Texas, nine US states accuse Google of teaming up with Facebook to violate antitrust law

WASHINGTON (Reuters) – Texas and nine other states sued Google on Wednesday and accused Google of partnering with Facebook Inc in an illegal manner that violated antitrust law to boost its already dominant online advertising activity. The states asked that the company owned by Alphabet Inc, which controls one-third of the global online advertising industry, indemnify them for damages and sought “structural redress,” which is commonly interpreted as a company that needs some of its assets. push off.

FILE PHOTO: The Google logo is displayed at the entrance of the Google offices in London, UK, January 18, 2019. REUTERS / Hannah McKay / File Photo

The Texas lawsuit is the second major regulatory complaint against Google and the fourth in a series of federal and state lawsuits aimed at curbing alleged bad behavior from Big Tech platforms, which has grown significantly over the past two decades.

Google called the Texas lawsuit “creditable.” Facebook did not immediately respond to a request for comment.

Wednesday’s move increases legal stakes for Google, which is expected to face a third antitrust lawsuit from more than 30 attorneys general Thursday, according to a source familiar with the case.

Online publishers, including Genius Media Group and news website The Nation, claimed in a separate antitrust case on Wednesday, pursuing class action status, that they have lost revenue due to Google’s dominance in online advertising. They are demanding that Google divest part of its advertising business.

In its lawsuit, Texas is asking a judge to find Google guilty of violating antitrust law and order the violations to stop. It accuses Google of abusing its monopoly in the digital ad market, allowing its own exchange to win ad auctions even when others bid higher and overcharge publishers for ads.

It also accused Google of partnering with Facebook. The two companies compete heavily in the sale of Internet advertising and together conquer more than half of the market worldwide.

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“As Google internal documents reveal, Google has tried to kill the competition and did so through a range of foreclosure tactics, including an illegal agreement with Facebook, the biggest potential competitive threat,” the lawsuit said.

The lawsuit, which has been filed in the Eastern District of Texas, also ties in closely with concerns publicly voiced by Rupert Murdoch-owned News Corp and other media companies to regulators in the United States and Europe over the past two years. It said Google lowered its fees to near zero to gain publisher dominance, used deceptive tricks to bring about transactions between publishers and advertisers, and took high fees from both parties for playing referee.


In a video posted to Twitter, Texas Attorney General Ken Paxton said, “If the free market was a baseball game, Google positioned itself as the pitcher, batter and umpire.”

Paxton, faced with allegations that he has abused the power of office and committed bribery, also recently contested the results of the Nov. 3 US presidential election in several battlefield states. The Supreme Court dismissed that lawsuit.

A Google spokeswoman said the company will defend itself against the “ baseless claims in court ” of the Texas lawsuit. She added, “Digital ad prices have fallen over the past decade. The costs for advertising technology are also falling. Google’s ad technology costs are lower than the industry average. These are the hallmarks of a highly competitive industry. “

Paxton, along with 10 other attorneys general, also joined a U.S. Department of Justice lawsuit against the company in October accusing the California-based $ 1 trillion company of illegally using its market power to defeat rivals. limping.

The nine states that joined Texas on Wednesday are Arkansas, Indiana, Kentucky, Missouri, Mississippi, South Dakota, North Dakota, Utah, and Idaho. They all have Republican prosecutors.

Google’s ad sales account for more than 80% of Alphabet’s revenue. But most of Alphabet’s sales and most of Alphabet’s profit come from Google’s high margin of placing text ads above the search results.

The company targeted on Wednesdays – posting ads to partner apps and websites – is far less important to Google.

Alphabet reported quarterly sales of $ 37.1 billion in digital advertising in its latest financial report. Alphabet shares ended 0.2% lower on Wednesday at $ 1,757.19. Facebook shares, which turned negative shortly after details of the Texas lawsuit were released, lost losses and little changed

Reporting by Diane Bartz and Paresh Dave in Oakland, California; Written by Nandita Bose in Washington; Editing by Sonya Hepinstall and Christopher Cushing