Bipartisan Bill Would Compel Google to Break Up Its Ad Business
Google headquarters in Mountain View, California
What's happening
A group of senators introduced a new bill that would force Google to break up its online ad business if it's passed into law.
Why it matters
The bill is a threat to Google's primary revenue source and could up-end its business model.
What's next
The bill has a long way to go and there's no guarantee it will be passed into law, especially during an election year.
A bipartisan bill designed to break up Google's massive online ad business has been introduced in the US Senate.
The Competition and Transparency in Digital Advertising Act, introduced Thursday, would prevent companies processing more than $20 billion in digital ad transactions annually from engaging in ad sales, according to the text of the legislation. The bill would force Google to divest its digital ads business within a year if passed.
The bill targets companies like Google that operate in multiple parts of the online ad economy, which senators say is a conflict of interest. Ad sales on its giant Search product is a pillar of the $209 billion in revenue that Google raked in last year. The company also helps third-party advertisers sell and purchase ads online and runs auctions at which ads are sold.
"When you have Google simultaneously serving as a seller and a buyer and running an exchange, that gives them an unfair, undue advantage in the marketplace, one that doesn't necessarily reflect the value they are providing," Sen. Mike Lee, a Utah Republican who is leading the bill, told The Wall Street Journal. "When a company can wear all these hats simultaneously, it can engage in conduct that harms everyone."
In a statement, Google said that its ad tools, along with those from its competitors, help American businesses grow and protect customers from privacy risks or misleading ads. "Breaking those tools would hurt publishers and advertisers, lower ad quality, and create new privacy risks," a Google spokesperson said. Google says that "low-quality data brokers" will flood the net with "spammy ads" and that this bill is the "wrong bill, at the wrong time, aimed at the wrong target."
In a press release, Lee and other senators called Google's business model a "tax on thousands of American businesses, and thus a tax on millions of American consumers."
The bill is the latest in a string of legislative proposals designed to limit the power of Big Tech. A package of five bills, including the American Innovation and Choice Online Act and Ending Platform Monopolies Act, directly target Google, Amazon, Apple and Facebook parent Meta.
If some or all of these bills were to pass, it would give Congress substantially more power in dealing with the massive tech industry, which is widely seen as lightly regulated.
The bill is co-sponsored by Texas Republican Ted Cruz and Democrats Amy Klobuchar of Minnesota and Richard Blumenthal of Connecticut. Similar legislation is set to be introduced in the House, according to The Journal.
The new legislation comes at a tricky time for Congress. Mid-term elections that could tip control to the Republicans take place in November. Opportunities to get a floor vote time might be limited.
Google is also facing lawsuits that accuse it of monopoly control of online ad sales. Texas Attorney General Ken Paxton is leading a coalition of 16 states and Puerto Rico in suing the search giant for allegedly controlling the online ad market. Google has said Paxton's allegations are inaccurate and asked a judge to dismiss the case.
Paxton has also filed a privacy lawsuit against Google. On Thursday, he amended it to include a claim that Google's Chrome browser tracks sensitive user data even when it's in incognito mode. A proposed class action lawsuit, Brown et al v. Google LLC, alleges that Google's Chrome browser collects data while in that private browsing mode.