Alphabet CEO Sundar Pichai gestures during a session at the World Economic Forum (WEF) annual meeting in Davos on January 22, 2020.
(Photo by Fabrice COFFRINI / AFP) (Photo by FABRICE COFFRINI / AFP via Getty Images)
Google on Sunday contested the claims made by a group of attorneys general led by Texas-based Ken Paxton that the ad-buying agreement with Facebook was anti-competitive.
In a blog post, Google’s economic policy director Adam Cohen called the lawsuit brought by 10 Republican-led states “misleading.” The statement is Google’s most comprehensive response to the lawsuit to date, which is also the only one to name Facebook as a “co-conspirator” (though it doesn’t name Facebook as a defendant). The company is facing two other complaints from a two-tiered group of attorneys general and the Department of Justice.
The statement followed an article in the New York Times earlier on Sunday that described more details of the alleged settlement, citing an unedited draft of the complaint. The Wall Street Journal reported on the unsedited draft earlier in December.
According to that version of the complaint, as described by the Times, a Google manager saw an “existential threat” in Facebook’s 2017 announcement that it was testing a move to the ad space. At the time, Facebook was considering a project in providing headlines, a form of buying ads that would allow publishers to get around reliance on Google’s platforms.
But that project came to an end when the two reached an agreement in 2018 that Facebook would partner in Google’s Open Bidding project, which allows for competitive ad exchanges but charges a fee for winning bids. That agreement was different from others offered to partners in the alliance, according to members interviewed by the Times, who refused to be identified for fear of jeopardizing their relationship with Google.
Google is said to have given Facebook more time to bid on ads than other members of the alliance, according to the documents and interviews presented by the Times. Google also reportedly offered Facebook more insight into who would be on the receiving end of ads and a guaranteed “win rate” for bids, the Times reported. The two agreed to “cooperate and assist each other” in case the agreement was investigated for competition concerns, the documents showed.
In the blog post responding to the allegations, Cohen defended Open Bidding as a tool that benefits publishers. Cohen wrote that Open Bidding addresses some of the issues 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 agreement with Facebook was widely covered at the time and said it simply allows Facebook and its advertisers to participate in Open Bidding.
“We absolutely don’t,” manipulate auctions in favor of Facebook, Cohen wrote. The agreement does not prevent Facebook from bidding via headers and still requires the company and its ad network to make the highest bid to win, Cohen wrote. He also said Google fees for advertisers are below the industry average and said there is a lot of competition in the industry.
“Such partnerships are common in the industry and we have similar agreements with several other companies,” a Facebook spokesperson said in a statement. “Facebook continues to invest in these partnerships and create new ones that help increase competition in ad auctions to create the best results for advertisers and publishers. Any suggestion that these types of agreements hurt competition is unfounded.”
A day after the Texas-led group filed its lawsuit against Google, a bipartisan coalition of 38 states and territories sued Google for a different set of antitrust issues, including alleged lockout contracts and discriminatory behavior towards competitors in the search results pages. The Justice Department and a group of Republican-led states have previously sued Google over some of the same contract concerns.
Facebook is separately facing complaints from the Federal Trade Commission and attorneys general from 48 states and territories alleging that it violated antimonopoly law.
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