Digital Advertising Act Aims to Dismantle Big Tech Ad Platforms

Another congressional bill aims to break up big tech companies — this time it targets their digital advertising practices.

The bipartisan Competition and Transparency in Digital Advertising Act introduced May 19 by Sen. Mike Lee, R-Utah, wants companies like Google, Meta and Amazon to sell off some of their advertising business.

It aims to separate platforms that provide both services to advertisers and publishers that could potentially lead to a conflict of interest and strengthen the market power of those platforms within the ad tech stack, according to Laura Petrone, principal analyst at the London-based data analytics firm. Global data. The bill is co-sponsored by Sens. Amy Klobuchar, D-Minn.; Ted Cruz, R-Texas; and Richard Blumenthal, D-Conn.

The Digital Advertising Bill amends the Clayton Act, an existing US antitrust law that was enacted in 1921, by adding an additional section outlining competition and transparency requirements specifically in digital advertising.

The UK and European Union are already reviewing big tech ad platforms for antitrust reasons, and Petrone said she expects to see extensive cooperation between the EU and Washington to address competition concerns and of transparency.

“This new law focuses on the anti-competitive nature of big tech ad platforms and has the potential to contribute to continued industry disruption,” Petrone said.

Encourage competition

The digital advertising bill aims to increase competition by prohibiting large digital advertising companies generating more than $20 billion in advertising revenue from owning more than one element of the digital advertising ecosystem, the bill says. .

This means that these companies could not simultaneously sell and buy advertisements and offer digital advertising space.

“Companies like Google and Facebook have been able to leverage their unprecedented troves of detailed user data to gain vise-like control over digital advertising, hoarding power from all sides of the market and using it to block the competition and take advantage of their customers,” Lee said in a press release.

If the bill becomes law, it would likely force companies like Google, Meta and Facebook-owner Amazon to sell parts of their advertising business. Daniel Castro, vice president of the Foundation for Information Technology and Innovation, said the legislation could “significantly disrupt the online advertising ecosystem” for buyers and sellers of ads.

Still, Castro doesn’t know that breaking ad platforms would be so beneficial. Castro said online advertising platforms provide integrated and cohesive services to businesses that would be difficult for the market to catch up to in the short term if tech companies were broken up by legislation.

“There’s so much efficiency right now in online ad buying compared to 20 years ago,” he said. “It’s so different and it’s because of the integration.”

Increase transparency

The Digital Advertising Act also aims to increase transparency by requiring companies to provide advertising clients with information about ad performance, which Castro says is a good thing.

Advertising performance data has been a long-standing issue for businesses, and legislation could address that issue, Castro said. It could also begin to address concerns about platforms preferring their own products over those of a competitor, as the proposed bill would require transparency in the advertising process.

“Is there self-preference? Is there some sort of change in the bidding algorithms that may put those who buy and sell the ads at a disadvantage? These types of questions are perfectly legitimate to ask,” did he declare.

Makenzie Holland is a news writer covering big tech and federal regulation. Before joining TechTarget, she was a generalist journalist for the Wilmington StarNews and crime and education reporter Wabash Plain Dealer.

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