Bipartisan digital advertising law would smash big trackers

In May, Senators Mike Lee, Amy Klobuchar, Ted Cruz and Richard Blumenthal introduced the “Law on Competition and Transparency in Digital Advertising.” The bill, also known as the “Digital Advertising Act” or simply “DAA” for short, is an ambitious attempt to regulate, if not break up, the world’s largest online advertising companies.

The biggest trackers on the internet, including Google, Facebook and Amazon, are all vertically integrated. This means that they own multiple parts of a supply chain – specifically, the digital advertising supply chain, from the apps and websites that serve ads to the exchanges that sell them and the data warehouses that are used to target them. These companies harm users by collecting large amounts of personal information without meaningful consent, sharing that data, and selling services that enable discriminatory and predatory behavioral targeting. They also use vertical integration to crush competition at all levels of the market, preventing less harmful advertising business models from taking hold.

The DAA specifically targets vertical integration in the digital advertising industry. The bill classifies advertising services into four types of activities:

  • Editors create websites and apps, and show content directly to users. They sell advertising space around this content.
  • Ad Exchanges run auctions for ad space from many different publishers and solicit bids from many different advertisers.
  • Sell-side brokerages work with publishers to monetize their ad space on exchanges. These are sometimes referred to as “supply-side platforms” in the industry.
  • Buy-side brokerages work with advertisers to purchase advertising space through exchanges. These are sometimes referred to as “demand-side platforms” in the industry.

Broadly speaking, the bill would prevent any company that earns more than $20 billion a year in ad revenue from owning more than one of these components at a time. It also creates new obligations for advertising companies to operate fairly, without self-preference, and prohibits them from acting against the interests of their clients. The bill is complex and nuanced, and we will not analyze all of its provisions here. Instead, we’ll look at how the main ideas behind this bill could affect the internet if passed.

How would this affect the real world?

The DAA would likely apply to the three largest ad tech companies in the world: Meta, Amazon and Google. As we’ll describe, all of these companies act as both publishers and service providers at multiple levels of the advertising technology “stack.”

Meta is a “publisher” because it operates websites and apps that deliver content directly to users, including Facebook, Instagram, Whatsapp, and Oculus. It also operates a massive third-party advertising platform, called “Audience Networkwhich sells ad space in “thousands” of third-party apps that reach “more than a billion” people every month. Audience Network essentially acts as a supply-side platform, a demand-side platform, and an exchange at the same time. Additionally, Meta uses both its user-facing applications and these “thousands” of third-party Audience Network applications to collect data about our online behavior. The data it collects about users on its social media platforms is used to target them in the Audience Network applications; these apps, in turn, collect even more data about user behavior. This type of cross-platform data collection is common to all ad-tech oligarchs, and it helps them target users more precisely (and more invasively) than their smaller competitors.

Amazon quickly developed its own advertising business. While online advertising was once widely seen as a Google and Facebook duopoly, today the advertising market is characterized more as a triopoly. Amazon operates several third-party advertising services, including Amazon DSPsan analytics platform called Amazon Attributionand a bid-side ad server called Sizmek ad suite. This too sells advertising space on Amazon properties such as its flagship site amazon.com, its Kindle e-readers, Twitch.tv and its many video streaming services. Like Facebook, Amazon may use user behavior data on its own properties to target third-party publishers and vice versa.

Google is the biggest of all. It earns billions of dollars selling ads on its user-facing services, including Google Search, YouTube, and Google Maps. But behind the scenes, Google’s ad infrastructure is even bigger. Google operates at least ten different components who handle different parts of the advertising business for different types of clients. His ad exchange (AdX, formerly Doubleclick Ad Exchange), supply side platform (Google Ad Manager, formerly Doubleclick for Publishers) and mobile advertising platform (AdMob) dominate all of their respective market segments. Its tracers, inserted in third-party sites, are by far the the most common on the web. And in addition to the enormous information advantage it has over its competitors, Google has repeatedly been accused of using its various components to covertly self-prefer and directly undermine the competition. As a result, the company is currently subject to a various different antitrust investigations around the world.

All of these businesses likely meet the revenue threshold specified by the DAA. This means that if the bill becomes law, all three could be required to divest their advertising businesses. Google could operate Youtube and Search, or the infrastructure that serves ads on those sites, but not both. Moreover, if all of its advertising components were rolled into a single “Google Ads” conglomerate that still generated over $20 billion in revenue, the resulting company would have to choose between its ad exchange, its supply-side platforms, or his side asks. platforms, and derive its other parts. Essentially, ad giants will have to split into components until each component either falls below the revenue threshold or leverages only one layer of the ad tech stack.

Why are breakups important?

Google and Facebook create platforms for users, but their main customers are advertisers. This central conflict of interest manifests itself in design choices that betray our privacy. For example, Google ensured that Chrome and Android continue to share private information by default, even in competition. browsers and Operating systems take a more pro-privacy stance. When advertisers’ interests conflict with users’ rights, Google tends to side with its customers.

Separating user-facing platforms from ad-tech tools would reduce this tension. Chrome and Android developers would face competitive pressure from competitors who design tools for users only.

Separating advertisements from publication may protect rights that US privacy laws do not address. The majority of privacy laws proposed and enacted in the United States regulate data sharing Between separate companies more strictly than data sharing in a single company. For example, the California Privacy Rights Act (CPRA) allows users to opt out of having their personal information “shared or sold,” but it does not give them the right to opt out of many types of intra-company sharing, such as when Google’s search engine shares data with Google Ads to enable hyper-specific behavioral targeting to Google properties. The separation of services intended for users from companies intended for advertisers will facilitate the regulation of these flows of private information.

The separation of advertising empires is also the promise of a fairer advertising market. Removing the content and application business of tech companies from their ad business and separating the sell side and buy side of the ad tech stack will make self-preference, bid riggingand other forms of fraud and cheating less profitable, less lucrative and easier to detect. This will help media producers and individual creators get their fair share of revenue from ads that go against their jobs, and it will help protect small businesses and other advertisers from being abused or defrauded prices by powerful integrated advertising technology companies.

Conclusion

The Digital Advertising Act is a bold and promising legislative proposal. It could divide the more toxic parts of Big Tech to make the Internet more competitive, more decentralized, and more respectful of users’ digital human rights, such as the right to privacy. As with any complex legislation, the impacts of this bill need to be fully explored before it becomes law. But we believe in the methods outlined in the bill: they have the power to reshape the internet for the better.

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