Sen. Mike Lee (R-Utah) has introduced a bill that would likely require Google and Facebook to divest their ad-sales side businesses and, concerned interactive online advertisers say, likely kill their industry.
Lee is billing the Advertising Middlement Endangering Rigorous Internet Competition Accountability (AMERICA) Act as protecting competition in digital advertising by disallowing powerful online platforms like search giant Google or social-media titan Facebook from having a piece of the digital ad business driven by their platforms.
But the Interactive Advertising Bureau said the bill “has the potential to destroy one of the most powerful growth engines of the economy — digital advertising and media.“ It also said the bill would hurt millions of small businesses that rely on those digital ads by creating a “more inefficient, costly and fragmented advertising ecosystem.”
“The AMERICA Act 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,” reads a summary on Lee's website.
That means that ad exchange owners can't own supply- or demand-side platforms, and the largest supply- and demand-side platforms can't be co-owned.
But it is not only the largest platforms that would be affected by the bill.
Companies doing more than $5 billion in digital transactions could have a piece of both sides of the market, but they would have to abide by rules including that they must take “the best” bid on ads; provide transparency to clients to demonstrate they are acting in the customer’s best interests; and, if operating on both sides of the market, they would have to erect conflict-of-interest “firewalls.”
The new regulations and rules would be enforced both by the Justice Department and states attorneys general. And there is the dreaded — at least by most industry players — private right of action, which means companies could be sued by individuals for violations.
Lee's summary of the bill makes it clear he thinks Google and Facebook will have to divest ”significant“ portions of their ad businesses, and that Amazon may have to as well. It would also put a crimp in Apple’s efforts on the third-party ad front.
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Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.