Google denies claiming an anti-competitive deal with Facebook

Google on Sunday disputed claims by a group of attorneys general, led by Ken Paxton of Texas, that its deal to buy ads with Facebook was anti-competitive.

In a blog post, Google’s economic policy director Adam Cohen called the demand for 10 Republic-led states “misleading”. The statement is Google’s broadest response to the lawsuit, which is also the only one that has designated Facebook as a “conspirator” (though it does not name Facebook as the defendant). The company faces two other complaints from a bipartisan group of attorneys general and the Justice Department.

The statement was followed on Sunday by a New York Times article describing more details of the alleged deal, citing an unwritten draft of the complaint. The Wall Street Journal previously reported on the unwritten draft in December.

According to this version of the complaint described by the Times, a Google executive saw an “existential threat” in the 2017 Facebook ad that was testing a move to the ad slot. Facebook was at the time considering a headline bidding project, a form of ad buying that allows publishers to circumvent reliance on Google platforms.

But that project ended when the two reached an agreement in 2018 for Facebook to become a partner in Google’s Open Bidding project, which allows you to exchange competitive ads alongside your own, but charges a fee to win bids. That deal is unlike any other offered to alliance partners, according to members interviewed by the Times who refused to be identified for fear of jeopardizing their relationship with Google.

According to documents and interviews presented by the Times, Google allegedly offered Facebook more time to make advertising offers than other alliance members. Google allegedly also offered Facebook more information about who would be the recipient of the ads and a guaranteed “profit rate” for the offers, the Times reported. The two agreed to “cooperate and help each other” in case the agreement is investigated for competition issues, according to the documentation.

In the blog post responding to the allegations, Cohen advocated Open Bidding as a tool that benefits publishers. Cohen wrote that Open Bidding addresses some of the issues related to header bids, such as slow-loading pages, and that header bids are still a growing market, citing a 2019 eMarketer report.

Cohen noted that Google’s deal with Facebook had been widely reported at the time and said it simply allows Facebook and its advertisers to participate in Open Bidding.

“We don’t do it at all,” we manipulate auctions in favor of Facebook, Cohen wrote. The deal doesn’t stop Facebook from pursuing headline bids and still requires the company and its advertising network to make the highest bid to win, Cohen wrote. He also said that Google rates for advertisers are lower than the industry average and said there is a lot of competition in the space.

“Collaborations like this are common in the industry and we have similar agreements with several other companies,” a Facebook spokesman said in a statement. “Facebook continues to invest in these partnerships and create new ones, which help increase competition in advertising auctions to create the best results for advertisers and publishers. Any suggestion that such agreements harm competition is unfounded.”

A day after the Texas-led group filed a lawsuit against Google, a bipartisan coalition of 38 states and territories sued Google for another set of antitrust concerns, including alleged foreclosure agreements and discriminatory behavior against competitors in the U.S. your search results pages. The Justice Department and a group of Republican-led states previously sued Google over some of the same concerns about the contracts.

Facebook faces separate complaints from the Federal Trade Commission and attorneys general from 48 states and territories claiming it violated antitrust law.

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