Digital Ad Bill Gives The Attorney General Its Own Damages Fund

The text as introduced · 2,849 words

By: Little
H.B. No. 5480

A BILL TO BE ENTITLED

AN ACT

relating to competition and transparency in digital advertising.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Title 2, Business & Commerce Code, is amended by

adding Chapter 18 to read as follows:

CHAPTER 18. COMPETITION AND TRANSPARENCY IN DIGITAL ADVERTISING

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 18.001. DEFINITIONS. In this chapter:

(1) "Brokerage customer" means a person who purchases

or sells digital advertisements, or directly related goods or

services, through a buy-side brokerage or a sell-side brokerage.

(2) "Buy-side brokerage" means a person in the

business of effecting transactions on digital advertising

exchanges, including by offering software or services that assist

in serving or displaying digital advertisements, for other buyers.

(3) "Digital advertisement" means an advertisement

that is served electronically over a computer network, including

the Internet.

(4) "Digital advertising exchange" means a person who

constitutes, maintains, or provides a marketplace for or

facilitates bringing together buyers and one or more sellers of

digital advertisements, or for otherwise performing with respect to

digital advertising the functions commonly performed by a digital

advertising marketplace.

(5) "Digital advertising revenue" means the greater

of:

(A) global revenue derived from or directly

related to the operation of a digital advertising exchange, a

buy-side brokerage, or a sell-side brokerage; or

(B) the largest of:

(i) the sum of the clearing prices of all

digital advertisements bought or sold from or through a digital

advertising exchange;

(ii) the total value of the gross

advertising spending managed by a buy-side brokerage; or

(iii) the total value of the gross

advertising sales managed by a sell-side brokerage.

(6) "Divestiture deadline" means the 30th day after

the date on which the attorney general approves or denies a required

divestiture.

(7) "Own" means ownership whether directly or

indirectly or wholly or partly. The term includes operation or

control, whether directly or indirectly or wholly or partly.

(8) "Person" includes:

(A) a subsidiary of an entity; and

(B) a corporate parent of an entity.

(9) "Required divestiture" means a divestiture, sale,

or other transaction undertaken to comply with this chapter. The

term does not include an action required by a state or federal

court.

(10) "Sell-side brokerage" means a person in the

business of effecting transactions on digital advertising

exchanges, including by offering software or services that assist

in serving or displaying digital advertisements, for other sellers.

(11) "Third party," for a person subject to this

chapter, means an entity that:

(A) does not own or is not owned by that person;

and

(B) is not affiliated with that person through

direct or indirect ownership or control.

Sec. 18.002. CONSTRUCTION OF CHAPTER. This chapter may not

be construed to:

(1) prohibit a person from:

(A) selling the person's own inventory of

advertising space if:

(i) the inventory was not acquired solely

for resale purposes, except to monetize the person's own content or

intellectual property; and

(ii) the person does not also assist a third

party in the sale or purchase of advertising space, other than

purchasing advertising space from that person; or

(B) buying inventory to market the products or

services of the person;

(2) prohibit a person from, consistent with antitrust

law, entering into a joint venture or other collaboration to

prevent harm from spam, fraud, or other forms of abuse in digital

advertising; or

(3) require the disclosure of information if the

disclosure would violate a law of this state, the United States, or

a foreign country.

SUBCHAPTER B. PROHIBITIONS AND REQUIREMENTS

Sec. 18.051. PROHIBITED PRACTICES. A person with more than

$20 billion in digital advertising revenue for the preceding

calendar year may not:

(1) own a digital advertising exchange if that person

owns either a buy-side brokerage or a sell-side brokerage or is a

seller of digital advertising space;

(2) own a sell-side brokerage if that person owns a

buy-side brokerage; or

(3) own a buy-side brokerage or a sell-side brokerage

if that person is also a buyer or seller of digital advertising

space.

