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.