Google again accused of fixing ad prices with Facebook in new lawsuit

Google has been accused again of giving itself an edge in online advertising. According to multiple media reports including Bloomberg, the latest anti-trust lawsuit by two Massachusetts companies accused the tech giant of inking "a cozy deal" with Facebook to give it an advantage in online ad buying. This deal has reportedly enabled Google to "retain its dominance" in digital advertising, Bloomberg said, while other advertisers are kept "on the sidelines" and online publishers receive limited revenue.

The lawsuit alleged that Facebook had initially adopted header bidding. However, it agreed to limit its programme when it entered into the Facebook Agreement with Google in September 2018. According to the lawsuit seen by MARKETING-INTERACTIVE, this was done in return for preferred treatment in the Google advertising business system. 

Through this agreement, the lawsuit said Facebook "agreed with Google to strengthen Google’s market dominance in the online advertising industry". 

The lawsuit added that Google "cut off innovation and competition" through a deal with Facebook when its market power was threatened. "Google and Facebook restricted the innovation of header bidding to their benefit and in direct hindrance of competition in violation of Section 1 of the Sherman Act," the lawsuit said. The Sherman Act prohibits activities that restrict interstate commerce and competition in the marketplace. The lawsuit also claimed that Google is responsible for all the damages incurred. MARKETING-INTERACTIVE has reached out to Google and Facebook for comments.

The two Massachusetts companies also stated in the lawsuit that the allegations against Google are based upon information and belief as to the investigation conducted by the Plaintiffs' counsel, which included, among other things, the complaint filed by the Attorney General of the State of Texas and nine other States Attorneys General in the US District Court for the Eastern District of Texas last December. It also included media reports from the Wall Street Journal and The New York Times in January this year. 

Last year, Google was sued by 10 US states for allegedly running "an illegal digital advertising monopoly" and bringing on board Facebook for "an alleged deal to rig ad auctions", reported the Wall Street Journal. The lawsuit is led by Texas Attorney General Ken Paxton who claimed in 2020 that Google "is brazenly abusing its monopolistic power" and encouraging Facebook to agree to a deal "that undermines the heart of the competitive process", WSJ reported.

Meanwhile, the New York Times previously reported that the deal between the two tech giants meant Facebook had 300 milliseconds to bid for ads while Google's partner companies usually had just 160 milliseconds or less to bid. Facebook also reportedly had direct billing relationships with sites where ads would be placed while Google controlled the pricing information for its other partners.

In response, Google called the allegations "misleading" and director, economic policy Adam Cohen wrote a blog post to "set the record straight" about the "misleading claims that have been circulating". He also explained that unlike some B2B companies in this space, a consumer Internet company such as Google "has an incentive to maintain a positive user experience and a sustainable internet that works for all—consumers, advertisers and publishers". Cohen added that its open-bidding agreement with Facebook has been inaccurately portrayed and while AG Paxton has attempted to paint Google's involvement in the industry as "nefarious", the opposite is true.

Photo courtesy: 123RF

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