John Paul M. Joaquin Tech 04.01.2023 00:Apr AM EDT

Lawmakers Want To Break Up Meta, Google’s Ad Businesses

Google and Meta's businesses might be in trouble in the foreseeable future.

A bipartisan group of senators has recently introduced a bill nicknamed the AMERICA Act that, if enacted, would limit and even break online ad monopolies if needed.

The bill could have serious repercussions for companies as large of a reach as Google and Meta in the ad business, but the companies themselves have experience fighting such bills and lawsuits.

AMERICA ACT Details

The Advertising Middlemen Endangering Rigorous Internet Competition Accountability or the AMERICA Act is a bill introduced in the senate that aims to "restore and protect competition in digital advertising by eliminating conflicts of interest" that allowed companies like Google and Meta to manipulate ad auctions and dictate monopoly rents on the market, per Utah Senator Mike Lee (R).

The senator, who is among the group that introduced the bill, also gave a deeper explanation for the act's goals. He mentioned that it prohibits large digital advertising companies from owning more than one part of the digital ad ecosystem if they process more than $20 billion in digital ad transactions.

According to Engadget, that would mean that companies couldn't own both an ad exchange and either a demand-or-supply-side platform. Meanwhile, a supply-side platform owner couldn't own a demand-side system and vice versa, while those buying and selling ads couldn't own either of the previously mentioned platforms except to sell their own ad stock.

The act also requires medium-sized and larger digital advertising companies that process more than $5 billion in digital ad transactions to abide by several obligations to protect their customers and competition.

Firstly, the AMERICA Act requires them to act in the best interests of their customers, such as making the best execution for bids on ads. Secondly, they must provide customers with transparency so they can verify they are acting in their best interest.

Thirdly, medium-sized and larger digital advertising companies must erect firewalls to prevent abuse and conflicts of interest if allowed to operate as a buyer and seller in the market. Lastly, they must provide customers fair access to their performance and information related to transactions, exchange processes, and functionality.

The act targets Google and Meta by name as they dominate the digital advertising market, particularly the former due to it controlling both sides.

AMERICA Act's Ramifications In The Digital Advertising Market

If enacted into law, the AMERICA Act would most likely require Google and Meta to divest "significant potions" or even break up their ad businesses to give competitors a chance to grow and fill the market vacuum the two companies leave behind.

This act would deal a significant blow to the two companies and those like it as they rely on ad sales as their main revenue maker, which they sometimes use to finance other projects like Meta's metaverse.

Meanwhile, the act could affect Amazon and Apple as they have to make divestments to follow it and see a slower entry into third-party ads, respectively.

Google and Meta commented that they previously fought bills and lawsuits like the AMERICA Act that mean to restrict their ad operations, though not much was said aside from that.