Google and Facebook’s secret deal revealed. According to newly unredacted court papers filed on Friday, Google CEO Sundar Pichai and Facebook CEO Mark Zuckerberg personally signed a secret advertising contract that granted Facebook special privileges on Google’s ad platform.
The complaint is from a lawsuit filed by Texas and several other states in December 2020 against Google for allegedly engaging in “deceptive, misleading, or fraudulent acts” while running its buy-and-sell ad auction system. State attorneys general argue that Google violated antitrust laws by combining with Facebook, its biggest competition in the digital advertising market, for a 2018 agreement dubbed “Jedi Blue” in reference to Star Wars.
Google and Facebook’s secret deal revealed
Facebook attempted to threaten Google’s market dominance before the alleged agreement by promoting an ad-buying approach known as “header bidding.”
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“Google understood the severity of the threat to its position if Facebook were to enter the market and support header bidding,” the complaint reads. “To diffuse this threat, Google made overtures to Facebook.” In the end, Facebook backed off after Google agreed to give the social network “information, speed, and other advantages” in auctions run by Google, the complaint says.
A new version of the complaint has been published, revealing that the agreement was made at the top levels of both firms, with a significant level of collaboration from two of the world’s most powerful corporations.
“Google CEO Sundar Pichai also personally signed off on the terms of the deal,” the unredacted complaint reads.
The lawsuit claims that the team working on the deal directly confronted Zuckerberg in an email, stating that the firm was “nearly ready to sign” and required “approval” to move ahead. Before making a decision, Zuckerberg wanted to meet with Facebook COO Sheryl Sandberg. The individuals’ identities are blanked out of the complaint, but their job descriptions can be seen.
The news comes as both Google and Facebook are being investigated by state and federal authorities over antitrust concerns for their business practices. On Monday, a judge denied Facebook’s request to dismiss a lawsuit brought by the FTC alleging that it used anti-competitive methods.
On Friday, Google responded to the Texas attorney general’s lawsuit, which was filed by Ken Paxton. The suit isn’t “correct,” according to Google.
“We sign hundreds of agreements every year that don’t require CEO approval, and this was no different,” Google spokesperson Peter Schottenfels said in a statement. “And contrary to AG Paxton’s claims, the fact of this agreement was never a secret — it was well-publicized. It simply enables FAN [Facebook Audience Network] and the advertisers it represents to participate in Open Bidding, just like over 25 other partners do.”
Meta, Facebook’s parent company, echoed Google’s assertion that the deal didn’t single out Facebook.
“Meta’s non-exclusive bidding agreement with Google and the similar agreements we have with other bidding platforms, have helped to increase competition for ad placements,” Meta spokesperson Stephen Peters said in a statement. “These business relationships enable Meta to deliver more value to advertisers while fairly compensating publishers, resulting in better outcomes for all.”
Google is preparing to argue that the lawsuit should be dismissed by a court.