Google and Facebook would agree to compete less in ads | Business

One of the lawsuits against Google in the United States accuses the company of having worked with Facebook to reduce competition in the internet ad market. Documents drawn up by attorneys general in 10 US states indicate that Mark Zuckerberg’s company has taken advantage of other companies to join an alliance created by the search giant.

Google Chrome (Image: Nathana Rebouças)

According to the New York Times, which had access to lawsuit documents, the deal involves Google’s “header bidding” service. Known as Open Bidding, it predicts competition from ad networks, including those from Google and Facebook. The idea is that the ad platforms compete for advertising spaces on websites.

In recent years, header bidding has become popular for allowing websites to increase ad revenue. Before them, sites were restricted to automated auctions for just one network. By adopting the new method, vehicles can analyze bids from various ad networks and display those with the highest bid.

Facebook reported in March 2017 that it was testing its “header bidding” service with vehicles such as The Washington Post and Forbes. In an email, Google executives analyzed the move as an “existential threat”. In December 2018, however, the company announced its adhesion to Open Bidding. According to the lawsuit filed by attorneys general in ten American states, the company changed plans due to the agreement with Google.

“Jedi Blue”: the agreement between Google and Facebook

The antitrust lawsuit claims that the deal, known on Google as “Jedi Blue”, guaranteed that Facebook would have additional data and time compared to other Open Bidding partner ad platforms. According to prosecutors, Google made a series of concessions to Zuckerberg’s company for its entry into the alliance.

Among them, it would be the guarantee that Facebook would be the winner of a fixed percentage of the auctions in which it participated. In other words, Google would have assured the Zuckerberg company that a portion of its customers’ ads would appear on the websites, regardless of the amount paid for them.

Facebook (Image: Max Pixel)

Facebook (Image: Max Pixel)

Automated auctions take place in fractions of a second between clicking a link and loading the ad on the page. According to the lawsuit documents, the Facebook system would have 300 ms to make calculations and submit bids. Meanwhile, other Open Alliance partners were 160 ms or less.

Prosecutors also point out that Google gave Facebook data for some users who would see the ads. On mobile devices, the company would guarantee data for 80% of users, while on PCs, the rate would be 60%. The company would also have promised not to use Facebook bid data in its favor, which it did not promise to other partners.

The documents indicate that, in return, Facebook has committed to bid in 90% of the auctions where it could identify users. The company’s annual investment in the Google platform would be $ 500 million over four years. In the deal, the two companies would have agreed to help each other if they were investigated in antitrust lawsuits.

The companies told the NYT that this type of partnership does not compromise competition. Google said the US antitrust lawsuit “distorts the deal, as do many other aspects of our ad tech business [publicidade digital]”. The company claimed that Facebook is one of many companies participating in Open Bidding and is a partner of other alliances.

Facebook, for its part, claimed that deals like the one with Google “help to increase competition in ad auctions”, something that would benefit advertisers and websites. “Any suggestion that these types of deals harm competition is unfounded,” the company told the NYT.

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