Name: Google, Facebook made secret deal to divvy up market, Texas alleges
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Google, Facebook made secret deal to divvy up market, Texas alleges

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Lawsuit says the companies agreed in secret in 2018 to carve up the advertising market between them.“Google offered Facebook information advantages, speed advantages, and other prioritizations, to the detriment of other auction participants,” the lawsuit said. | Paul Sakuma/AP PhotoGoogle and Facebook, the No. 1 and No. 2 players in online advertising, made a secret illegal pact in 2018 to divide up the market for ads on websites and apps, according to an antitrust suit filed Wednesday against the search giant.The suit — filed by Texas and eight other states — alleges that the companies colluded to fix prices and divvy up the market for mobile advertising between them.The allegation that Google teamed up with Facebook to suppress competition mirrors a major claim in a separate antitrust suit the Justice Department filed against the company in October: that Google teamed up with Apple to help ensure the continued dominance of its search engine.Such allegations provide some of the strongest ammunition yet to advocates who argue that the U.S. major tech companies have gotten too big and are using their power — sometimes in conjunction with each other — to control markets.Many of the details about the Google-Facebook agreement, including its specific language, are redacted from the complaint. But the states say it “fixes prices and allocates markets between Google and Facebook as competing bidders in the auctions for publishers’ web display and in-app advertising inventory.”The complaint alleges that the agreement was prompted by Facebook’s move in 2017 to use “header bidding” — a technology popular with website publishers that helped them increase the money they made from advertising. While Facebook sells ads on its own platform, it also operates a network to let advertisers offer ads on third-party apps and mobile websites.Adam Heimlich, CEO of advertising technology firm Chalice , described header bidding as a hack that helped website publishers consider multiple bids at once. Google did not use the technology.Header bidding proved “that publishers made more money by circumventing Google,” Heimlich said Wednesday. “Google’s refusal to have a unified auction was keeping publishers from making as much as they could.”Google was concerned about the move to header bidding, the complaint alleges, because it posed an “existential threat” to its own advertising exchange and limited the ability of the search giant to use information from its ad-buying and selling tools to its advantage. Those tools let Google cherry pick the highest value advertising spots and ads, according to the complaint.Within months of Facebook’s announcement, Google approached it to open negotiations, the complaint alleged, and the two companies eventually cut a deal: Facebook would cut back on the use of header bidding and use Google’s ad server. In exchange, the complaint alleges that Google gave Facebook advantages in its auctions.“Google offered Facebook information advantages, speed advantages, and other prioritizations, to the detriment of other auction participants,” the states said. “The agreement allocated a portion of publishers’ auction wins to Facebook, subverting the free operation of supply and demand.”Facebook declined to comment about the allegations in the Texas lawsuit. Google said the suit was “baseless” and that the specific allegations regarding its agreement with Facebook are inaccurate, adding that Facebook does not receive special advantages.Jason Kint, CEO of Digital Content Next, a trade association for digital media companies that includes Disney, the New York Times and other as members, called the details of the Google-Facebook agreement “disturbing” and said the two companies were “basically stealing money from publishers.”“I can’t imagine how many journalists’ jobs were taken by this alleged conduct,” he said.

Lawsuit says the companies agreed in secret in 2018 to carve up the advertising market between them.“Google offered Facebook information advantages, speed advantages, and other prioritizations, to the detriment of other auction participants,” the lawsuit said. | Paul Sakuma/AP PhotoGoogle and Facebook, the No. 1 and No. 2 players in online advertising, made a secret illegal pact in 2018 to divide up the market for ads on websites and apps, according to an antitrust suit filed Wednesday against the search giant.The suit — filed by Texas and eight other states — alleges that the companies...

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LEAH NYLEN

Leah Nylen

Politico, known originally as The Politico, is an American political journalism company based in Arlington County, Virginia, that covers politics and policy in the United States and internationally. It distributes content through its website, television, printed newspapers, radio, and podcasts. Its coverage in Washington, D.C. includes the U.S. Congress, lobbying, the media, and the presidency.

Google, Facebook made secret deal to divvy up market, Texas alleges

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