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Say hello to the US government’s latest attempt to impose antitrust regulations on the digital advertising industry.
It may sound familiar.
This week, Sen. Mike Lee (R-Utah) is reintroducing an antitrust bill known as the Strict Internet Competition Liability Act, or American Law for short, that would put advertising middlemen at risk. (How patriotic he is.)
But despite its mention of middlemen, the bill was written with Big Tech in mind.
The digital advertising space “suffers from a lack of real competition, which is stifling transparency and accountability,” Lee said Wednesday in a virtual press conference on the bill.
If Congress passes this second stab at AMERICA, it will have a major impact on the big tech titans and, in theory, give smaller tech companies a competitive edge.
Regulators’ desire to take Big Tech platforms down a peg has certainly produced some unlikely bedfellows. The bill’s bipartisan sponsors include Sens. Amy Klobuchar (D-Minn.), Lindsey Graham (R.S.C.), Elizabeth Warren (D-Mass.) and Ted Cruz (R-Texas).
According to Lee, the U.S. law is “virtually identical” to the bill he helped introduce last year, called the Competition and Transparency in Digital Advertising Act.
But the previous bill did not clear the floor of the 117th Congress before it adjourned. Digital advertising is a vital part of the US economy, which is why it’s taking so long for Congress to pass antitrust legislation, Lee AdExchanger said.
Legislation
Fair competition is limited in digital advertising because large technology platforms “occupy a lot of space” at the same time, Lee said, providing technology to buy, sell and serve ads.
In terms of regulation, he said, “there is no real verification against these companies.”
According to AMERICA’s law, companies that make $20 billion or more in revenue from digital advertising will be forced to liquidate part of their business under the supervision of the Justice Department.
But companies that spend at least $5 billion from digital advertising must disclose the sources of revenue for their separate business units, such as media sales and advertising services.
This transparency requirement will cast a somewhat wider net and have more impact on tech companies than Big Tech Cajuns like Google or Meta.
demolition
If passed, the US law would create a new category of corporations: businesses that are big enough to be required to disclose revenue, but small enough to benefit from the government’s crackdown on Big Tech behemoths.
Take Microsoft for example. It’s not as big as Google or Meta in terms of digital ad revenue, but it still has to file some revenue disclosures under US law.
Meta, for its part, will have to spin off its third-party ad business — which, Lee said, “isn’t a big division in the company as it is today” — and Google will have to “take a significant portion of the ad tech business.”
Fair enough, depending on one’s position and perspective. But if developing Big Tech was that easy, wouldn’t it have already happened?
challenge accepted
There’s a reason proposals like the US Act version 1.0 and the App Markets Act haven’t gotten very far.
Digital advertising is an integral part of the American economy, so government officials don’t want to regulate it out of existence. But when it comes to maintaining fair market competition, regulators can’t seem to agree on exactly how to deal with Big Tech.
Still, Lee pointed out, the government’s current efforts are not enough to curb potentially illegal business activities.
Take Google’s ongoing battle with the DOJ. This type of litigation takes years after each party completes the appeals process, and is still very much ongoing. And if the case finally goes to court and comes to a decision, the result will only work for one company.
But despite interest among some regulators in enforcing Big Tech’s dominance, it’s unclear why this bill has failed others.
Yet Lee is optimistic about the prospects for the AMERICA Act, and the bill has bipartisan support.
“Maybe the US law will pass this year,” Lee said. If this happens, it will help bring healthy competition back to digital advertising. let’s see.
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