According to an antitrust lawsuit against Facebook Inc. (NASDAQ:FB) and Google (NASDAQ:GOOGL), the companies might have cut a deal to reduce ad competition. In 2018 Google gave Facebook the “Jedi Blue,” contract giving it favors in ad header bidding. This meant that sites could seek ad space bids from several exchanges with support from the Open Bidding approach of Google to sell the ads.
Facebook and Google cut an anti-competitive deal
Initially, Facebook was to compete with Google on ad sales. However, the social media giant backed away from these plans following the preferential deal from Google. According to court documents, Facebook was to benefit by having more time to bid for ads, receive help on understanding audiences from Google, and enjoy direct billing deals with ad hosting sites. Most importantly, Facebook was to bid or at least 90% of ad auctions and promised minimum annual spending levels of $500 million. The company had also requested Google to stop using bid information to skew ads to its advantage.
The companies are facing an antitrust suit from ten states and the Texas attorney general office indicated that it uncovered that details of the agreement had been redacted in the suit filed last month. Interestingly other ad partners of Google never received a sweet deal as the one Facebook received. The lawsuit is accusing Google of guaranteeing a specific number of ad wins to Facebook at the disadvantage of rivals.
Facebook says the Jedi Blue deal wasn’t anti-competitive
The internet companies have however indicated that the Jedi Blue contract wasn’t anti-competitive. According to a Facebook spokesperson, such a deal “helps increase competition” in bidding and the assertions of anti-competitiveness are baseless. On the other hand, a Google spokesperson said that the Texas suit “misrepresents” the agreement and other ad business aspects.
However, this is unlikely to sway regulators as suggestions are indicating that the tech companies were aware of possible scrutiny. The deal included a clause requiring Facebook and Google to “cooperate and assist” in the event of a probe.