US lawsuit claims Google, Facebook cooperated to undermine ad competition

Google

Facebook and Alphabet’s Google, the two largest players in online marketing, used a series of deals to combine their market power illegally, Texas and nine other states alleged in a lawsuit against Google on Wednesday.

Google and Facebook compete heavily in online ad earnings, together capturing over half of the industry globally. The two players agreed in a publicized deal in 2018 to start providing Facebook’s advertiser customers the choice to place ads within Google’s community of publishing partners, the complaint alleged. Executives at the highest level of the companies signed off on the deal, according to the complaint.

For instance, a sneaker site that uses software from Google to market ads could end up generating revenue from a footwear retailer that bought ads on Facebook.

But what Google did not declare publicly is that Facebook consented to back down from supporting competing software, which publishers had developed to dent Google’s market power, the complaint alleged.

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Facebook

“Facebook decided to dangle the threat of competition in Google’s face and then cut a deal to manipulate the auction,” it said, citing internal communications.

In trade, the states said, Facebook received various advantages, such as access to Google data and coverage exceptions which enabled its customers to get more ads placed than clients of additional Google partners could.

Google called the Texas lawsuit “meritless.” Facebook didn’t immediately respond to a request for comment.

The complaint also alleged that Google and Facebook participated in adjusting prices of ads and have continued to collaborate, though the section was heavily redacted and left it unclear just how and when the companies supposedly used their “market allocation agreement.”

However, it said that “given the scope and extensive nature of cooperation between the two companies, Google and Facebook were highly aware that their agreement could trigger antitrust violations.

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The states didn’t accuse Facebook of all wrongdoing in the complaint.

The US Department of Justice also was exploring the arrangement between the firms as part of its antitrust probe into Google, six individuals familiar with the investigation said. However, the Justice Department, which sued Google over separate behaviour in October, has yet to deliver any allegations associated with this 2018 deal.

A Justice Department spokeswoman couldn’t immediately be contacted for comment.

The team at Platform Executive hope you have enjoyed this news article. Initial reporting via our official content partners at Thomson Reuters. Reporting by Paresh Dave in Oakland, California, and Katie Paul in Palo Alto, California. Editing by Lisa Shumaker.

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