Bipartisan bill targets Google’s ad business

A bipartisan group of senators on Thursday introduced legislation that would force Google to break up its digital advertising business.

The Competition and Transparency in Digital Advertising Act would prohibit large companies from owning more than one side of the online ad ecosystem if they process more than $20 billion in ad transactions.

Functionally, that would mean that a company like Google would have to choose between operating an ad exchange or a supply- or demand-side platform.

Facebook would also be forced to divest some of its advertising business if the legislation becomes law.

“Digital advertising is the lifeblood of the internet economy,” Sen. Mike Lee (R-Utah) said in a statement.

“Companies like Google and Facebook have been able to exploit 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 competition and take advantage of their customers,” he added.

Lee was joined in introducing the legislation by three of his colleagues on the Senate Judiciary antitrust subcommittee, Sens. Amy Klobuchar (D-Minn.), Richard Blumenthal (D-Conn.) and Ted Cruz (R-Texas.).

Online advertising is a key part of Google and its parent company Alphabet’s business.

Of Alphabet’s $68.01 billion in revenue reported in the first quarter of 2022, $54.66 billion came from advertising.

Google runs the largest online advertising exchange and maintains the tools that companies primarily use to buy and sell ads.

Critics allege that that market dominance lets the company overcharge businesses seeking to place ads online.

Those complaints form the basis of a lawsuit brought against Google by a coalition of 10 state attorneys general in late 2020.

“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 on Thursday.

“Breaking those tools would hurt publishers and advertisers, lower ad quality, and create new privacy risks,” they added. “And, at a time of heightened inflation, it would handicap small businesses looking for easy and effective ways to grow online.”

A spokesperson for Facebook declined to comment on the legislation.

The Senate Judiciary Committee has advanced two bills aimed at improving competition in the digital economy this year, the American Innovation and Choice Online Act and the Open App Markets Act.

Both bills focus on stopping Big Tech companies from favoring their own products in markets they manage.