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New bill aims to break up digital advertising market

The bipartisan AMERICA Act aims to introduce more competition into the digital advertising market that U.S. senators believe is largely dominated by tech giants.

A bipartisan group of U.S. senators are working to advance legislation altering the advertising technology landscape in a bid to improve competition.

The Advertising Middlemen Endangering Rigorous Internet Competition Accountability (AMERICA) Act, introduced in March, would prohibit large digital advertising firms earning more than $20 billion in digital ad transactions from owning more than one part of the digital advertising ecosystem. If passed into law, the legislation would likely force tech giants like Apple, Meta, Amazon and Google to sell parts of their advertising businesses.

Google owns and operates multiple parts of the digital advertising ecosystem, including services for advertisers and publishers as well as the exchange connecting the two. In its first quarter earnings reported last week, Google earned $55 billion in ad revenue alone.

The U.S. Dept. of Justice and multiple state attorneys general brought an antitrust lawsuit against Google in January for allegedly engaging in anticompetitive conduct to maintain its monopoly of the digital advertising market. However, Congress needs to address the ad technology competition concerns with not just Google but other tech giants as well, said Sen. Amy Klobuchar, D-Minn., during a Senate Subcommittee on Competition Policy, Antitrust and Consumer Rights hearing this week.

Klobuchar noted that federal antitrust enforcers like the DOJ and Federal Trade Commission face a long road ahead with litigation against tech companies. They are already running into challenges, such as when the Washington D.C. circuit court upheld the dismissal of state attorney generals' antitrust lawsuit against Meta last week.

"Like much of the digital economy, there is a lack of competition in digital advertising markets that has been harmful to small businesses and consumers," Klobuchar said during the hearing. "This legislation is a key part of the work this committee has been doing to rein in the market power of a handful of online gatekeepers."

Sen. Mike Lee, R-Utah, lead sponsor of the AMERICA Act and ranking member of the senate subcommittee, said during the hearing that targeting the digital advertising ecosystem is the first step toward addressing tech companies' overall market power.

"Digital ads are how you turn data into money," he said. "This is the lifeblood of the tech sector in many respects."

AMERICA Act aims to bring competition, transparency to digital ad market

Multiple sectors of the U.S. economy depend on being able to buy and sell online ads, and the AMERICA Act will fix a "significant problem at the heart of online markets," said Dina Srinivasan, researcher and fellow with the Thurman Arnold Project at Yale University and a witness at the hearing.

Digital ads are how you turn data into money. This is the lifeblood of the tech sector in many respects.
Sen. Mike Lee, R-Utah

Srinivasan said that today's digital advertising ecosystem operates much like a stock exchange. However, the problem is that companies who operate the new digital advertising exchanges do so without any of the rules Congress enforces on Wall Street, she said.

"There are no rules that manage conflicts of interest; there are no rules that require brokers or exchanges to be open, honest and transparent with their own customers," Srinivasan said. "The industry is most certainly not policing itself. That's the essence of the problem."

Roger Alford, professor of law at the University of Notre Dame and a witness at the hearing, also spoke in support of the AMERICA Act. He said the digital advertising market is almost completely unregulated, with neither litigation nor regulation curbing harmful conduct.

The AMERICA Act would prohibit tech companies with significant digital advertising revenue from owning and operating multiple entities across the ad tech stack. It would also require structural separation, which Alford said offers advantages such as eliminating conflicts of interest. He said structural separation also recognizes the limits of regulatory behavioral remedies, which can be difficult to devise and enforce.

Alford said advancing the AMERICA Act would mark a significant step in being able to address digital ad market competition and transparency concerns.

"While litigation is appropriate to curb big tech abuse of power, it is not sufficient," Alford said.

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

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