Sec. 18.052. GENERAL REQUIREMENTS. A person that is a

buy-side brokerage or sell-side brokerage with more than $5 billion

in digital advertising revenue for the preceding calendar year

shall:

(1) in the course of providing services as a

brokerage, use reasonable diligence, care, and skill to act in the

best interest of the brokerage customer and may not put the

brokerage's own interest ahead of the interest of the brokerage

customer; and

(2) seek the most favorable terms reasonably available

under the circumstances for each order transaction of the brokerage

customer.

Sec. 18.053. DIGITAL ADVERTISING REVENUE ADJUSTMENT. (a)

In this section, "consumer price index" means the average over a

calendar year of the Consumer Price Index for All Urban Consumers

(CPI-U), U.S. City Average, published monthly by the United States

Bureau of Labor Statistics, or its successor in function.

(b) Beginning in 2027, on January 1 of each year, the

attorney general may adjust the digital advertising revenue amount

prescribed by Sections 18.051 and 18.052 by an amount equal to the

percentage increase, if any, in the consumer price index in digital

advertising revenue for the preceding calendar year.

(c) The attorney general shall make the determination

required by this section and may adopt rules related to making that

determination.

Sec. 18.054. TRANSPARENCY REQUIREMENTS. (a) On written

request from a brokerage customer, a buy-side brokerage or

sell-side brokerage shall provide to the customer, within a

reasonable time, information sufficient to permit the customer to

verify the brokerage's compliance with Section 18.052.

(b) The information disclosed under Subsection (a) must

include, if requested and to the extent the information is

collected by the brokerage in the ordinary course of business:

(1) if a sell-side brokerage is providing information

to a sell-side brokerage customer:

(A) a unique and persistent identifier that

identifies each unique digital advertising space for sale;

(B) for each identifier described by Paragraph

(A), all bids received and, for each bid received:

(i) the bid submitted to the digital

advertising exchange on behalf of the buy-side brokerage customer;

(ii) the winning price;

(iii) the uniform resource locator or other

property identifier at the lowest level of granularity;

(iv) the identity of the digital

advertising exchange or other digital advertising venue returning

the bid;

(v) the date and time that the bid response

was received in microseconds or a lower level of granularity;

(vi) the web domain associated with the

advertising creative;

(vii) the advertising creative size and

format; and

(viii) whether the bid won the seller's

impression;

(C) the nature of any data collected or derived

from the brokerage customer or any user or customer of the brokerage

customer and the ways in which that data is used by the sell-side

brokerage;

(D) the order or bid routing practices or

processes, including any material exceptions to the standard

practice of the brokerage; and

(E) the source and nature of any compensation

paid or received in connection with transactions; and

(2) if a buy-side brokerage is providing information

to a buy-side brokerage customer:

(A) all bids won by the buy-side brokerage

customer, and for each bid won:

(i) the maximum allowed bid, if any, of the

advertiser;

(ii) the uniform resource locator or other

property identifier at the lowest level of granularity;

(iii) the date;

(iv) the digital advertising exchange;

(v) the web domain associated with the

advertising creative;

(vi) the advertising creative size and

format;

(vii) the winning price;

(viii) the bid submitted to the digital

advertising exchange on behalf of the buy-side brokerage customer;

and

(ix) if possible, whether the advertisement

served and whether the advertisement rendered;

(B) the order or bid routing practices or

processes; and

(C) the source and nature of any compensation

paid or received in connection with transactions.

Sec. 18.055. RETENTION OF RECORDS. (a) A brokerage shall

retain the records specified in Section 18.054(b), as applicable,

if collected by the brokerage in the ordinary course of business,

until the later of:

(1) the 90th day after the date the data is collected;

or

(2) the date the brokerage provides the data to a

customer in response to a request submitted by that customer under

Section 18.054(a), if the request was submitted before the 90th day

after the date the data was collected.

(b) A brokerage shall retain billing information for a

brokerage customer until the first anniversary of the collection of

that information.

