A bipartisan group of senators led by Utah Republican Mike Lee introduced legislation that would take aim at conflicts of interest in the advertising industry and force Google to break up its dominant online-ad business, The Wall Street Journal reported.
Senators Amy Klobachar (D-MN), Ted Cruz (R-TX), and Richard Blumenthal (D-CT) are cosponsors of this legislation.
The bill is titled “The Competition and Transparency in Digital Advertising Act”. The purpose of this bill is “to prevent conflicts of interest and promote competition in the sale and purchase of digital advertising.” According to The Wall Street Journal, it 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.
Senator Lee commented about the legislation: “Digital advertising is the lifeblood of the internet economy, It supports most of the free content and services Americans have come to rely upon, including local journalism, and it allows businesses of every size to reach their customers quickly and efficiently. Unfortunately, online advertising is also suffering under the thumb of trillion-dollar ad companies.
“Companies like Google and Facebook have been able to export their unprecedented troves of detailed user data to obtain vice grip-like control over digital advertising, amassing power on every side of the market and using it to block completion and take advantage of their customers. The conflicts of interest are so glaring that one Google employee described Google’s ad business as being like ‘if Goldman or Citibank owned the NYSE.”…
The Wall Street Journal also reported that similar legislation is to be introduced in the House of Representatives by Republican Ken Buck of Colorado and Democrat Pramilla Jayapal of Washington. If the legislation becomes a law, companies would have a year from the enactment of the legislation to comply with new rules.
The Verge reported that 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,” said Julie Tarallo McAlister. “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.”
According to The Verge, the bill could require Google 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. Meta (Facebook’s parent company) could also be similarly affected by this legislation.
Personally, I don’t think it is a terrible idea to have reasonable legislation that regulates the amount of money big companies can take in from selling ads. It would also be nice to have more transparency about the pricing of ads. That information could be really significant for a business to fully understand if the price Google gives them for an ad is too high.
Overall, though, I don’t think it was ever a good idea for Google (or Meta) to choose to rely so heavily on the money that it takes in from selling ads. It is not reasonable to presume that their ad systems would be able to sustain them forever.