It has been reported that Google and Facebook have struck a secret deal to cut down on ad competition. As reported by the New York Times, Facebook and Google were set to compete over for some advertising sales but made a preferential deal to reduce this competition.
Both companies have faced a number of antitrust investigations over recent years and continue to do so. Many feel that this deal could amount to the smoking gun which could harm them severely in any ongoing cases of this nature.
Both Facebook and Google agreed to co-operate with an antitrust lawsuit back in December, perhaps aware of the behind the scenes problems.
Facebook is no stranger to facing antitrust problems with a fine expected to come its way from the FTC. This emerged back in November when the company faced legal action from the FTC in 2020.
Facebook and Google face more antitrust issues
As reported by Engadget, the secret deal reportedly nicknamed “Jedi Blue” ave Facebook favors in ad header bidding. This effectively reduced ad competition between Facebook and Google hence the backlash this deal has caused.
Facebook received this leg up in return for backing Google’s Open Bidding approach for selling those ads. Hence why many saw this as a mutually preferential and beneficial deal at the expense of others.
What this did in practice was give Facebook more time to bid for ads. It also gave them direct billing deals with the sites hosting the ads as well as help from Google to understand audiences.
Facebook claimed it would bid on at least 9 out of 10 ad auctions when it could identify users. It promised minimum spending levels up to $500 million per year. However, the company has said it asked Google to not use bid info to skew ad auctions in its favor.
One complaint against the company claims that Google essentially guaranteed Facebook a set number of ad wins. This in turn put their rivals at an inherent disadvantage.
Facebook and Google respond to antitrust claims
Google and Facebook, have naturally rejected accusations that the deal was anti-competition. Facebook has said deals like this actually “help increase competition” in ad bids. Google also said that this report has misrepresented the deal and what it entails.
However, the chances of regulators siding with Facebook and Google seems unlikely on this one. Given there is some evidence to suggest that the companies knew this deal would come under scrutiny that will harm their case.
This is because the deal required that the two “cooperate and assist” in the event of any investigation. It also mentioned “antitrust” twenty times making it clear both companies were aware of the issues of this deal.
How this all plays out admits various antitrust cases pending could be fascinating. However, it does not look good right now for Facebook and Google.