HomeFeaturedBig Tech Wary as Six ‘Killer’ Bills Loom in Congress

Big Tech Wary as Six ‘Killer’ Bills Loom in Congress

Big Tech Wary as Six ‘Killer’ Bills Loom in Congress

BY NIKHILA NATARAJAN

WASHINGTON, DC (IANS)- Google, Meta, and Amazon may have to spin off masses of their advertising businesses under the US Congress’s latest bill targeting Big Tech, the four senators behind it said.

The bipartisan bill introduced late last week by Senators Mike Lee, Amy Klobuchar, Ted Cruz, and Richard Blumenthal, trains the gun into the treasures of the world’s largest digital advertising giants – punishing them for owning multiple parts of the advertising stack that makes up a vast and sprawling online ecosystem.

Although five preceding bills have sullied investor sentiment, the latest legislation on Thursday has brought Meta down around 9 per cent. Alphabet, the parent of Google, has fallen in equal measure. Amazon and Apple have done just a shade better. The drops have been around 7 and 5 per cent respectively.

“The 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,” a brutal explanatory on Senator Lee’s website stated.

“Several smaller ad tech competitors would also fall under the best interest and transparency requirements, but industry experts have confirmed that any compliance burden would not impair their ability to compete,” it said.

When a web user visits a website or opens an app, a real-time auction serves an ad on the website or app.

The auction takes place in a fraction of second, in much the same way that electronic securities trading functions.

Billions of times every day, publishers use supply-side brokers and advertisers use demand-side brokers to connect with one another in the ad exchanges, which is a real-time auction marketplace.

“As Google’s own employees have said “[t]he analogy would be if Goldman or Citibank owned the NYSE,” the explanatory said.

“Competition Problems in Ad Tech Digital advertising is dominated by Google and Facebook. Google 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.”

Google is not the only company that operates on both sides of the ad tech market, the lawmakers noted.

“Rules to address its (Google’s) bad acts need to apply broadly to avoid replacing one abusive monopolist with another,” they explained.

CTDA would be enforced by the Department of Justice and state attorneys general.

It also includes a private right of action for violations of the best interest, transparency, and other requirements imposed at the $5 billion threshold when committed by companies over the $20 billion threshold.

For context, in the first quarter of 2022 alone, Alphabet generated $68 billion in total revenue, with nearly $55 billion, or 81 per cent, coming from Google’s ad business.

The bill thus threatens Alphabet’s primary source of revenue and its business model.

Google spokesperson Julie Tarallo McAlister pushed back. She warned that, should the bill pass, “low-quality data brokers” will flood the internet with “spammy ads”. Alphabet asserts that this piece of legislation is the “wrong bill, at the wrong time, aimed at the wrong target”.

Five other pieces of bipartisan legislation have been pending in Congress.

One, the American Innovation and Choice Online Act would bar companies from discriminating against smaller competitors, such as by prioritizing their products ahead of others.

Two, the Platform Competition and Opportunity Act that would empower regulators to block dominant companies from acquiring potential competitors.

Three, the Ending Platform Monopolies Act that would prohibit companies from taking actions against smaller competitors that would restrict fair and free online competition.

Four, the Augmenting Compatibility and Competition by Enabling Service Switching Act that would make it easier for new companies to enter the market by changing requirements that affect costs for businesses.

Five, the Merger Filing Fee Modernization Act that would update the filing fees for mergers, intended to assist regulators in enforcing antitrust laws.

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