What Advertisers Need To Know About The ‘AMERICA Act’ Bill via @sejournal, @brookeosmundson
Members of Congress aim for big tech companies like Google and Facebook to divest portions of their advertising businesses to protect competition. The post What Advertisers Need To Know About The ‘AMERICA Act’ Bill appeared first on Search Engine...
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It’s been a big month for big tech. It can be hard to keep up between the TikTok congressional hearing and the competitive AI explosion (hello ChatGPT, Bard, and Bing Chat).
Members of the United States Congress introduced yet another new bill targeting big tech on March 30, 2023.
Similar to previous lawsuits introduced, the ‘AMERICA Act’ bill references big tech giants, including Google, Facebook, Amazon, and Apple.
The proposed bill aims to force big digital advertising companies to divest portions of their advertising business units.
The ‘AMERICA Act’ Explained
Let’s start with the definitions. The ‘AMERICA Act’ bill stands for: “Advertising Middlemen Endangering Rigorous Internet Competition Accountability Act.”
The 22-page bill aims to amend the Clayton Act, which prevents conflicts of interest and promotes competition in selling and purchasing digital advertising.
The ‘AMERICA Act’ bill will impact companies that complete over $20 billion in digital ad transactions.
In a supported document accompanying the bill, the proposed legislation is ultimately looking to protect digital advertising competition in two ways:
If processing more than $20 billion (per year) in digital ad transactions: Prohibits the ability to own more than one part of the digital ad ecosystem. This means: Ad exchange owners cannot own supply-side platforms or demand-side platforms. Supply-side platform owners cannot also own a demand-side platform and vice versa. Buyers and sellers of digital advertising cannot own a demand- or supply-side platform (except to sell their advertising inventory). If processing more than $5 billion (per year) in digital ad transactions: Abide by fundamental obligations to protect customers (advertisers) and competition, including: Act in customers’ best interest, including making the best execution on ad bids. Provide transparency to customers so that they can clarify they are acting in their best interest. If allowed to operate on both sides of the market, they must erect firewalls to prevent abuse and conflicts of interest. Provide fair access to all customers concerning performance and information related to transactions, exchange processes, and functionality.Potential Impacts On Big Tech
If the ‘AMERICA Act’ passes, expect a shake-up in the big ad platform conglomerates.
For example, Google and Facebook may be required to divest large portions of their advertising businesses that facilitate a large share of ad revenue.
Looking further into the Google example, the advertising platform acts on the supply-side platform (Google Ads Manager) and demand-side platform (Google Marketing Platform). The proposed bill would require that Google divests portions of the company so it cannot have ownership in both SSP and DSP.
Amazon may also be affected and forced to divest portions of its advertising business.
Lastly, the recent growth in Apple advertising could impact the company’s entry into third-party ads.
Microsoft declined our request to comment on the proposed impact on big tech and individual advertisers.
The Trickle-Down Effect On Advertisers
There is no doubt that advertisers will be indirectly affected by this proposed change.
The impending effects on advertisers could be both positive and negative. However, there is no certainty about what will happen in digital advertising.
On the one hand, a forced business divest could mean additional opportunities for new ad platforms to emerge. Potential benefits to advertisers could be:
Diversified advertising reach Lower CPCs, meaning greater marketing efficiencyImproved transparency reports from the companies are another potential positive impact of the bill.
Page 12 states that each company affected needs to provide a quarterly report on the order routing practices, broken down by month. This report needs to include the following:
The total number of bids routed The total number of bids executed The fill rate of bids The average net execution fee or rebate per 1,000 impressions The average time in milliseconds between when a bid request is sent and when a bid response is received The value and form of any compensation given in exchange for routing or execution.In short, it’s trying to require the ad platforms to provide their bid auction process and transparency freely.
On the other hand, in a previous statement by Google regarding the antitrust lawsuit, the broader advertising sector can be negatively impacted, “making it harder for Google to offer efficient advertising tools that benefit publishers, advertisers and the wider U.S. economy.”
Machine learning has come a long way for many marketers, making it more of a reliance on platforms. If years of AI and machine learning were to be divested, sold, or put into others’ hands, this could hurt advertising performance (short, long-term, or both).
Summary
The war on big tech continues to heat up with the new ‘AMERICA Act’ proposed legislation. And the line between government involvement in public entities such as Google, Facebook, Amazon, and Apple continues to thin.
Proposed legislative bills can take weeks, months, or years before review. It’s unclear at this time the priority or timeline of this bill to Congress.
We’ll continue to update as more information is provided.
You can read the entire proposed bill here.
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