A group of Senates led by Utah Republican Mike Lee proposed a bill that aims at forcing Google to break up its online advertising business. The key senates of the group include R-Utah, R-Texas, Amy Klobuchar, D-Minn., as well as Sens, D-Conn, Richard Blumenthal, and Ted Cruz. According to the bill, companies that are making more than $20 billion annually by participating in more than one part of the digital advertising process, will be banned. The news was first reported by The Wall Street Journal.
Google is involved in multiple parts of the digital ad process. It runs an auction, buys and sells the ad, provides tools to different companies for advertising, and so much more. If the bill passed, it would have to choose one area where it wants to stay. Lee also mentioned while giving an interview to the Journal that Google has entered into different digital ad processes by serving both as a buyer and seller. It gives Google an undue advantage in the marketplace. According to him, when a single company ends up wearing all of the hats, it can engage in activities that can easily harm others in the market.
In response to Lee’s statement and Bill that has been proposed, a Google spokesperson said that the advertising tools they provide to the advertisers help protect users from privacy risks, fraudulent websites, and misleading ads. Breaking those tools won’t only hurt the publishers but the quality of ads would also get compromised which may result in more privacy risks. Moreover, small businesses will get affected which are looking for the easiest and most effective ways of growing their online business at this time of heightened inflation. The spammers will take over the internet to flood the privacy of Americans with spam. So, according to Google, it is the wrong bill that is being proposed at the wrong time while aiming at the wrong target.
The group behind the bill supports and emphasizes guiding the tech power to use it more effectively. Lee, who has led this bill, has also opposed some other antitrust reforms. Klobuchar has also put in efforts to get competition reformed passed this year. The two bills have the chance to become the law if the congress takes action in time. The first bill is the “American Innovation and Choice Online Act”. It would prevent dominant platforms like Google to favor its products over other competitors that are relying on its services to promote their products. The other one is the “Open App Markets Act” which has the same effect as the first one but it will focus more on app stores like the ones from Google and Apple. During committee votes, Lee supported the second bill but not the first one.
The legislation requires Google to deprive the major portions of its digital advertising. According to Lee, Google is running a massive business. Its network includes tools that the third party uses to buy and sell ads. In 2021, it ended up generating a revenue of $31.7 billion. The company would be given a year after the bill gets passed to follow the new rule and policy properly.
The bill also aims to address the allegations which were filed by dozens of state attorney generals against Google in 2020 in the light of the antitrust lawsuit. According to this, Google has been misleading its advertisers and publishers for years about the ad prices and processes of ad auctions. It has created secret programs to keep the sales of the companies lower while charging the buyers more.
Other than this, some people related to legislation stated that Facebook Meta Platform Inc. is also going to divest itself of some significant parts of its digital advertising. However, Facebook hasn’t approved this statement. Moreover, smaller companies that make more than $5 billion through digital advertising transactions would also be required to follow new rules, according to the bill. These companies would be looking only for the best interests of their customers to ensure that they provide their customers with ad privacy and transparency.
If the bill passed, it would be applied by the U.S. Department of Justice and state attorney journal. It would give power to customers as they can then sue companies that violate the law by not being transparent and not acting in the customer’s best interests. Lee supports the Texas suit and he believes that congressional actions have a certain role to play in such critical matters. According to him, we will keep on waiting again for nearly a decade and by then a lot of bad things will have happened that cannot be undone.
The Bottom Line
The group of senates has passed the bill to break the monopoly of Google’s online business to prevent it from harming other companies, advertisers, or publishers in any way. However, it has not passed yet, and Google is going to fight its case with full force like before as it has so much to lose. If Google fails in the end the dynamic of digital advertising will change for Google and a lot of other companies.