Facebook and Google Secret Advertising Agreement Antitrust Class Action

Digital advertising is big business now, expected to total $198 billion in 2021. The complaint for this antitrust class action brings suit against Facebook, Inc. and Google, LLC (along with its parent company, Alphabet, Inc.), saying that the two should be vigorous competitors for advertising yet claiming that they are not. The case centers on an agreement between the two companies and their alleged agreement to allocate elements of the market and not to compete against each other.

The class for this action is all persons who bougth digital display advertising through Google Ads, Amazon DSP, or another non-Facebook demand-side platform to reach consumers in the US between September 2018 and the present.

The complaint opens with a startling statement: “In 2019, spending in the United States on digital, online advertising reached $129.34 billion, exceeding for the first time the total spent in the US on all forms of traditional print, radio, television and billboard advertising.”

About a third of the amount is spent on search advertising, which is mostly Google’s business. The remaining two-thirds is display advertising, with images, banners, and videos placed on websites. Advertisers with material they want to post come together with publishers with space to sell on ad exchanges. The transactions take place on the ad exchanges at high speed.

Facebook, Google, and, to a much lesser extent, Amazon control around 79% of this “open display” market with their ad exchanges. Google has the Google Display Network (GDN), which is part of Google Ads, and Facebook has the Facebook Audience Network (FAN). These two exchanges handle around 67% of the open display advertising spend.

Facebook and Google should thus be fierce competitors, but the complaint says that this is not true. The complaint alleges that the two companies “conspired to allocate to onoe another the advertisers and publishers affiliated with each network and to eliminate competition between them in the open display advertising market. … Facebook agreed to bid FAN’s demand through Google’s ad exchange, rather than directly through multiple exchanges using a competing technology called ‘header bidding.’”

Where’s the gain for Facebook? The complaint claims that in return, it “received (i) preferential treatment over other bidders, including a guaranteed ‘win rate’; (ii) superior information about the advertising opportunity, including the identity of the user most of the time; and (iii) increased ‘timeouts’ for Facebook to bid before it was excluded from the auction…” All of these advantages allowed Facebook to bid and win more often compared to other bidders.

The complaint alleges that this kind of agreement violates the Sherman Act, an antitrust law. In fact, the complaint reports that ten state attorneys general filed a complaint against Google on December 16, 2020. A January 17, 2021 article in the New York Times, called “Behind a Secret Deal Between Google and Facebook,” further reported on the agreement.

Article Type: Lawsuit
Topic: Antitrust

Most Recent Case Event

Facebook and Google Secret Advertising Agreement Antitrust Complaint

February 9, 2021

Digital advertising is big business now, expected to total $198 billion in 2021. The complaint for this antitrust class action brings suit against Facebook, Inc. and Google, LLC (along with its parent company, Alphabet, Inc.), saying that the two should be vigorous competitors for advertising yet claiming that they are not. The case centers on an agreement between the two companies and their alleged agreement to allocate elements of the market and not to compete against each other.

Facebook and Google Secret Advertising Agreement Antitrust Complaint

Case Event History

Facebook and Google Secret Advertising Agreement Antitrust Complaint

February 9, 2021

Digital advertising is big business now, expected to total $198 billion in 2021. The complaint for this antitrust class action brings suit against Facebook, Inc. and Google, LLC (along with its parent company, Alphabet, Inc.), saying that the two should be vigorous competitors for advertising yet claiming that they are not. The case centers on an agreement between the two companies and their alleged agreement to allocate elements of the market and not to compete against each other.

Facebook and Google Secret Advertising Agreement Antitrust Complaint
Tags: Antitrust, Collusion and Price Fixing