Understand the Impact New Antitrust Legislation Could Have on Your Business
Certain legislation has been introduced that may impact the digital marketing and advertising industry. This legislation, if passed, has the potential to hurt small businesses who use digital marketing as a part of their overall advertising strategy, to reach out and engage their target audiences. We’ve written this blog post to help inform business owners about these bills and the potential impacts they could have on the digital advertising industry.
The Competition and Antitrust Law Enforcement Reform Act is a bill introduced by Senator Amy Klobuchar. According to the Senator, this bill, if passed, would curb large tech platforms from using their power to disadvantage their competitors. The legislation will bar the technology platforms from engaging in self preferencing-actions designed to favor their products and services over those offered by their rivals.
In theory, this sounds fair. But in reality, if passed, it could have major negative impacts for consumers and small businesses. Imagine you’re going to search for mexican restaurants near you on Google. If this bill passed, Google’s search engine may not be allowed to display Google local business results. In essence, the bill may have adverse effects on millions of small businesses which depend on these platforms for free and innovative services to propel their growth. The business tools offered by Google and other platforms may become less effective for business, and less useful to the end-user.
The three main platforms that will receive a blow are Amazon, Google, and Facebook, which are the most reliable support system for many businesses.
If passed, the legislation is supposed to reform the antitrust laws by boosting consumer and workers protection and promoting economic equality. The bill will outlaw several behaviors termed as non-competitive. However, if you are a small business owner, you’ll likely suffer in ways like;
- Customers may have more difficulty finding you. As mentioned above, if the bill passes, your business listings would no longer appear in the Google search for customers to find your location. Your listings may be displayed with missing essential information such as, phone number, address, or business working hours.
- Some platforms may end free services or increase rates for affordable digital tools.
- Low productivity level. If some of the important Google aspects like Gmail and Google docs are split, their productivity will slow down since the apps might not work seamlessly anymore.
- Facebook, Google, and Amazon will be mandated to remove customer data from their systems after a request. This will diminish search quality and targeted advertising. As a result, small businesses may have to spend more to get noticed by potential customers.
Here are a few specific effects Klobuchar’s Bill could have on business;
Google plays an essential role in the development of businesses globally. Businesses can show their names, location, operating hours, contacts, and other information through Google to their intended customers.
The new legislation will adversely lower the quality of the Google search results with a negative impact on small businesses. The effect comes as a result of the bill’s intention to outlaw the platform’s elevation of their products and services over their competitors.
In its attempt to reduce competition, the bill might force Google to separate its Workspace, YouTube, Google Ads, and other aspects to form separate businesses.
It will deter Google from showing its map on the search results whenever you search for a local business location. This would have an impact on all location based businesses such as restaurants and others. It will make it harder for restaurants to connect with potential customers and, on the flip side, will create a more frustrating, less intuitive search experience for customers who are searching for local restaurants near them.
Also, the bill will disable the Google Business Profile (formerly known as Google My Business) and YouTube videos from showing up in the Google search results. The changes will affect both the businesses and the customers by creating a gap between them.
Facebook is one of the leading digital tools used by business owners to promote their businesses- this is not news, right? It’s one of the low-cost marketing strategies where you can post your business basic information and easily reach out to your target clients. Facebook’s integration with Instagram provides an even better platform to reach out to a broad customer base. Small businesses cross-use the apps to their advantage.
However, the legislators argue that Facebook has dominated Instagram for its benefit. The bill requires that the integration between the two apps be banned. Therefore, if the bill is passed into law, Facebook will no longer show you your friends’ Instagram stories just above your news feed as it usually does.
Also, you’ll no longer be able to cross-post between the apps in a single touch. The bill demands that each of the apps remain independent. The change will see small businesses lose the benefits from the integration of the apps.
The bill will also prevent Facebook from showing its Marketplace and Groups on the same page with its News Feed.
Amazon offers an enhanced service known as Amazon Prime, which with $13 monthly; you get free shipment for some products. The service is enabled by a program called Fulfillment by Amazon, where sellers pay Amazon a certain fee per product in exchange for the company’s services. If you purchase items labeled Prime, Amazon assures delivery within the same day or two days.
As a business that sells on Amazon, if you wish, you can partner with other logistics companies for your deliveries. In this case, Amazon can’t assure the delivery time as the shipping is handled by a different company.
Recent statistics show that almost half of America’s population has subscribed to Amazon Prime membership.
If this Amazon service is banned, shipping costs will increase for both the business and the consumer. Although Amazon does not force its members to join Prime membership, this is the only way they’ll assure you of short-time deliveries. For this reason, some items are not labeled Prime.
Higher shipping costs may hurt small businesses which depend on Amazon’s free/low-cost shipping. The bill will ban Amazon Prime by;
- Averting them from labeling some items Prime
- Prevent the company from financing shipping
- Prevent highlighting of Prime products to its members on search results
The bill also demands that Amazon turns its storage and products, Amazon fulfillment tech and services, and its third-party seller marketplace into independent companies.
If passed, this antitrust bill will slow down innovation, disrupt consumers, and most likely, harm American technology leadership. Generally, the legislation will diminish the quality of targeted advertising by creating a gap between consumers and sellers. Small businesses will struggle to get noticed, an action that will hurt consumers instead of helping them. In doing so, the bill may leave consumers with fewer choices, actually limiting competition rather than broadening it.
If you wish to stay informed about legislative and regulatory issues, events, and advocacy opportunities related to your business, we encourage you to sign up for Google’s informational emails on these important topics.
Finally, as we always say, the digital advertising industry is constantly changing, and is not going anywhere anytime soon. All we can do is stay up on the latest changes and encourage and help businesses to adapt their marketing strategies as necessary.
If you’re in need of a digital advertising agency to help your business, contact us today.