Sec. 18.056. USER PRIVACY. (a) When providing information

to a brokerage customer in response to a request authorized by

Section 18.054(a), the brokerage shall, to the greatest extent

possible consistent with the purpose of this chapter, anonymize,

hash, or otherwise render the information incapable of being tied

to an individual Internet user.

(b) A brokerage customer may not use data or information

received in response to a request made under Section 18.054(a) for

any purpose other than:

(1) verifying the brokerage's compliance with Section

18.052; or

(2) bringing an action under Section 18.105.

Sec. 18.057. POLICIES AND PROCEDURES FOR INTERNAL

COMPLIANCE. A buy-side brokerage and sell-side brokerage shall

establish, maintain, and enforce a written policy and procedures

reasonably designed to ensure compliance with the requirements of

this subchapter.

Sec. 18.058. POLICIES AND PROCEDURES FOR EXTERNAL

COMPLIANCE. A buy-side brokerage, sell-side brokerage, digital

advertising exchange, or other person when acting as a buyer or

seller of digital advertising, as applicable, that is not subject

to the prohibitions under Section 18.051 shall establish, maintain,

and enforce a written policy and procedures reasonably designed to

ensure that those persons operate separately from and independently

of one another and transact business with one another at arm's

length.

Sec. 18.059. FAIR ACCESS DUTY. A digital advertising

exchange shall provide to each buyer and seller in the exchange fair

access, including access with respect to operations of the

exchange, colocation, any technology systems or data, information

related to transactions, service, or products offered, exchange

processes, and functionality.

Sec. 18.060. TIME SYNCHRONIZATION. A digital advertising

exchange, buy-side brokerage, or sell-side brokerage shall

synchronize and maintain the exchange's or brokerage's business

clocks at a minimum to within a two-millisecond tolerance of the

time maintained by the atomic clock of the National Institute of

Standards and Technology.

Sec. 18.061. DATA OWNERSHIP. All records pertaining to an

order solicited or submitted by a brokerage customer, and the

subsequent result of the order, remain the property of the

brokerage customer, including any bid solicited from or submitted

to a digital advertising exchange, unless the information is

publicly available.

Sec. 18.062. ROUTING PRACTICES DISCLOSURE. A buy-side

brokerage or sell-side brokerage shall:

(1) make publicly available for each calendar quarter

a report on the order routing practices of the buy-side brokerage or

sell-side brokerage, as applicable, for digital advertisements

during that quarter broken down by calendar month; and

(2) retain the report described by Subdivision (1)

posted on an Internet website that is free and readily accessible to

the public until the third anniversary of the date the report is

posted.

Sec. 18.063. FORMAT. A report made available under Section

18.062 must:

(1) be rendered in a format that is readily

informative to the average brokerage customer; and

(2) include for the 10 venues to which the largest

number of total bid requests or bid responses were routed for

execution and for any venue to which five percent or more of bid

requests or bid responses were routed for execution:

(A) the total number of bids routed;

(B) the total number of bids executed;

(C) the fill rate of bids;

(D) the average net execution fee or rebate per

1,000 impressions;

(E) the average time in milliseconds between when

a bid request is sent and when a bid response is received; and

(F) the value and form of any compensation given

in exchange for routing or execution.

Sec. 18.064. CERTIFICATION. A digital advertising

exchange, buy-side brokerage, or sell-side brokerage shall

annually certify to the attorney general that the digital

advertising exchange has complied with the requirements of this

subchapter.

SUBCHAPTER C. ENFORCEMENT

Sec. 18.101. ENFORCEMENT BY THE ATTORNEY GENERAL. (a) The

attorney general may bring an action on behalf of persons in this

state injured in their business or property by a violation of this

chapter.

(b) In an action brought under this section, the attorney

general is entitled to:

(1) obtain injunctive relief; and

(2) recover actual damages sustained by the injured

persons.

