Lawmakers launch bill to break up tech giants' ad dominance

Running ad auctions while also buying and selling ads may be outlawed for large firms


A bipartisan group of US lawmakers has proposed legislation that would likely force Alphabet's Google, Meta's Facebook, and Amazon to divest portions of their ad businesses.

The bill, called the Competition and Transparency in Digital Advertising Act (CTDA), was introduced on Thursday by Senator Mike Lee (R-UT), with the participation of Senators Amy Klobuchar (D-MN), Ted Cruz (R-TX), and Richard Blumenthal (D-CT).

The bill would prevent large ad companies from participating on different sides of the ad transaction chain. Large ad firms could operate supply-side brokers selling publisher ad space, demand-side brokers selling ads, or ad exchanges connecting buyers and sellers – but not more than one of these.

Similar to rules governing financial trading, the bill forbids entities with more than $20bn in annual digital advertising revenue from participating in the online ad ecosystem in a way that creates conflicting interests, such as simultaneously buying ads, selling ads, and operating the ad exchange that handles those transactions.

It also imposes obligations on ad business firms bringing in more than $5bn in digital ad transactions. These include: acting in the best interest of customers (eg striving to get the best bids for ads); providing transparency so customers can verify that; separation of concerns if operating on both the buy and sell side of the market; and fair access to all customers.

slide from Sen. Mike's Lee's summary of CTDA

Graphic from bill summary

The legislation aims to address anticompetitive practices such as those Google has been accused of, like Project Bernanke, described in the Texas antitrust case against the Chocolate Factory as an initiative to ensure that advertisements booked via Google's ad system AdX would win auctions for ad space on websites.

"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," said Senator Mike Lee in a statement. "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 CTDA, if approved and signed into law, would be enforced by the US Justice Department. However, for large firms ($20bn+) that violate the obligations imposed on firms at the lower revenue threshold ($5bn+), there's a private right to action. That means if Google, Facebook, or Amazon disregard the transparency or best interest requirements, they could be sued by affected individuals rather than waiting for Justice Department intervention.

The summary information [PDF] provided by Senator Mike Lee's office says, "If enacted into law, this bill would most likely require Google and Facebook to divest significant portions of their advertising businesses—business units that account for or facilitate a large portion of their ad revenue. Amazon may also have to make divestments, and the bill will impact Apple's accelerating entry into third-party ads."

Apple does not separate its ad revenue from its services business but estimates suggest the iBiz made about $3.7bn selling ads in 2021. Assuming Apple continues to grow its services business, the company will eventually meet the $5bn threshold.

"Our bipartisan bill would guard against immense conflicts of interest in today’s digital advertising market," said Senator Richard Blumenthal in a statement. "Big Tech claims that it simply presides over an open and free market, but in a truly free market the same party can’t represent the seller, the buyer, make the rules, and conduct the auction. And that is unacceptable in a free enterprise system – it hurts consumers and it hurts competition."

Google, Facebook, and Amazon did not immediately respond to requests for comment. ®


Other stories you might like

  • UK competition watchdog seeks to make mobile browsers, cloud gaming and payments more competitive
    Investigation could help end WebKit monoculture on iOS devices

    The United Kingdom's Competition and Markets Authority (CMA) on Friday said it intends to launch an investigation of Apple's and Google's market power with respect to mobile browsers and cloud gaming, and to take enforcement action against Google for its app store payment practices.

    "When it comes to how people use mobile phones, Apple and Google hold all the cards," said Andrea Coscelli, Chief Executive of the CMA, in a statement. "As good as many of their services and products are, their strong grip on mobile ecosystems allows them to shut out competitors, holding back the British tech sector and limiting choice."

    The decision to open a formal investigation follows the CMA's year-long study of the mobile ecosystem. The competition watchdog's findings have been published in a report that concludes Apple and Google have a duopoly that limits competition.

    Continue reading
  • Meta agrees to tweak ad system after US govt brands it discriminatory
    And pay the tiniest of fines, too

    Facebook parent Meta has settled a complaint brought by the US government, which alleged the internet giant's machine-learning algorithms broke the law by blocking certain users from seeing online real-estate adverts based on their nationality, race, religion, sex, and marital status.

