Facebook and Google allegedly made a secret deal related to the online advertising market, according to a report by The New York Times.
In 2017, Facebook stated it was testing a new way to sell online advertising that would challenge Google’s reign of dominance on the digital advertising market but later scrapped these plans.
Facebook never stated why they scrapped this project, but an antitrust lawsuit filed by 10 state attorneys allege that Google and Facebook cut a deal.
Details of the agreement, based on documents from the Texas attorney general’s office, were redacted, but The New York Times received an unredacted draft of the complaint.
Executives at six of more than 20 partners in the alliance told The New York Times that their agreements with Google were nowhere as generous as Facebook’s agreement. Google had given Facebook a significant advantage over the other partners.
The executives state that they had not known that Google had given these advantages to Facebook.
The leaking of the deal, which is code-named “Jedi Blue” inside Google, between the tech giants have created concerns about how tech companies band together to stifle competition.
Unbeknown to other market participants, no matter how high others might bid, the parties have agreed that the gavel will come down in Facebook’s favor a set number of times,” said the complaint.
Parler, a direct competitor to Twitter and Facebook, had its services cut by other big tech companies, including Google and Amazon after the Capitol Hill Riots. Parler has sued Amazon, alleging that Amazon violated the Sherman Antitrust Act.
Google and Facebook defended the deals, stating that these are common in the digital advertising agency and denouncing allegations of stifling competition.
Google spokeswoman Julie Tarallo McAlister said the complaint “misrepresents this agreement, as it does many other aspects of our ad tech business.”
She also stated that Facebook is one of many companies that participate in the Google alliance program and that Facebook has similar relationships with other companies.
Facebook spokesman Christopher Sgro said deals similar to its agreement with Google “help increase competition in ad auctions,” which benefits other companies.
“Any suggestion that these types of agreements harm competition is baseless,” said Sgro. Google and Facebook declined to elaborate on the specifics of their deal when asked by The New York Times.
Facebook and Google control over half of the online advertising industry, accounting for more than half of spending. Many companies rely on them for their own advertising.
There have been several recent antitrust lawsuits against big tech companies by the government. In October, the Justice Department sued Google.
“This idea that the major tech platforms are robustly competing against each other is very much overstated,” said Sally Hubbard, a former assistant attorney general in New York’s antitrust bureau who now works at Open Markets Institute. “In many ways, they reinforce each other’s monopoly power.”
Adam Heimlich, chief executive of Chalice Custom Algorithms, said the deal gave Facebook an extreme advantage, comparing it to a sports team who started every tournament in the finals.