The Known Limits Politicians. Google & Facebook Don’t Have That Luxury

Sen. Mike Lee is looking into the past to the peril of American businesses. As he attacks Google and Facebook’s perceived dominance in the AdTech sector with his America Act, Lee reminds us that politicians are invariably constrained by the known.

To understand the danger of Lee’s legislation, stop and consider author and writer Bryan Burrough. He recalls earning in the six figures per article written for Vanity Fair from 1992-2017, “a halcyon era for magazines.”

Time was that magazines could sell hundreds of pages of expensive ads to business brands more than eager to reach acquisitive magazine readers. Vanity Fair not only offered “eyeballs,” but well-to-do ones. Burrough was paid a half million per year because editor Graydon Carter was paid millions per year, while the brands that bought ads in Vanity Fair earned even more in sales to and visibility with readers of means.

Which explains the title of Carter’s new memoir: When the Going Was Good is a look back to how things were in the once booming magazine business. Expensive ads formerly paid for enormous amounts of entertaining and informative writing by people like Burrough. Only for things to change quickly.

In business it’s always this way. Profits are invariably competed away. In the words of Jeff Bezos, “your margin is my opportunity.” An internet that Bezos was so instrumental in mainstreaming proved the competitor and margin-crusher for magazines.

As Dana Brown (a longtime employee of Carter) explained it in his own memoir, Dilettante, while Facebook was “able to target advertising at very specific demographics and then show advertisers actual figures of who saw the ad, who clicked on it, and who made the purchase,” those in magazines who were not “data people” could sell a magazine ad for $100,000, talk up the demographics of the readership, but not much more. Well, there you go.

In a very short time, the ad landscape was turned on its head, and in the process magazines wholly reliant on the sale of expensive ads shrank in terms of page count and relevance. In commerce, the present is always the past. Google, Facebook, and others invented a future of advertising that few, including magazine editors, saw.

The above truth is crucial, and it’s seemingly what Sen. Lee is missing. Much like the magazine executives, editors and writers from a gold-plated past, Lee imagines that the ad market of today will resemble that of tomorrow, a year from now, and ten years from now. Lee’s “Big Tech” targets can’t be so shortsighted. They don’t have the luxury to be so shortsighted.

Paraphrasing a popular quip about relationships, how you’re rendered irrelevant is how you rendered past competition irrelevant. Google, Facebook and other technology giants of today are being attacked by Lee for having had the temerity to discover an advertising future that few saw. Instead of making them the enemy, Lee should be celebrating these tech giants for having had such foresight. Just the same Lee should recognize, as Facebook and Google do, that tomorrow in business is something else altogether, particularly as China’s greatest technological minds get to work themselves on competing away margins.

Instead of legislating against the U.S.’s greatest businesses, Lee and other members of the U.S. political class should be removing barriers to their ability to innovate, and in the process freeing them to find a future of advertising that history says will not resemble the one of the present. It’s a reminder that with Lee’s America Act, he’s staring into the past while blinding American competitors going to great lengths to see the future.