The revelations stem from an antitrust lawsuit filed by Texas attorney general Ken Paxton on behalf of 10 states. The claims accuse Google of unlawfully hatching a deal with Facebook to manipulate the ad exchange.
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A heavily redacted draft had previously been made public, but The Wall Street Journal said it saw an unredacted version. In it, the tech giants — Silicon Valley’s biggest rivals in online ads — allegedly struck a tit-for-tat bargain in 2018, in which Facebook would reportedly hold off on competing with Google in return for preferred treatment in the search giant’s ad auctions.
According to the report, the deal also included a pledge by both companies that they would “cooperate and assist one another” if the agreement ever drew scrutiny.
Neither Facebook nor Google immediately responded to a WWD request for comment. But a Google spokesperson did tell the media that the deal has been mischaracterized: “The idea that this was a secret deal is just wrong,” the person told a reporter. “We’ve been public about this partnership for years.”
While the fundamental terms may be in a gray area, what may be more problematic is the added cooperation pact. Corporate lawyers are no strangers to figuring out how to legitimize or rationalize agreements between companies, but that’s harder to defend if the parties knowingly enter a questionable deal. In that context, the acknowledgement that their arrangement could draw antitrust attention could be dicey, especially these days.
Antitrust regulators have been tightening the screws on tech companies in recent months — with inquiries and lawsuits in the U.S. and beyond, including the Europe Union, India and South Korea, while the EU and the U.K. have taken steps to propose new legislation.
This crackdown has ensnared Facebook and Google repeatedly, but they’re far from alone. Regulators are also eyeing Amazon for its e-commerce marketplaces practices — the EU just brought a new lawsuit against the e-tailer last month accusing the company of using seller data to compete against them — as well as Apple over policies that may undercut competing developers in its App Store.
Update: A Google spokesperson responded after publication with the following statement, included here in its totality:
“AG Paxton’s ad tech claims are inaccurate. We don’t manipulate the auction and Facebook’s participation in Open Bidding doesn’t prevent the company from participating in header bidding or any other similar auction. In fact, Facebook participates in several similar auctions on rival platforms. And the idea that this was a secret deal is just wrong. We’ve been public about this partnership for years.
“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. The whole goal of Open Bidding is to work with a range of ad networks and exchanges that are important to our publisher partners. Likewise, FAN is involved in a number of similar auctions / exchanges on platforms offered by rivals, such as Fyber, MoPub (Twitter’s ad exchange), Applovin MAX and Ironsource.”