    Specifically, Meta violated America's Fair Housing Act, which protects people looking to buy or rent properties from discrimination, it was claimed; it is illegal for homeowners to refuse to sell or rent their houses or advertise homes to specific demographics, and to evict tenants based on their demographics.

    This week, prosecutors sued Meta in New York City, alleging the mega-corp's algorithms discriminated against users on Facebook by unfairly targeting people with housing ads based on their "race, color, religion, sex, disability, familial status, and national origin."

    Continue reading
  • Amazon fears it could run out of US warehouse workers by 2024
    Internal research says the hiring pool has already dried up in a number of locations stateside

    Jeff Bezos once believed that Amazon's low-skill worker churn was a good thing as a long-term workforce would mean a "march to mediocrity." He may have to eat his words if an internal memo is accurate.

    First reported by Recode, the company's 2021 research rather bluntly says: "If we continue business as usual, Amazon will deplete the available labor supply in the US network by 2024."

    Some locations will be hit much earlier, with the Phoenix metro area in Arizona expected to exhaust its available labor pool by the end of 2021. The Inland Empire region of California could reach breaking point by the close of this year, according to the research.

    Continue reading
  • End of the road for biz living off free G Suite legacy edition
    Firms accustomed to freebies miffed that web giant's largess doesn't last

    After offering free G Suite apps for more than a decade, Google next week plans to discontinue its legacy service – which hasn't been offered to new customers since 2012 – and force business users to transition to a paid subscription for the service's successor, Google Workspace.

    "For businesses, the G Suite legacy free edition will no longer be available after June 27, 2022," Google explains in its support document. "Your account will be automatically transitioned to a paid Google Workspace subscription where we continue to deliver new capabilities to help businesses transform the way they work."

    Small business owners who have relied on the G Suite legacy free edition aren't thrilled that they will have to pay for Workspace or migrate to a rival like Microsoft, which happens to be actively encouraging defectors. As noted by The New York Times on Monday, the approaching deadline has elicited complaints from small firms that bet on Google's cloud productivity apps in the 2006-2012 period and have enjoyed the lack of billing since then.

    Continue reading
  • Google has more reasons why it doesn't like antitrust law that affects Google
    It'll ruin Gmail, claims web ads giant

    Google has a fresh list of reasons why it opposes tech antitrust legislation making its way through Congress but, like others who've expressed discontent, the ad giant's complaints leave out mention of portions of the proposed law that address said gripes.

    The law bill in question is S.2992, the Senate version of the American Innovation and Choice Online Act (AICOA), which is closer than ever to getting votes in the House and Senate, which could see it advanced to President Biden's desk.

    AICOA prohibits tech companies above a certain size from favoring their own products and services over their competitors. It applies to businesses considered "critical trading partners," meaning the company controls access to a platform through which business users reach their customers. Google, Apple, Amazon, and Meta in one way or another seemingly fall under the scope of this US legislation. 

    Continue reading
  • It's a crime to use Google Analytics, watchdog tells Italian website
    Because data flows into the United States, not because of that user interface

    Another kicking has been leveled at American tech giants by EU regulators as Italy's data protection authority ruled against transfers of data to the US using Google Analytics.

    The ruling by the Garante was made yesterday as regulators took a close look at a website operator who was using Google Analytics. The regulators found that the site collected all manner of information.

    So far, so normal. Google Analytics is commonly used by websites to analyze traffic. Others exist, but Google's is very much the big beast. It also performs its analysis in the USA, which is what EU regulators have taken exception to. The place is, after all, "a country without an adequate level of data protection," according to the regulator.

    Continue reading
  • Cookie consent crumbles under fresh UK data law proposals
    Campaigners fear erosion of rights as narrowing of law proposed as well as political control over independent watchdog

    The UK government has published its plans for reforming local data protection law which includes removing the requirement for consent for all website cookies – akin to the situation across much of the US.

    Also notable is the removal of the requirement for a Data Protection Impact Assessment, as well as a new political direction over the Information Commissioner's Office.

    However, Nadine Dorries, the minister for the Department of Digital, Media, Culture and Sport, rejected controversial proposals to remove the right to challenge automated decision-making. Privacy campaigners had said the proposals were "irresponsible" and would make it harder for people to "challenge the government or corporations."

    Continue reading

Biting the hand that feeds IT © 1998–2022