US senators aim to break up Google and Meta’s ad divisions: adland reacts
Introduced by a bipartisan group of lawmakers focused on antitrust issues, the Competition and Transparency in Digital Advertising Act bill seeks to tear down the walled gardens. If passed, Google and Meta would be forced to break up their multi-billion-dollar advertising arms. The Drum surveys top advertising and media leaders on how the bill could send shockwaves through the industry.
The first domino to fall?
Cory Munchbach, president and chief operating officer, BlueConic
The implications of the passage of this bill go beyond the obvious for Google and Meta [and others] – not least of which is the fact that this will be truly bipartisan legislation about a very significant economic topic. It paves a path toward other legislation on related topics such as privacy and app stores that are hot antitrust topics. In other words, this could represent a critical first domino falling and thus have a major impact on additional legal measures passing in the near future.
If passed, the new bill could enhance competition – but could also throw a spanner into the works for cookie alternatives
Meanwhile, this will theoretically open up a lot more opportunity for other players in the ad space – but don’t expect to feel that impact soon. Google and Meta [and others] will fight this hard in practice, and it will take a long time for there to be enough oxygen in an alternative ecosystem to create viable scale. We’ll continue to see brands and publishers invest in first-party alternatives, which they’ve already begun to do extensively.
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Matt Gray, global vice-president of partnerships, Tealium
While intended to provide more transparency, the bill will instead force the major players such as Facebook and Google to break their entities into smaller companies below the revenue thresholds in the bill. If it passes, this bill will be the first of many aimed at illuminating how billions of dollars change hands in advertising. Markets and exchanges come with regulations, and this is the beginning of the regulation reckoning for the digital ad industry. However, the speed and complexity of the ad exchanges make it difficult to predict the impact if it becomes law.
Shiv Gupta, manager partner, U of Digital
If Google is forced to divest some of its adtech business units, it will embolden some of their biggest ad competitors that fall below the $20bn threshold – such as Microsoft and The Trade Desk Yahoo – which means they will start hiring aggressively and acquiring companies aggressively to take advantage of an opening window. A break-up would also kickstart venture capital interest in adtech, prop up adtech share prices and increase industry M&A – almost as a counterbalance to the current slowdown we’re starting to see.
In order to get ahead of the regulation, big ‘full stack’ companies such as Yahoo, Amazon and Comcast may all be looking for buyers for their various components, perhaps making some of those components relatively cheap. Given historical valuations, I would think sell-side components will be on sale first. Having to sell these components will force these companies to rethink their value prop, [which will] slow them down. [Meanwhile] the ‘pure play’ adtech companies, such as The Trade Desk, Magnite, Pubmatic and Criteo, might gain an advantage, as they can simply stay on course.
From a privacy perspective, I predict that the demise of cookies and other IDs will accelerate, as Google will no longer care too much about what the ad ecosystem has to say. Privacy wars will get ugly as Google will start acting even more like Apple.
New limitations on access to data
Aviran Edery, senior vice-president, marketplace, Verve Group
Should this legislation move forward, there could be a few different outcomes – some that are obvious and others that are not so obvious. What may seem obvious is that the revenue that used to stay within Google’s four walls will divert to other global exchanges. This could be good news for publishers and advertisers in the long term as it reduces concentration risk, increases competition and eliminates a conflict of interest source.
What may not be obvious to those who have crafted the legislation is that if Google exits the supply side of the business, many Google-led device ID and ‘cookie replacement’ technologies may not function properly or at all, decreasing addressability and diminishing the value of advertisers’ campaigns. Smaller publishers may also suffer losses, with fewer self-service options available among competing exchanges.
Arielle Garcia, chief privacy officer, UM Worldwide
Generally, the industry would benefit from more competition and strict limits on self-preferencing. There would likely be an impact to data availability; although what exactly the impact might be is not clear. This is underscored by the contrast between Google’s comments that the bill, if passed, would be bad for privacy – versus the IAB’s critique that “the market would lose the scale and precision the internet offers.”
Brian Mandelbaum, chief executive officer, Klover
Data is absolutely necessary in powering truly relevant experiences for consumers, from streaming to weather to news; it’s the backbone of understanding and context. But consumers should have a choice in powering that. In a world where data and transparency are in the crosshairs, consumers are left with little choice of where and how their data is used. This becomes highly precarious when a singular company is representing both the advertising buyer and the seller.