Google, Facebook CEOs oversaw illegal ad auction deal that gave Facebook an advantage, states allege

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  • The CEOs of Google and Facebook personally oversaw a 2018 deal that benefited Facebook in Google’s ad auctions, a group of state attorneys general alleged in court documents Friday.
  • Facebook, which recently changed its name to Meta, is not listed as a defendant in the complaint.
  • A Google spokesperson called the state’s characterization of the Facebook arrangement incorrect.

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After the CEOs of Google and Facebook personally oversaw an illegal 2018 deal that benefited Facebook in Google’s ad auctions, a group of Texas-led state attorneys general filed a revised lawsuit against Google on Friday. Alleged in the antitrust complaint.

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Facebook, which recently changed its name to Meta, is not listed as a defendant in the complaint.

The complaint alleges that Google manipulated its ad pricing tiers under a covert program called Project Bernanke, which removed second-place bids on ad auctions. This allowed Google to pocket a portion of the difference between first- and third-place bids, as well as hurt publishers who relied on advertising revenue and who could earn more from higher bids.

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The complaint states that under the agreement with Facebook, Google and Facebook illegally collaborated to undercut the prices paid to publishers, cut out rival ad networks, and manipulate publisher-run ad auctions.

The new filing shows how far the alleged arrangement went in the earlier filing. Facebook’s Chief Operating Officer Sheryl Sandberg, whose name has been modified in the complaint, called the agreement “strategically a big deal” in an email including CEO Mark Zuckerberg, whose name was also modified. Sandberg and Google CEO Sundar Pichai signed the terms of the deal, the states allege, noting that Sandberg was previously a high-ranking executive in Google’s advertising business. Sandberg’s signoff was previously reported by wall street journal,

According to the third amended complaint in the case, Google made the deal after Facebook announced a move that would help publishers and advertisers get around the fees Google charges for advertising through its services. The states alleged that Google feared a long-term threat to its ad server monopoly if enough buyers were able to bypass its fees.

An internal Facebook document cited in the complaint reportedly states that partnering with Google will “build/buy in the zero-sum ad tech game and be relatively cheaper than the competition.” Google reportedly code-named the arrangement “Jedi Blue”, referring to Facebook’s blue logo.

The group of 16 states and Puerto Rico alleged that this and other actions Google took in the online advertising space were in violation of the Sherman Antitrust Act to illegally seek to preserve its monopoly power.

Google had previously strongly rejected the claims in a Texas-led lawsuit, with economic policy director Adam Cohen calling it a 2021 blog post A “misleading attack.” A Google spokesperson said Friday that the company will file a motion to dismiss next week, saying the case is “full of inaccuracies and lacks legal merit.”

A Google spokesperson misquoted Facebook’s description of the arrangement, saying, “We sign hundreds of agreements every year that don’t require CEO approval, and this one was no different.”

The spokesperson said the agreement was publicized at the time, which was called a . was linked to facebook blog post Designating Google as one of its new bidding technology partners from 2018.

Meta shares were up more than 1 per cent on Friday afternoon, while Google parent Alphabet was up nearly 1 per cent.

According to a Google spokesperson, the agreement allows the Facebook ad network and its representatives to “participate in open bidding, just as more than 25 other partners do. This will help publishers drive demand for ad space.” and helps publishers earn more revenue, as we explain Here,

A spokesperson for Meta said in a statement on Friday that “the non-exclusive bidding agreement with Google and our similar agreements with other bidding platforms have helped increase competition for ad placement. These business relationships allow Meta to help advertisers become more competitive.” enabling them to deliver value, while significantly compensating publishers, resulting in better outcomes for all.”

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