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17 Dec, 2020 11:10

Ten US states sue Google for colluding with Facebook to rig online advertisement market

Ten US states sue Google for colluding with Facebook to rig online advertisement market

A coalition of ten US states led by Texas have filed an antitrust lawsuit against Alphabet's Google, accusing the tech giant of abusing its monopolistic power and colluding with Facebook to rig advertising auctions.

In their lawsuit, filed at the US District Court in Texas, the states claim that Google struck an “unlawful agreement” with Facebook as soon as the company realized in 2017 that Mark Zuckerberg’s social network could be a powerful rival in online advertising.

According to the complaint, the deal – codenamed after a ‘Star Wars’ character (it is not clear which one, as the name itself was redacted in the text) – was meant to kill the competition.

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In exchange for Facebook’s backing down from header bidding, Google allegedly gave the tech rival information and speed – among other advantages – in the ads auctions that Google runs for publishers’ mobile app advertising inventory each month in the US.

“Google is a trillion-dollar monopoly brazenly abusing its monopolistic power, going so far as to induce senior Facebook executives to agree to a contractual scheme that undermines the heart of competitive process,” Texas Attorney General Ken Paxton said as he introduced the lawsuit. He added that the Silicon Valley tech behemoth is destroying the free market as it is “essentially trading on ‘insider information’ by acting as the pitcher, catcher, batter and umpire, all at the same time.”

The lawsuit, which was supported by Arkansas, Indiana, Kentucky, Missouri, Mississippi, South Dakota, North Dakota, Utah, and Idaho, also said that Google used other anti-competitive tactics while selling, buying, and auctioning online display ads. For instance, the company allegedly deceived “exchanges into bidding through Google instead of header bidding” and forced publishers to cut off a rival ad exchange.

“Anticompetitive and deceptive” tactics used by the monopoly ripped off publishers, as they reduced their ability to monetize content, while increased advertising costs eventually harmed consumers, the plaintiffs said. Those practices add up to what the lawsuit called a “monopoly tax” on businesses that is “ultimately borne by American consumers through higher prices and lower quality on the goods, services, and information those businesses provide.”

The ten states demand a jury trial and want the court to force Google pay multiple fines if found guilty.

Google called the ad tech claims “meritless,” insisting it provides "state-of-the-art ad tech services that help businesses and benefit consumers.” It also told CNBC that the allegation of collusion with Facebook was not accurate, as the social network’s ads tool, Facebook Audience Network, is involved in exchanges outside of Google.

Wednesday’s case is the second sweeping lawsuit questioning Google’s monopolistic practices in just two months. The US Justice Department sued Google in October, accusing the trillion-dollar company of using anti-competitive tactics to maintain and extend its monopolies in search and advertising.

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