Congressional lawmakers have proposed legislation to break Google and Facebook’s monopoly over digital advertising, accusing the tech giants of profiteering off their market dominance.
Both the House and Senate have introduced the “Competition and Transparency in Digital Advertising Act,” which proponents say would restore and protect fair competition in digital advertising markets that have been dominated by Google and Facebook.
In a statement introducing the bill, Sen. Mike Lee, the bill’s chief sponsor, said it would free the internet from online monopolies.
“This lack of competition in digital advertising means that monopoly rents are being imposed upon every website that is ad-supported and every company—small, medium, or large—that relies on internet advertising to grow its business,” he said. “It is essentially a tax on thousands of American businesses, and thus a tax on millions of American consumers.”
The bill has not yet been scheduled for consideration in committee in either chamber, and it faces pushback from wary lawmakers, particularly those from California, which is home to Apple, Google parent company Alphabet and Facebook parent company Meta, as well as scores of other tech players.
But it marks another of many legislative attempts by Congress to assert federal control over the flourishing and largely ungoverned online industry.
The bill would ban large digital advertising companies like Google from owning more than one part of the digital ad “ecosystem,” and it would block them from playing a dual role in the advertising process.
Large companies, namely Google, would have to end their ownership of both supply-side platforms and demand-side platforms that have helped them generate significant revenue.
In 2021, Alphabet earned more than $209 billion from advertising and Meta made roughly $115 billion from advertising.
Other Big Tech firms would also be impacted.
Mr. Lee, Utah Republican, said the legislation would likely require Google and Facebook to “divest significant portions” of their ad businesses, which account for a large portion of their ad revenue.
Amazon could also be required to make divestments, and the bill would “impact” Apple’s developing third-party advertising business, Mr. Lee said.
Mr. Lee said Google, Facebook and other Big Tech firms need regulation because they have used massive troves of user data to establish a monopoly over digital advertising that blocks competition and hurts consumers.
The measure has attracted a handful of co-sponsors so far.
Like other Big Tech bills, support comes from a coalition of Republicans and Democrats who demonstrate that the desire to rein in the industry cuts across party lines.
The bill is co-sponsored by Sens. Ted Cruz, Texas Republican, Amy Klobuchar, Minnesota Democrat, and Richard Blumenthal, Connecticut Democrat.
An identical measure was introduced Thursday in the House. It was sponsored by Rep. Ken Buck, a Colorado Republican who has long sought to bring massive tech companies to heel.
Support in the House also spans the political spectrum. Mr. Buck is a member of the arch-conservative House Freedom Caucus. The co-sponsors include Rep. Pramila Jayapal of Washington who chairs the Democrat’s Progressive Caucus.
Reps. Matt Gaetz, Florida Republican, and David CiccilineCicilline, Rhode Island Democrat, are also sponsors.
“The online advertising market is monopolized, opaque, and rigged in favor of just two companies: Google and Facebook,” Rep. Cicilline said.
Despite the broad political coalition backing the bill, its passage, or even floor consideration, is far from guaranteed. Lawmakers in both parties have opposed implementing government controls over flourishing online platforms.
Previous attempts in Congress to implement antitrust reform in the tech industry haven’t gotten very far yet and the legislative window is closing fast this year.
Congress is expected to adjourn by August for a long summer recess. When they return, the midterm elections will be just a few months away and lawmakers typically steer clear of major legislation before facing voters at the polls.
Among the major bills Mr. Buck, Ms. Klobuchar and other proponents hope to pass this Congress is the American Innovation and Choice Online Act, which would ban online businesses such as Amazon and Facebook from giving preference to their services over other advertisers.
The bill has advanced in the Senate and House but has yet to receive a floor vote in either chamber because other lawmakers in both parties say the bill is too broad and would potentially hurt consumers.
Big Tech has enjoyed a firewall of protection from the House and Senate delegation of lawmakers from California.
“While I share the desire to reform digital markets and increase competition, as drafted, the bills fall short and will create more harm than good for American consumers and the U.S. economy,” Rep. Zoe Lofgren, a California Democrat, said in a statement opposing the American Choice and Innovation Online Act and a suite of bills advanced earlier this year to curb tech monopolies.
The tech giants spent millions of dollars lobbying Congress to block federal controls over their industry.
They argue government controls would cause a wide range of problems that would hurt advertisers and consumers.
In a January blog post, Google Global Affairs President Ken Walker said legislation to check big tech could stifle innovation by requiring firms to get approval from the government before launching new programs. Consumers could end up with less helpful apps, lower-quality search results and less security from cyberattacks.
“Antitrust law is about ensuring that companies are competing hard to build their best products for consumers,” Mr. Walker said. “But the vague and sweeping provisions of these bills would break popular products that help consumers and small businesses, only to benefit a handful of companies who brought their pleas to Washington.”