Four Democratic members of Congress are demanding an investigation into whether the alleged 2018 secret agreement between Google and Facebook over digital ads violated federal antitrust law.
The members wrote a letter to the attorney general and acting US attorney general in Texas asking them to determine whether the federal charges were warranted.
The letter states that if the reports are accurate, the behavior appears to be a clear violation of Section 1 of the Sherman Antitrust Act, which criminalizes the conclusion of any contract restricting trade.
Prosecutors raised in ten states lawsuit against the search giant in December due to an agreement called Jedi Blue. This is according to an unedited draft version I reviewed newspaper The Wall Street Journal.
The Texas Attorney General’s Office led the lawsuit, alleging that Google and Facebook had sabotaged a key bid, which allows advertisers to bypass Google’s ad auctions.
According to the complaint, the search giant has repeatedly used its monopoly power to control prices.
It is alleged that the Jedi Blue Convention included Facebook receives a fixed percentage of ad offers through Google.
In return, Facebook agreed to reduce its participation in ad auctions, the complaint said.
In February, the parent company of a West Virginia newspaper chain filed an antitrust lawsuit against the two companies.
She claimed that they were taking digital advertising revenue away from news organizations. HD Media said in its complaint that the Jedi Blue agreement was an illegal barter.
Members of Congress now want the Justice Department to investigate whether the two companies should be subject to sanctions, including possible criminal penalties.
Both companies strongly deny any wrongdoing, and have issued detailed refutations of the charges.
Advertising collusion between Google and Facebook reappears
She said post Posted in January by Adam Cohen, Director of Economic Policy at Google: Facebook is one of over 25 Open Bidding partners. Facebook Audience Network engagement helps publishers by increasing the demand for publishers’ advertising space. This allows publishers to earn more profits.
“Facebook Audience Network must submit the highest bid to win a certain impression,” Cohen wrote. And if there is another eligible network, it wins the auction.
He added: “Facebook Audience Network’s participation in Open Bidding does not prevent Facebook from participating in vertical bidding or any other similar system.” Facebook Audience Network participates in several similar auctions across competing platforms.
Facebook’s December statement on the matter said such partnerships are common in the digital advertising markets. Any suggestion that these types of agreements are detrimental to competition is unfounded.
However, the specific allegations in the Texas case were enough to provoke further action. In the letter, members of Congress were particularly interested in the claim that the Jedi Blue deal was signed by Google Senior Vice President Philip Schindler and Facebook COO Sheryl Sandberg.
The letter said the two may have been aware that they were violating antitrust laws, as suggested in a clause governing the parties’ options to terminate the agreement in the event of certain government investigations into the agreement, which could be evidence of criminal intent.
The letter notes that the Jedi Blue deal amounts to auction rigging, in violation of Sherman Act. Criminal penalties can be up to $100 million for the violating company. With a fine of up to $1 million and ten years in prison if an individual is found guilty.
Also Read: Google and Facebook Collaborate Against Antitrust Measures