Google is the target of a new Senate bill that aims to dismantle online advertising companies

As time is running out for Congress to attempt to rewrite antitrust laws in the tech sector this year, arguably the most aggressive bill yet emerged on Thursday to rein in the digital advertising market.

The Digital Advertising Competition and Transparency Act, backed by Senate Republicans and Democrats, targets top online advertising player, Alphabet Inc.’s Google GOOGL,
-1.34%

GOOG,
-1.29%,
and could force each to divide their labyrinthine business operations.

Led by Sen. Mike Lee (R., Utah) and co-sponsored by Ted Cruz (R., Texas), Amy Klobuchar (D., Minn.) and Richard Blumenthal (D., Connecticut), the legislation prohibits companies dealing more than $20 billion in digital advertising transactions per year by participating in more than one part of the digital advertising ecosystem. Google’s Web of Commerce Operations, for example, allows businesses to sell and buy listings, as well as auction houses or exchanges, where transactions take place.

The bill addresses charges in a 2020 antitrust lawsuit against Google filed by more than a dozen state attorneys general, led by Texas Attorney General Ken Paxton. The lawsuit claims that Google misled advertisers and publishers for years about its ad auction pricing and processes.

In a forceful response, Google said the bill would irrevocably harm publishers and advertisers, leading to lower ad quality and privacy.

“Advertising tools from Google and many competitors help US websites and apps fund their content, help businesses grow, and help protect users from privacy risks and misleading ads,” said a Google spokesperson in a statement to MarketWatch. “Breaking these tools would harm publishers and advertisers, reduce ad quality and create new privacy risks. And, in an age of increased inflation, it would handicap small businesses looking for simple and effective ways to grow online. The real problem is shoddy data brokers threatening Americans’ privacy and flooding them with spammy ads. In short, it is the wrong bill, at the wrong time, aimed at the wrong target.

Parent company of Facebook Meta Platforms Inc. FB,
+1.18%,
the second-largest digital ad company, declined to comment.

If the bill becomes law, companies like Google and Facebook would have a year to comply with the new rules. Similar legislation is before the House, in a separate effort led by Reps. Ken Buck (R., Colorado) and Pramila Jayapal (D., Washington).

It remains to be seen, however, whether any of the many tech antitrust bills pending in Congress will become law as the legislature nears its summer recess, weighed down by issues such as Roe v . Wade, inflation, war in Ukraine. , supply chain constraints and other pressing issues.

According to a report by Axios, Senate Majority Leader Chuck Schumer, DN.Y., may bring tech antitrust legislation to a vote in early summer.

Norman D. Briggs