Two of the largest ad-powered titans of the web are Google and Facebook.
And this time, the two giant companies have agreed to “cooperate and assist one another” if they ever faced an investigation into their online advertising business, and “promptly and fully inform the Other Party of any Governmental Communication Related to the Agreement.”
The news came from The Wall Street Journal, which said it reviewed an unredacted draft version of an antitrust lawsuit filed against Google.
The lawsuit was filed by a group of 10 states led by Texas Attorney General Ken Paxton, accusing the company of anticompetitive practices in online advertising.
The complaint alleges that Google made an unlawful deal with Facebook in September 2018 to manipulate advertising auctions, in which Facebook agreed not to compete with Google’s online advertising tools in return for special treatment when it used them.
Google used language from 'Star Wars' as a code name for the deal, according to the lawsuit, which was a term redacted from the draft and changed it to “Jedi Blue.”
Here, Facebook is locked into spending a minimum of $500 million per year to run ads on Google "to win a fixed percent of those auctions,” the draft version wrote.
According to an internal Facebook document, the social giant described the price offered by Google as “relatively cheap”, if compared to others in the competition.
For many years, Google has been criticized for its monopolistic online business, and how the company leveraged its powerful consumer-facing platforms, like Google Search and YouTube, as a way to entice advertisers to spend money in what scrutiny may see as a less visible business.
Led by Sundar Pichai, Google has been one of the top in the food chain in terms of creating the middlemen for buying and selling ads across the entire web.
And Facebook here, is just another middleman.
But unlike others, Facebook is too powerful for Google that it's considered its “largest potential competitive threat” if faced heads on. This is why Google allegedly offered Facebook a deal.
Google and Facebook are no strangers to lawsuits. And this is yet another they need to deal with.
But in this case, neither of the two were aware that the agreement could attract antitrust investigations.
A Google spokesperson said that the “claims are inaccurate. We don’t manipulate the auction,” adding that the deal wasn’t at all secret and that Facebook participates in other ad auctions.
“There’s nothing exclusive about [Facebook’s] involvement and they don’t receive data that is not similarly made available to other buyers.”
"We've been public about this partnership for years," the spokesperson said, directing Business Insider to a brief PR announcement about Google's Open Bidding ad tech integrating with Facebook's advertising service Facebook Audience Network from December 2018.
"Facebook Audience Network (FAN) is one of over 25 companies participating in our Open Bidding program. There's nothing exclusive about their involvement and they don't receive data that is not similarly made available to other buyers," Google's spokesperson said.
The redacted lawsuit also made no mention of Facebook COO Sheryl Sandberg. According to the draft version, it was Sandberg who signed the deal with Google. The draft version also cites an email where she told CEO Mark Zuckerberg and other executives: “This is a big deal strategically.”
As for Facebook, the social giant also disputed the allegations, saying that its agreements for bidding on advertising are meant to benefit advertisers, publishers and small businesses.
“Any allegation that this harms competition or any suggestion of misconduct on the part of Facebook is baseless,” a Facebook spokesperson said.
