Elizabeth Warren's proposal to break up the tech giants could give marketers more choice, but some ad industry insiders worry about the impact

AP

Google CEO Sundar Pichai.

• Sen. Elizabeth Warren proposed breaking up the tech giants Google, Facebook, and Amazon.
• The rise of the tech giants has remade the media and marketing landscape, driving mega-mergers like AT&T's with Time Warner and Disney's with Fox.
• Industry watchers said breaking up the tech giants would spread digital ad dollars around more evenly.

Presidential candidate Elizabeth Warren proposed breaking up big tech companies like Facebook and Google and regulating them like utilities.

"Today's big tech companies have too much power  -  too much power over our economy, our society, and our democracy," the senator wrote in a Medium post. "They've bulldozed competition, used our private information for profit, and tilted the playing field against everyone else. And in the process, they have hurt small businesses and stifled innovation."

She would require tech giants to be classified as platform utilities, barring them from sharing data with third parties. She also would undo mergers like Facebook's of Instagram and Google's with DoubleClick.

"Amazon Marketplace, Google's ad exchange, and Google Search would be platform utilities under this law," she wrote. "Therefore, Amazon Marketplace and Basics, and Google's ad exchange and businesses on the exchange would be split apart. Google Search would have to be spun off as well."

Read more: The Trade Desk's CEO shot down investors' biggest worry about competition from Amazon, and it could reveal major flaw in the e-commerce giant's plan to win over big advertisers

The rise of the tech giants has remade the media and marketing landscape, driving mega-mergers like AT&T's with Time Warner and Disney's with Fox.

The reaction from ad and media watchers was mixed, with some applauding a breakup and others warning to be careful what you wish for.

"A breakup of these dominant platforms would result in a more vibrant marketplace," said Terry Kawaja, founder and CEO of Luma Partners, an advisory firm focused on digital media and marketing. "More innovation, more competition, more marketer choice and more diverse consumer experiences. No comment on the probability of such a change to the antitrust laws that would be required to manifest such a break up (nor the political will required), but the effect should be positive. We've seen it with the breakup of Ma Bell (AT&T) in the 1980s."

Jason Kint is CEO of Digital Content Next, a trade association for digital publishers, and an outspoken critic of Google and Facebook. He said breaking up Google and DoubleClick would cause ad dollars to be spread more evenly throughout the ad ecosystem. In the case of Facebook, he argued that if it didn't own Instagram, it would have dealt with fake news faster and been more transparent about its business practices.

"They'd actually have a competitor," he said.

Breaking up the tech giants is one way to address their conflicts of interest, said an antitrust lawyer familiar with the ad industry.

"Obviously there would be disruption, but in long run, advertisers would be better off if they had tools and services devoted to giving them a higher return on investment, publishers had tools devoted to giving them better yield and an exchange that let them meet in the middle without conflicts of interest," the lawyer said.

Others were more cautious about the prospect of breaking up the tech giants, even if they think they've gotten too big.

"Think twice before you break up utilities that are free to the end user and provide services that could not have been imagined 20 years ago," said Rob Norman, retired global chief digital officer at GroupM. "Alternatively, you could think about taxation for super-profit takers and re-distribution of narrow corporate wealth specifically to counter the social costs of their businesses."

A breakup isn't necessarily what the news business needs the most

David Chavern, president and CEO of the News Media Alliance, a trade association representing news outlets including The Wall Street Journal and The New York Times, was critical of Google's growth in the digital ad market and Facebook's expansion of its social network by acquisitions.

But breaking apart the companies would be difficult, he said, noting Facebook's new plan to integrate the infrastructure behind its messenger services. Plus, it wouldn't necessarily help the publishing business, he added.

Chavern proposed instead stronger regulation to boost people's rights to their personal data and put more limits on platforms' ability to use that data. He also has long argued for the ability for the news business to collectively negotiate with the platforms to get a better deal for their data, brands, and distribution.

"The news business has its own issues that aren't addressed by Warren," he said.

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