The Google division of Alphabet Inc. ( GOOGL , GOOG ) and the Facebook division of Meta Platforms, Inc. ( FB ) may be forced to spin off large portions of their online ad businesses, should a new bill pending in the United States Senate eventually become law. The Competition and Transparency in Digital Advertising Act would prohibit companies with more than $20 billion per year in digital ad revenue from running a “digital advertising exchange.” In the first quarter of 2022 alone, Alphabet generated $68 billion in total revenue, with nearly $55 billion, or 81%, coming from Google’s ad business. The bill thus threatens Alphabet’s primary source of revenue and its business model . Specifically, Google runs an auction , or exchange, where ad transactions are made and prices are set. It also offers tools to assist companies in selling and buying ads. If the new legislation passed, Google would have to choose which of those businesses it would retain. Facebook faces a similar threat. Key Takeaways Google and Facebook may be forced to spin off large portions of their online businesses, should a bipartisan U.S. Senate bill become law. A similar measure is expected to be introduced in… Read full this story
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