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US senators are proposing legislation that would break the advertising side of big tech companies like Google, and also affect Apple’s growing advertising business.
Sen. Mike Lee, who previously served on a Big Tech Judiciary Committee, introduced a bill that would prevent companies from operating as both buyers and sellers of advertising. Along with Senators Amy Klobuchar, Ted Cruz and Richard Blumenthal, Lee’s billing goals Google, but wants to “avoid replacing one abusive monopolist with another”.
What the legislation is trying to curb are the technologies at the heart of online advertising. Each time a user hits a website, some ad units will have a real-time “bidding” process, where ads loosely tailored to the user’s preferences, as far as Google knows, compete against each other in milliseconds for placement based on a number of factors. Google, for example, not only manages the bidding process, but also owns the advertisements.
“Monopoly rents are imposed on every ad-supported website and every business – small, medium or large – that relies on Internet advertising to grow its business,” Lee said in a statement. “It’s essentially a tax on thousands of American businesses, and therefore a tax on millions of American consumers.”
Overall, the Competition and Transparency in Digital Advertising (CTDA) Act focuses on companies that handle more than $20 billion a year in digital advertising revenue. These companies would no longer be allowed to own “more than part of the digital advertising ecosystem”.
There is one exception. One of the examples given by Senator Lee explanatory document states that, in general, a business that buys and sells digital advertising cannot own the platforms that sell or provide advertising. However, this would not apply to companies with a platform selling “their own advertising inventory”.
CTDA also targets smaller digital ad companies, those that “process over $5 billion in digital ad transactions.” These companies would be required to take steps to “act in the best interests of their customers,” including erecting firewalls “to prevent abuse and conflicts of interest” between buying and selling ads.
“If enacted, this bill would most likely require Google and Facebook to divest a significant portion of their advertising business,” Lee’s bill says. “Amazon may also have to make divestments, and the bill will have an impact on accelerating Apple’s entry into third-party advertising.”
The complete invoice does not specifically mention Apple, Google, or Facebook’s parent company, Meta. None of these companies have yet responded publicly.