into Google’s alleged antitrust practices regarding digital advertising,” according to Fox.

Meanwhile, reports the Journal,  congressional aides have said similar bipartisan legislation to that in the Senate, led by Reps. Ken Buck (R-CO) and Pramila Jayapal (D-WA), is expected to be introduced in the House.

If passed, say antitrust experts, the Competition and Transparency in Digital Advertising Act would mark the most significant change to antitrust law in a generation.

 

Melissa Fine
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