The lawsuit, as filed, cites internal company documents that were heavily redacted. The Wall Street Journal reviewed part of a recent draft of the lawsuit without editorial measures, detailing the findings and allegations in the court documents.
Ten Republican Attorneys General, led by Texas, claim that the two companies struck a deal in September 2018 in which Facebook agreed not to compete with Google’s online advertising tools in exchange for special treatment when using them.
Google used language from “Star Wars” as the code name for the deal, according to the lawsuit, in which the actual name was redacted. According to the concept version of the suit, it was known as ‘Jedi Blue’.
The lawsuit itself said Google and Facebook knew their agreement could trigger antitrust investigations and discussed how to deal with it, in a passage followed by key editorial teams.
The draft sets out some of the contractual clauses, stating that the companies “will cooperate and assist each other in responding to antitrust measures” and “will promptly and fully notify the other party of any government communication related to the agreement.”
The contract of the companies says “the word [REDACTED] occurs no less than twenty times, ”said the lawsuit. The unedited concept fills in the word: Antitrust.
A Google spokesperson said such agreements on antitrust threats are very common. The spokesperson also disputed the lawsuit’s claims that it manipulated auctions for online advertising, saying that Google does not provide Facebook with an exclusive arrangement and does not provide business data that is not available to others.
The redacted lawsuit filed last week makes no mention of Facebook Chief Operating Officer Sheryl Sandberg. According to the draft, Ms. Sandberg has signed the deal with Google. The draft also cites an email in which she told CEO Mark Zuckerberg and other executives, “This is a big deal strategically.”
Like Google, Facebook has also disputed the allegations in the lawsuit, saying that the ad bidding agreements promote choice and create clear benefits for advertisers, publishers and small businesses.
“Any allegation that this harms competition or any suggestion of wrongdoing on the part of Facebook is unfounded,” said a Facebook spokesman.
The final version of the lawsuit did not make public details of the value of the deal. The draft states that from the fourth year of the deal, Facebook is committed to spending at least $ 500 million a year on Google-managed ad auctions. “Facebook is going to win a fixed percentage of those auctions,” says the draft version. The lawsuit says, “Facebook is on [REDACTED]. ”
According to the draft, an internal Facebook document described the deal as’ relatively cheap ‘compared to direct competition, while a Google presentation said that if the company couldn’t avoid competition with Facebook, it would work together to’ build a moat. The redacted lawsuit filed last week does not contain these quotes.
The lawsuit alleges that prior to the deal, Google executives were concerned about competition from Facebook and others using “ header bids, ” a technique for buying and selling online ads.
In an internal Google presentation in October 2016, an employee expressed concern about the potential for competition from Facebook and other major tech companies, saying, “to stop these guys from doing HB. [header bidding] we should probably consider something more aggressive, ”the draft said.
The edited lawsuit discusses Google’s concerns about competition and mentions the presentation, but does not include a quote.
According to a November 2017 internal Google announcement discussing a possible ‘Facebook partnership’ for Google’s ‘Top Partner Council’, Google said the endgame was ‘working together when necessary to maintain the status quo …’. The redacted lawsuit describes a presentation about Google’s endgame, but without the quotes.
As the two sides almost came to an agreement, Facebook’s negotiating team sent an email to Mr. Zuckerberg according to the draft, saying the company was dealing with options: “invest hundreds of additional engineers” and spend billions of dollars to lock up inventory, leave the company, or do the deal with Google. According to the draft, Mr. Zuckerberg wanted to meet before making a decision.
Those details do not appear in last week’s lawsuit, which mentions Mr. Zuckerberg only once, in a separate section on another internal announcement about the deal.
For years, criticism of Google’s online advertising empire has focused on how the company used its powerful consumer platforms, such as Google Search and YouTube, to acquire another lucrative but less visible company: the software that acts as an intermediary for it. buying and selling ads on the internet.
Facebook’s allegations add another wrinkle: that Google has struck a deal with a rival broker, a deal the states are describing as Google’s “biggest potential competitive threat.”
They also pose a powerful legal risk. Under US law, price-fixing agreements may be easier to prove than the states’ other allegations that Google is maintaining an illegal monopoly.
In addition to the lawsuit filed in Texas, Google was hit last week in a separate antitrust case involving 38 attorneys general, who claimed it maintained its monopoly position in the Internet search market through anti-competitive contracts and conduct.
Google has also disputed the allegations in that lawsuit, as well as a previous lawsuit brought by the Justice Department on Oct. 20 over alleged monopoly practices.
—Jeff Horwitz contributed to this article.
Write to Ryan Tracy at [email protected] and John D. McKinnon at [email protected]
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