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Antitrust bill could force Google, Facebook and Amazon to shutter parts of their ad businesses

by admin
May 22, 2022
in Marketing
Antitrust bill could force Google, Facebook and Amazon to shutter parts of their ad businesses


A new Senate antitrust bill could make Google, Facebook and Amazon divest portions of their ad businesses. 

The Competition and Transparency in Digital Advertising Act (S4285) would prevent large ad companies from participating on different sides of the ad transaction chain. It would ban them from operating more than one of these functions: supply-side brokers selling publisher ad space, demand-side brokers selling ads, or ad exchanges connecting buyers and sellers.

Image from CDTA factsheet

The bill, introduced yesterday by Sen. Mike Lee (R-UT) and co-sponsored by Sens. Amy Klobuchar (D-MN), Ted Cruz (R-TX) and Richard Blumenthal (D-CT), bans companies earning more than $20 billion in annual digital advertising revenue from participating in the online ad ecosystem in a way that creates conflicting interests. 

It also imposes consumer protection rules similar to ones governing financial trading. Under the law, businesses with more than $5 billion in digital ad transactions annually would have to: 

  • Act in the best interest of customers by getting the best bids for ads.
  • Provide transparency customers can verify that.
  • Create firewalls between their buying and selling operations if they are allowed to operate both.
  • Treat all customers the same concerning performance and information related to transactions, exchange processes, and functionality.

“Digital advertising is dominated by Google and Facebook,” Sen. Lee said in a statement. “Google, in particular, is the leading or dominant player in every part of the ad tech stack: buy-side, sell-side, and the exchange that connects them. For example, Google Ad Manager is used by 90% of large publishers, and in the third quarter of 2018 it served 75% of all online display ad impressions. Google uses its pervasive market power across the digital advertising ecosystem, and exploits numerous conflicts of interest, to extract monopoly rents and stack the deck in its favor. These monopoly rents function as a tax — upwards of 40% — on every ad supported website and every business that advertises online, collectively a huge segment of the modern economy.”

The IAB is strongly against the bill. In a statement released today, CEO David Cohen said, “This legislation is intended to punish a few companies, but the effects would reverberate across the digital economy, affecting advertisers large and small as well as the American public. The unintended consequences would be devastating to one of the most powerful growth engines of the U.S. economy. The market would lose the scale and precision the internet offers, ad costs would rise, and growth opportunities for brands and publishers would disappear. Small businesses and content creators across the country wouldn’t exist without integrated technologies helping them to attract and retain customers, providing them with products and services. Vital tools that we take for granted like email, search and navigation create value for millions of U.S. consumers every day and are under threat with this proposal.”


Get the daily newsletter digital marketers rely on.


The new law is a response to the anti-competitive practices Google has been accused of. These include Project Bernanke, the focus of an antitrust lawsuit filed by the attorneys general of more than a dozen states. The suit claims Google ensured ads booked via its AdX system would win ad space auctions. 

“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,’” Sen. Lee said.

Why we care. A business capable of gaining a monopoly on a market will always do so. It is their nature. This is why regulation is essential. Having a company control all of a market — buying, selling and the mechanism that connects them — strangles innovation and competition. This is as true today as it was in 1776, when Adam Smith laid it out in Wealth of Nations. No amount of technology can change it.

Read next: Is there any incentive to crack down on programmatic ad fraud?


2022 MarTech replacement survey


About The Author

Constantine von Hoffman is managing editor of MarTech. A veteran journalist, Con has covered business, finance, marketing and tech for CBSNews.com, Brandweek, CMO, and Inc. He has been city editor of the Boston Herald, news producer at NPR, and has written for Harvard Business Review, Boston Magazine, Sierra, and many other publications. He has also been a professional stand-up comedian, given talks at anime and gaming conventions on everything from My Neighbor Totoro to the history of dice and boardgames, and is author of the magical realist novel John Henry the Revelator. He lives in Boston with his wife, Jennifer, and either too many or too few dogs.



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