New Senate bill could force Google and Meta to break apart

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Big tech continues to be in the spotlight of Washington lawmakers. While America’s largest tech giants have faced hearings, investigations, and fines, little has been done to change their overall business models. However, that might change thanks to a new piece of legislation proposed Thursday morning.

A new potential bill introduced by the U.S. Senate could force Google (NASDAQ: GOOG) and Meta (NASDAQ: FB) to break apart their online advertising businesses. If successful, its a move that could be among the most aggressive attempts to curtail big tech companies in American history.

The bill, known as the Transparency in Digital Advertising Act, focuses on potential conflict of interest in online advertising technology and would seek to block companies that process more than $20 billion in ads from participating in more than one part of the online advertising ecosystem.

For companies like Google, which play a role in almost every step in the online advertising chain and connecting buyers and sellers, this piece of legislation could be game-changing for the company. Not only would a bill likely force Google to split apart its online advertising business, but other tech companies, like Facebook, could also end up divesting a big portion of their operations.

The bill, which has bipartisan support, was co-sponsored by Senators Ted Cruz, Amy Klobuchar, and Richard Blumenthal. Other notable senators have expressed support for the bill as well.

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,” said Utah Republican Mike Lee, who introduced the legislation. “When a company can wear all these hats simultaneously, it can engage in conduct that harms everyone.”

A Google spokesperson said that splitting apart Google’s advertising efforts would end up doing more harm than good for the many businesses that rely on its services. If divested, Google argued that whatever resulting ad services would be much less effective than they were as part of a unified, whole Google ecosystem.

If passed, the bill would become perhaps the biggest change to American antitrust law, amending the Clayton Act of 1914, one of America’s foundational cornerstones of antitrust law. The last time it was amended was back in the 1970s.

Google was down around 1.5% on Thursday, while Meta fell by around half a percent. Big tech stocks generally aren’t moving much on antitrust news, as investors seem to have largely gotten used to the idea that there always seems to be some regulatory or antitrust issue that’s haunting the world of big tech.

 

Google Company Profile

Alphabet is a holding company, with Google, the Internet media giant, as a wholly owned subsidiary. Google generates 99% of Alphabet revenue, of which more than 85% is from online ads. Google’s other revenue is from sales of apps and content on Google Play and YouTube, as well as cloud service fees and other licensing revenue. Sales of hardware such as Chromebooks, the Pixel smartphone, and smart homes products, which include Nest and Google Home, also contribute to other revenue. – Warrior Trading News

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