Google and Facebook reached a secret deal in 2018 in which Facebook promised not to compete with Google’s online advertising tools in return for special treatment in Google-run ad auctions, claims a lawsuit filed by Texas and nine other GOP-led states.
“Google is a trillion-dollar monopoly brazenly abusing its monopolistic power, going so far as to induce senior Facebook executives to agree to a contractual scheme that undermines the heart of [the] competitive process,’” argues Texas Attorney General Ken Paxton.
As described in the suit, Facebook must spend at least $500 million each year in Google-run ad auctions. In return, Facebook is guaranteed to win a fixed percentage of those actions. This is a cheap deal compared to direct competition.
Most concerning is a provision of the deal in which both companies agree to “cooperate and assist each other in responding to any antitrust action.” This agreement proves that both companies knew the deal was illegal.
In its defense, Google said that agreements over antitrust threats are common and claimed that its deal with Facebook wasn’t a secret (even though the deal went by the code name “Jedi Blue”).
“We don’t manipulate the auction,” said a spokesperson. “There’s nothing exclusive about [Facebook’s] involvement and they don’t receive data that is not similarly made available to other buyers.”
Facebook issued a similar statement, claiming that its deal with Google ‘does not harm competition or suggest misconduct in any way.’
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Google has long been criticized for using consumer-facing platforms like YouTube to eliminate or control the software that typically acts as a “middleman” for buying and selling ads on the Internet. The deal with Facebook (its largest competitor) takes that effort one step further.
As noted by the Wall Street Journal, “Google owns the dominant tool at every link in the complex chain between online publishers and advertisers, giving it undue power over the monetization of digital content.”
The states’ lawsuit seeks monetary damages from Google and asks the court to rein in Google’s behavior in order to “restore competitive conditions in the relevant markets.”
States joining Texas in the case include: Idaho, Arkansas, Indiana, Mississippi, Kentucky, North Dakota, Missouri, South Dakota, and Utah. Google faces two other lawsuits – one filed by 38 state attorneys general and another by the Department of Justice – regarding its monopoly over the Internet search market.
Author’s Note: We have no reason to doubt these accusations. It should come as no surprise to learn that Facebook, Google, and other Big Tech companies maintain preferential agreements that harm consumers and competitors.
In my day they broke up AT&T because they were a monopoly and now you have these media giants getting away with everything. Go figure.
Both Google and Face Book ought to be broken up and accused of collusion.