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Google's ad business targeted by GOP-led bill

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Yahoo Finance’s Alexis Keenan joins the Live show to break down how Google’s ad business will be the target of a GOP-led bill.

Video Transcript

- Guys lawmakers are cracking down on Google though with a new legislation that could force the tech giant to break up its advertising business. Yahoo Finance's Alexis Keenan's got the details for us. Alexis.

ALEXIS KEENAN: Hi, yeah, good morning. So this is a Republican led bipartisan bill that was introduced in the Senate yesterday. And it goes after Google's advertising business. And that's a huge business. We all know it's been a long controversial one that lawmakers have been going after for years.

In this case, the Senate is saying, we'd like to do something about this by amending antitrust laws. They actually want to insert some language into the Clayton Act that was written in 1914. So this would be a major change for antitrust law. And the idea would be here to eliminate the conflicts of interest that lawmakers and many rather see in this business.

So let's take a look at why this business for Google and this could affect Facebook, it could affect Meta as well here. We are not sure on that one yet. It just all depends on ad revenues that are derived from the transactions here. So Google's huge revenue driver here for Alphabet, I should say.

In the first quarter reporting $54.7 billion in advertising revenue on a total revenue report of $68 billion. The company has not yet responded to Yahoo Finance. But in a statement to CNBC, the company said that the real issue is low quality data brokers who threaten Americans privacy and flood them with spammy ads. In short this is the wrong bill at the wrong time aimed at the wrong target.

So Alphabet there seeming to say that its vertical integration of these businesses here is a good thing for consumers. It's a good thing for all users. Because they're able to protect the privacy of online users as well as their data. And across the board, they see this as a good thing and the wrong fit for addressing this issue.

But what it does is it takes any company that has over $20 billion or over in transactions in this space they would be subject to this law. So it would be a major change here. It's at the beginning stages. Yesterday also the House introduced a mirror bill to this one.

- And this is something that Europe is also trying to tackle in terms of changing the way what it says also are alleged conflicts of interest. It's actually a little bit further along if I'm not mistaken than something like this bill.

ALEXIS KEENAN: Europe is and they recently just passed a measure that will allow the European Union to move forward with this legislation and other legislation that targets big tech more as a whole. So yes in fact, they are further ahead. And then you also have regulators in Australia working on moving things forward there a little bit ahead as well. They recently issued a report that said, they estimate that more than 90% of ad impressions in the ad tech supply chain passed through at least one Google service in 2020.

So what this bill would do is take out, eliminate the ability of these huge ad tech companies from being able to participate in all sides of the transaction. Here you have a Google participating, offering software and services on the buy side, on the sell side of this advertising space. And this is across both the web and apps. So they're also in addition to that operating the exchange where these ads are bought and sold.

So they are just across this whole ecosystem. And that's what really rubs people the wrong way.

- Yeah the vertical integration of the digital advertising business, they performed and we're able to kind of cement their own duopoly along with Meta platforms within this landscape. Yahoo Finance's own Alexis Keenan and thanks for breaking this down for us today.