HB5480 - Relating to competition and transparency in digital advertising.

      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 b [Text truncated for display. 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