Google, Meta Investigated By EU, UK Over Ad Deal

The UK’s antitrust watchdog and the European Commission intend to “closely co-operate”, after they both opened formal antitrust investigations into Google and Meta (aka Facebook).

The investigation is to assess whether an agreement between Google and Meta for online display advertising services may have breached competition rules.

The announcement from the European Commission and the UK’s Competition Market Authority (CMA), said it will look into the so called ‘Jedi Blue’ agreement between the two tech giants in 2018.

US lawsuit

In January a group of US states alleged in a newly unsealed antitrust complaint that Google chief executive Sundar Pichai personally approved a deal with Facebook aimed at killing off competition in the advertising technology market.

The 2018 deal, which Google codenamed “Jedi Blue”, was signed by Facebook chief executive Mark Zuckerberg and chief operating officer Sheryl Sandberg, according to the complaint.

The states originally filed their lawsuit against Google in December 2020, updating it with a heavily redacted version of their most recent complaint in November.

The complaint was refiled with fewer redactions after a New York judge ruled additional details should be made public.

Google and Facebook are the number 1 and number 2 players in the online advertising market.

When online publishers began using an alternative system for selling their ad space, Google allegedly worked to undermine it by creating a similar system it controlled, the US lawsuit says.

EU, UK investigation

Now the UK and EU are opening their own investigations of the deal.

”Many publishers rely on online display advertising to fund online content for consumers,” said executive VP Margrethe Vestager, in charge of competition policy. “Via the so-called ‘Jedi Blue’ agreement between Google and Meta, a competing technology to Google’s Open Bidding may have been targeted with the aim to weaken it and exclude it from the market for displaying ads on publisher websites and apps.”

“If confirmed by our investigation, this would restrict and distort competition in the already concentrated ad tech market, to the detriment of rival ad serving technologies, publishers and ultimately consumers,” said Vestager.

“We’re concerned that Google may have teamed up with Meta to put obstacles in the way of competitors who provide important online display advertising services to publishers,” said Andrea Coscelli, CMA chief executive.

“If one company has a stranglehold over a certain area, it can make it hard for start-ups and smaller businesses to break into the market – and may ultimately reduce customer choice,” said Coscelli. “We will not shy away from scrutinising the behaviour of big tech firms while we await powers for the Digital Markets Unit, working closely with global regulators to get the best outcomes possible.”

The CMA said it is focusing on whether the companies restricted or prevented the uptake of header bidding services and whether Google also affected the ability of other firms to compete with its products in this area.

As part of its investigation, the CMA will consider whether an agreement between Google and Meta broke the law. The CMA is also scrutinising Google’s conduct in relation to header bidding services more widely to see if the firm abused a dominant position and gained an unfair advantage over competitors trying to provide a similar service.

The European Commission is also concerned that the agreement may form part of efforts to exclude ad tech services competing with Google’s Open Bidding programme, and therefore restrict or distort competition in markets for online display advertising, to the detriment of publishers, and ultimately consumers.

Both the UK’s CMA and European Commission said they would work closely together on the probe.

The CMA also noted their investigation is also the subject of the lawsuit by the US State of Texas and other US states.

Google, Meta response

Both Google and Meta have responded to the news of the official investigation.

“The allegations made about this agreement are false,” Google was quoted by Reuters as saying in a statement. “This is a publicly documented, procompetitive agreement that enables Facebook Audience Network (FAN) to participate in our Open Bidding program, along with dozens of other companies.”

Meta also issued its own response.

“Meta’s non-exclusive bidding agreement with Google and the similar agreements we have with other bidding platforms, have helped to increase competition for ad placements,” Facebook was quoted by Reuters as saying in a statement.