On Friday (14), a coalition of attorneys general from 15 US states released details of a lawsuit filed against Google. According to the lawsuit, the company would have signed a secret agreement with Facebook that gave potentially illegal advantages to the social network in web ad auctions.
The lawsuit, led by Texas Attorney General Ken Paxton, accused Google of monopolizing the market for online advertising and the tools used to buy, sell and display ads on the web. The lawsuit was initially filed in 2020, but last November the complaint was updated with additional details. Now, the judge overseeing the case has ordered parts of the allegations to be revealed to the public.
The additional complaints allege that Facebook founder Mark Zuckerberg and Google CEO , Sundar Pichai, personally approved a secret deal that gave the social network an edge in the search giant’s online advertising auctions. In return, Facebook has pledged to give up its own web ad plans like Google’s. Today, both companies control more than half of the digital ad market, which moves approximately US$491 billion.
Among the terms of the agreement, which would have been signed in September 2018, Facebook agreed to reduce its involvement in ad management in exchange for the “information, speed and other benefits” it would obtain using Google’s ad exchange platforms. One of the biggest advantages described in the case was an alleged advance quota of how many ad auctions Facebook would win from other competitors.
The new document also alleges that Sheryl Sandberg, COO ) of Meta, owner of Facebook, helped negotiate the deal, dubbed “Jedi Blue”, considering the deal as “a big strategic deal”. The document also alleges that Pichai personally signed the terms of the agreement
Earlier versions of the complaint had revealed the existence of Jedi Blue, but the latest details show that the pact between Google and Facebook was negotiated and approved at the highest levels of both companies. Prior to joining Facebook, Sandberg was a top executive at Google responsible for online sales.
Context
Sites that sell ad space as a form of revenue — that is, most of them — rely on a specific intermediary called an “ad server” to help them get the most return (dollar per ad) from selling the space advertising.
A 2020 survey by Advertiser Perceptions found that 60% of top ad sales professionals place Google’s native server, called Google Ad Manager, as their primary partner.
Until 2017, if a website wanted to generate good ad revenue, using the Google Ad Manager platform was one of the only ways. The invention of a new tool, called “header bidding”, or “header auction”, allowed sites to sell their advertising space directly, removing the dependence on intermediary tools, such as Google.
At this point, Facebook soon announced that it would make the social network compatible with this technology, which would mean that websites selling their ad spaces could take advantage of Facebook’s many features. In return, they were supposed to hand over a small part of the financial return to the company. This ended up placing Facebook as a direct competitor of Google in the field of online ads.
What the giants say
A Google spokesman, Peter Schottenfels, told the international press that the lawsuit was “an unfortunate legal maneuver” by the Texas attorney general. The company said it will ask for the case to be dropped.
“Despite Attorney General Paxton’s three attempts to rewrite his complaint, it is still riddled with inaccuracies and lacks legal merit.” said Schottenfels. “Our online advertising technologies help websites and apps fund their content and enable small businesses to reach customers around the world. There is vigorous competition in online advertising, which has reduced ad technology rates and expanded options for websites and advertisers.” , he added.
Google also denied that its chief executive was involved in passing the deal, but did not deny the existence of the deal itself. “We sign hundreds of agreements every year that do not require CEO approval, and this one was no different,” Schottenfels said.
Meta, in turn, confirmed the existence of the agreement. and defended him. It is worth mentioning that Meta is not a defendant in the lawsuit.
“Meta’s non-exclusive agreement with Google and the similar agreements we have with other management platforms have helped to increase competition by ad placements,” said spokesman Christopher Sgro, in a statement sent to foreign media.
“These business relationships allow Meta to provide more value to advertisers, while in which it remunerates websites and content producers fairly, bringing better results for everyone.”
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