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An illegal agreement between Google and Facebook to display online advertising is said to have been approved at the highest level in both US companies. Texas, 14 other US states and Puerto Rico raise this allegation in a complaint made public on Friday as part of their relevant competition lawsuit against Google. Facebook CEO Mark Zuckerberg and Google CEO Sundar Pichai have personally agreed to a secret deal that gave the social network a head start in the search engine giant’s online advertising auctions.
Competition largely eliminated
The coalition, led by Texas Attorney General and Attorney General Ken Paxton, filed its lawsuit back in December 2020. It described years of systematic illegal activities ranging from lies to technical tricks to a cartel with Facebook. Part of the submission is the Jedi Blue project. Accordingly, Google assured the social network that it would win a certain percentage of advertising auctions.
A large part of the multi-billion dollar turnover in the online advertising industry is generated on auction marketplaces such as Google’s. This is primarily about so-called programmatic advertising, i.e. computer-based, individualized buying and selling as well as the control of advertising space in real time (real-time bidding). Google and Facebook are the two major players in the online banner market. They are said to have largely eliminated the competition with their agreement.
Bosses were directly involved
It was already known that Philipp Schindler, Chief Business Officer (CBO) and board member at Google, and Sheryl Sandberg, Chief Operating Officer (COO) of Facebook, signed the Jedi Blue deal in 2018. This is now underpinned by the new lawsuit, which is reported by US media such as the Wall Street Journal and Politico. The names themselves are blacked out, but not the entrepreneurial job descriptions of the two chief negotiators of the agreement.
In the expanded court filing, the states further allege that Sandberg and her team directly involved Zuckerberg. They described the planned agreement as a “strategically important deal”. An email is said to have gone to the Facebook boss with the announcement: “We are almost ready to sign and need approval to move forward.” According to the reports, the documents also say: “Google CEO Sundar Pichai has also personally approved the terms of the agreement.”
Allegations dismissed as “legal manoeuvre”.
The states had already updated their lawsuit in November. At that time, however, only a heavily redacted version of it had been published. An update with more openly legible passages followed on Friday after a judge in a US federal court in New York ruled that the additional details should be made public. It had already emerged from the case that Google preferred itself in the advertising market as part of the “Bernanke” project and is said to have earned an additional 230 million US dollars in 2013 alone.
A Google spokesman dismissed the additional allegations as Paxton’s unfortunate legal maneuver: Even with the third attempt, the lawsuit still contained many inaccuracies and was not legally tenable. “Our advertising technologies help websites and apps to finance their content,” the group said. This also enables small companies to “reach customers all over the world”. In addition, there is strong competition in online advertising, “which has lowered ad tech fees and expanded the options for publishers and advertisers”.
Google and Facebook deny illegal agreements
Google also denied that Pichai was directly involved. The spokesman stressed, “We sign hundreds of agreements each year that do not require CEO approval, and this was no different.” The group will ask the competent court next week to dismiss the lawsuit.
Facebook, which now operates as Meta, again denied illegal agreements. A company spokesman spoke of a “non-exclusive bidding agreement with Google”. Similar agreements exist with other advertising platforms. This would have helped “increase competition for ad placements”. Such business relationships allowed Meta to offer advertisers added value while “fairly compensating” publishing partners. This leads to “better results for everyone.” Meta is not a defendant in the lawsuit, but faces another antitrust lawsuit from the US government.
(tw)
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