Draft lawsuit says Google and Facebook agreed to team up against potential antitrust litigation
Big Tech giants Google and Facebook agreed to “cooperate and assist one another” if faced with antitrust litigation related to a deal on online advertising, according to a lawsuit filed by 10 states against Google last week.
According to the Wall Street Journal, the suit cites internal company documents that were “heavily redacted.” The publication reviewed a portion of a recent draft of the lawsuit without the redactions, that elaborated on findings and allegations in the court documents.
The lawsuit, which is led by Texas, includes ten Republican attorneys general who allege that Google and Facebook joined in an agreement in September 2018 in which Facebook agreed not to compete with Google’s online advertising tools in exchange for special treatment when it used them.
Using terms from the Star Wars franchise, the lawsuit redacted the actual name of the agreement. According to the Journal, the draft version of the suit refers to the deal as “Jedi Blue.”
In a heavily redacted passage, the lawsuit states that Google and Facebook were both aware that their agreement could trigger antitrust investigations and discussed how to deal with them.
The Journal reports that the draft version specifies the contract provisions stating that, “cooperate and assist each other in responding to any Antitrust Action” and “promptly and fully inform the Other Party of any Governmental Communication Related to the Agreement.”
The publication found that in the company’s contract found, “the word [REDACTED] is mentioned no fewer than 20 times,” according to the lawsuit. The unredacted version makes clear what the word is — “antitrust.”
Speaking to the publication, a Google spokesperson said that the claims made in the states’ lawsuit “are inaccurate. We don’t manipulate the auction,” the spokesperson said, adding that the deal wasn’t secret and that Facebook participates in other ad auctions. “There’s nothing exclusive about [Facebook’s] involvement and they don’t receive data that is not similarly made available to other buyers.”
The WSJ reports:
The redacted lawsuit filed last week makes no mention of Facebook Chief Operating Officer Sheryl Sandberg. According to the draft version, Ms. Sandberg signed the deal with Google. The draft version also cites an email where 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 its agreements for bidding on advertising promote choice and create clear benefits for advertisers, publishers, and small businesses.
Facebook’s spokesperson stated, “Any allegation that this harms competition or any suggestion of misconduct on the part of Facebook is baseless.”
The WSJ report continues:
The final version of the lawsuit didn’t make public details about the deal’s value. The draft states that starting in the deal’s fourth year, Facebook is locked into spending a minimum of $500 million annually in Google-run ad auctions. “Facebook is to win a fixed percent of those auctions,” the draft version says. The lawsuit says “Facebook is to [REDACTED].”
According to the draft version, an internal Facebook document described the deal as “relatively cheap” when compared with direct competition, while a Google presentation said if the company couldn’t “avoid competing with” Facebook, it would collaborate to “build a moat.” The redacted lawsuit filed last week doesn’t include those quotes.
According to the lawsuit, Google executives were concerned ahead of the deal about competition from Facebook and other companies deploying “header bidding,” which is a technique for buying and selling online ads.
The draft states that an internal Google presentation from October 2016 shows that concerns were expressed about potential competition from Facebook and other big tech companies.
An internal Google communication dated November 2017 allegedly discussed a potential “Facebook Partnership” for Google’s “Top Partner Council.” Google said in internal communication that its end game was to “collaborate when necessary to maintain status-quo…”
According to the draft, Facebook’s negotiation team sent an email to Zuckerberg stating the company had several options, including, “invest hundreds more engineers” and spend billions of dollars to lock up inventory, exit the business or do the deal with Google. According to the draft, Zuckerberg wanted to meet before making the decision.
“Under U.S. law, agreements to fix prices can be easier to prove than the states’ other accusations—namely that Google is maintaining an illegal monopoly,” reports the WSJ.
Google is facing a separate antitrust lawsuit, joined by 38 attorneys general, alleging that it maintains monopoly power over the internet search market through anti-competitive conduct.
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