Sec. 18.102. DAMAGES. (a) In an action brought under

Section 18.101, a court may award on a prompt motion by the attorney

general simple interest on actual damages awarded under that

section.

(b) A court may not award any damages under this subchapter

that are duplicative of damages awarded before the date of the award

in a separate civil action pertaining to the same conduct and

injured party.

(c) A court awarding damages to a person in a civil action

after the date of an award of damages under this subchapter that

would be duplicative of damages awarded to the attorney general on

behalf of the person shall direct that the damages must first be

paid by the office of the attorney general from amounts in the

antitrust consumer damages fund under Section 18.103 and, to the

extent the damages are not fully paid by the office of the attorney

general from amounts in that fund, shall then be paid by the

defendant.

Sec. 18.103. ANTITRUST CONSUMER DAMAGES FUND. (a) The

antitrust consumer damages fund is a special fund in the state

treasury outside the general revenue fund to be administered and

used by the attorney general for the purposes authorized by this

chapter.

(b) Notwithstanding any other law, any amounts received by

the attorney general under an award under this subchapter shall be

deposited in the fund and shall be available to the attorney

general, without further appropriation, for distribution to

persons harmed by a violation of this chapter.

(c) Effective on the 10th anniversary of the date on which

an award is received under Section 18.102, the unobligated balances

in the fund of amounts that were received under the award are

rescinded and shall be deposited in the general revenue fund of the

state treasury.

Sec. 18.104. DIVESTITURE ENFORCEMENT. The attorney general

may bring an action on behalf of this state and may obtain

injunctive relief on showing by a preponderance of the evidence

that the defendant has:

(1) violated Section 18.106; or

(2) undertaken a required divestiture that

unnecessarily harms or threatens competition in any market in this

state.

Sec. 18.105. PRIVATE RIGHT OF ACTION. (a) A brokerage

customer in this state harmed by a knowing violation of Subchapter B

may bring an action to obtain injunctive relief, if appropriate,

and to recover damages in the amount of the greater of:

(1) $1 million for each month in which a violation of

Subchapter B occurred and reasonable attorney's fees; or

(2) actual damages and reasonable attorney's fees.

(b) No person subject to this chapter may require a class

action waiver for a claim under this chapter, including for

arbitration of a claim under this chapter.

(c) A person harmed by a violation of Section 18.051 may

bring a civil action for a violation of that section any time after

the later of:

(1) the expiration of any applicable divestiture

deadline; or

(2) the expiration of the deadline under Section

18.106 if no filing has been made.

Sec. 18.106. DIVESTITURE. (a) An agreement or other

document setting out the terms of a required divestiture must be

filed with the attorney general not later than the later of:

(1) the effective date of the agreement or other

document; or

(2) the earlier of:

(A) the 30th day after the date on which an

agreement making a required divestiture under this chapter is

executed; or

(B) the 180th day after meeting a criterion

specified by Section 18.051.

(b) The attorney general shall approve a required

divestiture on a showing by the person making the divestiture that

the terms of the divestiture, including the qualifications of any

counterparties to the divestiture, will not unnecessarily harm or

threaten competition in any market in this state.

(c) The attorney general shall grant or deny approval of a

required divestiture, unless agreed to by the parties, not later

than the later of:

(1) the 60th day after receipt of all information

obtained under Subsection (f); or

(2) the 60th day after receipt of the filing made under

Subsection (a).

(d) A divestiture must be completed not later than the

divestiture deadline.

(e) The attorney general shall issue and maintain guidance

on the divestiture process under this section and the certification

requirement under Section 18.064.

(f) The attorney general may request or issue a civil

investigative demand under Section 15.10 for documents from any

person involved in a required divestiture to determine the

competitive effects of the divestiture.

SECTION 2. The attorney general shall issue guidance as

required by Section 18.106(e), Business & Commerce Code, as added

by this Act, not later than the 120th day after the effective date

of this Act.

SECTION 3. This Act takes effect September 1, 2025.