When it comes to controversies and lawsuits, Big Tech companies like Facebook, Google, and Amazon always seem to be in the spotlight. A little more than a month ago, the U.S. Federal Trade Commission (FTC) filed a revised antitrust lawsuit against Facebook. Now, both Meta (formerly Facebook) CEO Mark Zuckerberg and Alphabet (Google’s parent company) CEO Sundar Pichai have been accused of being involved in an ad collusion plot.
In a fresh antitrust lawsuit filed by a coalition of state attorneys general, headed by Ken Paxton, Texas Attorney Journal, the two company chiefs have been accused of conspiring in programmatic ad markets in a project named â€œJedi Blueâ€. The project is said to have seen the two companies working together to curtail header bidding, which was predominantly supported by Facebook.
The complaint was first filed in December 2020. An updated and heavily redacted version was filed in November last year.
Based on the email exchanges within the companies, it was found that the project was reviewed in both the companies at the highest levels. The complaint further said that Pichai, Zuckerberg, and Facebook COO Sheryl Sandberg were personally involved in reviewing the project’s agreements. In one email, Sandberg told Zuckerberg that â€œthis is a big deal strategicallyâ€, and in another, she sought Zuckerberg’s approval to move forward.
Google and Meta Deny Claims
However, Google referred to its previous statementOpens a new window and denied that Pichai was personally involved in the project. Peter Schottenfels, a Google representative, said, â€œAG Paxton’s assertion isn’t accurate. We sign hundreds of agreements every year that don’t require CEO approval, and this was no different.â€
He further saidOpens a new window , â€œContrary to AG Paxton’s claims, the fact of this agreement was never a secret â€” it was well-publicized. It simply enables FAN and the advertisers it represents to participate in Open Bidding, just like over 25 other partners do. That helps increase demand for publisher ad space and helps publishers earn more revenueâ€.
Similarly, Meta, Facebook’s parent company, has also denied the claims, saying that the agreement with Google was not exclusive, and there were similar agreements with other bidding platforms as well. The spokesperson also said that it helped increase competition for ad placements and compensated publishers fairly.
Complaint Provides Evidence of Concerted Duopoly
However, the states attorney general had managed to dig up a few emails and passages where the two companies participated in a concerted duopoly. The complaint also quotes a 2015 email where Google employees feared that the company’s exchange might have to compete with a few other exchanges in the future.
A significant part of the lawsuit is based on the concessions made by Google to Facebook in this arrangement, which include longer timeout limits and lower fees during bidding. These concessions gave Facebook an advantage in winning the auctions.
An extract from the complaint states, â€œOne Facebook study in 2019 found that Facebook’s bids for in-app impressions won more frequently in Google-run auctions than they did on any other platform. At the same time, the average price Facebook paid per in-app impression was lower in Google-run auctions than it was on any other platform. This would be a puzzling result, to say the least, if Facebook faced the same competition for inventory across auction houses.â€
Schottenfels, however, denied Google was providing Facebook any advantage, saying, â€œFAN must make the highest bid to win a given impression. If another eligible network or exchange bids higher, they win the auction.â€
Why This Matters
Google’s ad bidding space is highly competitive, where only the eligible or highest bidders win the auction. Many businesses find it challenging to win bids in this space as it is already crowded. However, a collaboration between Google and Facebook amounts to anti-competitive behavior where they are using unethical ways to maintain their duopoly instead of giving a fair chance to other players.
This is not the first time these two companies are facing antitrust lawsuits. As already mentioned, Facebook is facing an antitrust complaint by FTC. At the same time, Google too is facing antitrust lawsuits claiming search manipulationOpens a new window and violating antitrust lawsOpens a new window .
Whether the complaint will stick in the court is yet to be seen.