Bipartisan Bill To Break Up Online Advertising Market

Ted Cruz and Richard Blumenthal are cosponsoring an online advertising competition bill!?!?!?

Senators Mike Lee (R-UT), Amy Klobuchar (D-MN), Ted Cruz (R-TX), and Richard Blumenthal (D-CT) introduced the “Competition and Transparency in Digital Advertising Act” (S.4258), a bill that “would restore and protect competition in digital advertising by eliminating conflicts of interest that have allowed the leading platforms in the market to manipulate ad auctions and impose monopoly rents on a broad swath of the American economy” according to their press release. Klobuchar and Lee are the chair and ranking member of the subcommittee with jurisdiction over antitrust and competition issues, meaning this bill has better odds of moving than others introduced to rein in “Big Tech.” In this case, the bill purports to curb Google and Meta’s dominance in online advertising markets, including forcing them to spin off subsidiaries to avoid a situation in which one company owns multiple sides of the online advertising market structure.

The “Competition and Transparency in Digital Advertising Act” (S.4258) would add a new section to the “Clayton Act,” one of the United States’ (U.S.) two primary laws governing antitrust and competition enforcement. This new section would combat what many critics have called Google’s anticompetitive practices in the online advertising market, which functions much like a stock market with brokerages for those selling advertising space on websites and apps and those looking to buy space for their products. There are online ad exchanges that operate in ways virtually the same as stock markets, including with automated, very fast trading.

In terms of the problem the bill is trying to solve, there is ample evidence that online advertising markets are controlled by a few companies to the detriment of most of the other stakeholders. One firm found that Google, Meta, and Amazon collectively accounted for 74% of online advertising revenue in 2021, with Google taking home 44% of all revenue.