Calling legislation the AMERICA Act doesn’t make it a good bill

The Competition and Transparency in Digital Advertising Act is back but under a new name: The Advertising Middlemen Endangering Rigorous Internet Competition Accountability Act or the “AMERICA Act.” Sen. Mike Lee (R-UT) introduced the legislation during the 117^th Congress with little success. I wrote about last year’s version in a blog series on “Terrible Tech Bills.” 

Lee is taking another shot at it, rebranding the legislation as “AMERICA.” Little has changed in the bill language, and the same concerns remain.

As I explained,

The bill would prohibit companies with over $20 billion in annual digital ad revenue from owning and engaging in more than one part of the digital ad business, with small exceptions. The owner of a digital advertising exchange is not prohibited from buying digital advertising space, if it does not owns either a sell-side or buy-side brokerage. And companies over the threshold are allowed to both buy and sell digital advertising space, as long as they don’t own an ad exchange or brokerage.

Supporters of the legislation compare digital ad exchanges with stock exchanges. This is a faulty premise, according to Chicago Law Professor Todd Henderson. He explained the difference in an op-ed for the Wall Street Journal last summer:

Google may be similar to the New York Stock Exchange in that both use servers to handle trades, but there is a key difference. An auction for an ad takes place within a discrete time period and a winner is determined at the end. In the stock market, the fastest to trade has an edge. In ad markets, everyone who submits a bid has the same chance.

Henderson goes into more detail on the distinction in a new white paper released last week. The AMERICA Act would establish a best interest duty, a best execution duty, and transparency requirements for buy-side and sell-side brokerages with annual revenues over $5 billion. While it’s already difficult to enforce these duties with stocks, Henderson says that applying them to digital ads would be a “monumental task” that would likely require expansive bureaucracy to enforce.

The Department of Justice (DOJ) and state attorneys general would be the chief enforcers. The legislation also contains a puzzling provision on private rights of action. It allows brokerage customers harmed by a violation to bring a civil action for injunctive relief and damages. But this only applies to firms reaching the $20 billion in revenue mark. So, while the best interest duty would apply to those with revenues over $5 billion, only the DOJ or a state attorney general could bring an action against those under $20 billion in revenue.

As I argued last summer, it seems clear that this legislation is meant more to punish bigness rather than help consumers. Sen. Lindsey Graham (R-SC) and Rep. Ken Buck (R-CO) joined Sen. Lee in decrying the purported monopoly held by Google and Meta in the digital advertising space.

Let’s not forget the etymology of the word “monopoly.” It comes from the Greek “monos,” meaning “single.” It’s no wonder why proponents of the legislation refer to Google and Meta collectively, because there’s no single dominant platform in the digital advertising space.

Even so, Google’s and Meta’s shared percentage of revenue has been trending downward since 2017. The two companies are expected to bring in 48 percent of U.S. digital ad revenue this year. It was 54 percent in 2017.

U.S. lawmakers have increasingly introduced antitrust legislation tailored towards specific industries and markets, like the Open App Markets Act and the American Innovation and Choice Online Act. These bills, along with the AMERICA Act, rest on the premise that there are significant differences between online and offline commerce. But that’s not how markets work.

Digital advertising now accounts for about two-thirds of all U.S. advertising revenue, reaching over $200 billion annually. But more traditional forms of advertising still amount to somewhere around $100 billion. TV advertising is estimated to have brought in $58 billion in 2022. Billboard and outdoor advertising is a $9 billion industry. And print advertising is at $7 billion.  

The U.S. already has antitrust laws on the book. If there is illegal anticompetitive conduct in digital advertising, that should be determined in court on a case-by-case basis. As of late, antitrust enforcers have failed to prove these arguments in a variety of forums. Instead, lawmakers seem keen on introducing antitrust legislation targeting specific companies because regulators can’t achieve ideologically driven results under current law.

This is not prudent. Digital ad spending is increasing and prices have gone down, according to Henderson. Lee’s proposal would only make ads more expensive and less effective. The AMERICA Act, despite its patriotically crafted acronym, should be rejected outright.