Google, Facebook CEOs oversaw a 2018 ad auction deal, states allege

Facebook Chairman and CEO Mark Zuckerberg (left) and Google CEO Sundar Pichai.

REUTERS

The CEOs of Google and Facebook personally oversaw an illegal 2018 deal that benefited Facebook in Google ad auctions, a Texas-led group of state attorneys general alleges in an amended antitrust lawsuit against Google on Friday.

Facebook, recently renamed Meta, is not listed as a defendant in the complaint.

The new filing shows how far the deal has gone, alleged in previous filings. Facebook COO Sheryl Sandberg, whose name is not listed in the complaint, called the deal “a big deal strategically” in an email that included CEO Mark Zuckerberg, whose name was also redacted. Sandberg and Google CEO Sundar Pichai signed the terms of the agreement, the states allege, noting that Sandberg was previously a high-ranking executive in Google’s advertising business. Sandberg’s sign-out was previously reported by The Wall Street Journal.

According to the third amended lawsuit in the case, Google made the deal after Facebook announced a measure that would help publishers and advertisers avoid fees imposed by Google for advertising through its services. The states argued that Google feared a long-term threat to its ad-serving monopoly if enough buyers were able to get around its fees.

Under the settlement, Google and Facebook illegally collaborated to lower prices paid to publishers, eliminate rival ad networks and manipulate ad auctions operated by publishers, the complaint says.

An internal Facebook document cited in the complaint allegedly said partnering with Google would be “relatively cheap compared to building/buying and competing in a zero-sum ad tech game.” Google allegedly codenamed the fix “Jedi Blue,” referring to Facebook’s blue logo.

The group of 16 states and Puerto Rico alleged that this and other actions Google took in online advertising space were seeking to illegally preserve its monopoly power, violating the Sherman Antitrust Act.

Google has previously strongly rejected the claims in the Texas-led lawsuit, with Director of Economic Policy Adam Cohen calling it in a 2021 blog post a “misleading attack.” A Google spokesman said the company would file a motion to dismiss next week, saying the case remains “riddled with inaccuracies and lacks legal merit.”

A Google spokesperson called states’ characterization of Facebook deals inaccurate, saying, “Every year we sign hundreds of deals that don’t require CEO approval, and this was no different.”

The spokesperson added that the deal was published at the time, with a link to a Facebook blog post from 2018 that named Google as one of its new bidding technology partners.

Shares of Meta were up around 1% by mid-afternoon on Friday, while shares of Google were up around 0.65%.

The deal, according to the Google spokesperson, simply allows the Facebook Advertising Network and the advertisers it represents to “participate in Open Auction, as do 25 other partners. That helps increase demand for ad space from advertisers.” publishers and help publishers get more revenue as we explain here.”

A spokesperson for Meta said in a statement that its “non-exclusive bidding agreement with Google and similar agreements we have with other bidding platforms have helped increase competition for ad placements. These business relationships allow Meta to deliver more value.” advertisers while compensating publishers, resulting in better results for everyone.

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