Alphabet CEO Sundar Pichai gestures during a session at the annual meeting of the World Economic Forum (WEF) in Davos on January 22, 2020.
(Photo by Fabrice COFFRINI / AFP) (Photo by FABRICE COFFRINI / AFP via Getty Images)
On Sunday, Google contested allegations by a group of attorney generals, led by Ken Paxton, from Texas, that its ad purchase agreement with Facebook was anti-competitive.
In a blog post, Google’s director of economic policy, Adam Cohen, called the 10 Republican-led process “deceptive”. The statement is Google’s most extensive response to the lawsuit, which is also the only one to name Facebook as a “co-conspirator” (although it does not name Facebook as a defendant). The company faces two other complaints from a bipartisan group of attorney generals and the Department of Justice.
The statement followed an article in the New York Times on Sunday that described more details of the alleged deal, citing an unwritten draft of the complaint. The Wall Street Journal previously reported on the unwritten draft in December.
According to the version of the complaint described by the Times, a Google executive saw an “existential threat” in the 2017 Facebook ad that he was testing a move to advertising space. Facebook was considering a header bidding project at the time, a way of buying ads that allows publishers to circumvent their reliance on Google platforms.
But that project came to an end when the two reached an agreement in 2018 for Facebook to become a partner in Google’s Open Bidding project, which allows for competing ad exchanges alongside yours, but charges a fee to win the bids. This deal was different from others offered to alliance partners, according to members interviewed by the Times who declined to be identified for fear of jeopardizing their relationship with Google.
Google reportedly offered Facebook more time to bid on ads than other members of the alliance, according to documents and interviews presented by the Times. Google also reportedly offered Facebook more information about who would receive the ads and a guaranteed “win rate” for bids, the Times reported. The two agreed to “cooperate and help” each other in case the deal is investigated for competition reasons, the documents show.
In the blog post in response to the allegations, Cohen defended Open Bidding as a tool that benefits publishers. Cohen wrote that Open Bidding addresses some of the problems with header bidding, such as slow loading pages, and that header bidding is still a growing market, citing a 2019 eMarketer report.
Cohen noted that Google’s deal with Facebook was widely publicized at the time and said it simply allows Facebook and its advertisers to participate in the Open Bidding.
“We absolutely don’t want to,” we manipulate the auctions in favor of Facebook, Cohen wrote. The deal does not prevent Facebook from seeking header bids and still requires the company and its advertising network to make the biggest bid to win, Cohen wrote. He also said that Google’s fees for advertisers are lower than the industry average and said there is a lot of competition in the space.
“Partnerships like this are common in the industry and we have similar agreements with several other companies,” said a Facebook spokesman in a statement. “Facebook continues to invest in these partnerships and create new ones, which help increase competition in ad auctions to create the best results for advertisers and publishers. Any suggestion that these types of deals harm competition is unfounded.”
The day after the Texas-led group filed its lawsuit against Google, a bipartisan coalition of 38 states and territories sued Google for another set of antitrust issues, including allegedly excluding contracts and discriminatory behavior against competitors on its search results pages. . The Justice Department and a group of Republican-led states have sued Google earlier for some of the same contract concerns.
Facebook separately faces complaints from the Federal Trade Commission and attorney generals from 48 states and territories, alleging that it violated the antitrust law.
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