Google has been accused of secretly giving Facebook advertising data perks and engaging in a deal with the social media giant to manipula...
Google has been accused of secretly giving Facebook advertising data perks and engaging in a deal with the social media giant to manipulate sales to consolidate their market power illegally, a new antitrust lawsuit alleges.
Texas and nine other states filed the lawsuit against Google late Wednesday, accusing the search giant of using its 'monopolistic power' to control pricing of online advertisements, fixing the market in its favor and eliminating competition.
The lawsuit, which brands Google as an 'internet Goliath' and was announced by Texas Attorney General Ken Paxton, targets the heart of the search giant's business - the digital ads that generate nearly all of its revenue.
It was prompted by complaints by publishers and other businesses whose publications rely on advertising revenue to survive.
In the lawsuit, Google is accused of striking up an illegal deal with Facebook, a major competitor for online ad sales, to manipulate advertising auction.
Texas and nine other states filed the lawsuit against Google late Wednesday, accusing the search giant of using its 'monopolistic power' to control pricing of online advertisements, fixing the market in its favor and eliminating competition
Google and Facebook compete heavily in online ad sales and together capture over half of the market globally.
The two players agreed in a publicized deal back in 2018 to start giving Facebook's advertiser clients the option to place ads within Google's network of publishing partners, the lawsuit alleges.
For example, a sneaker blog that uses software from Google to sell ads could end up generating revenue from a footwear retailer that bought ads on Facebook.
Executives at the highest level of the companies signed off on the deal, according to the complaint.
While that deal was announced publicly, the lawsuit alleges that Google failed to disclose it would give Facebook preferential treatment and benefits, including access to the search giant's data.
As part of the secret deal, Facebook agreed to back down from supporting competing software, which publishers had developed to dent Google's market power, the complaint said.
'Facebook decided to dangle the threat of competition in Google's face and then cut a deal to manipulate the auction,' the complaint alleged, citing internal communications.
In exchange, Facebook received various benefits, including access to Google data and policy exceptions that enabled its clients to unfairly get more ads placed than clients of other Google partners could, the lawsuit alleges.
Google spokesman Peter Schottenfels described the accusations in the lawsuit about the ongoing partnership as inaccurate and said that Facebook does not receive special data. Facebook, which is not accused of any wrongdoing in the complaint, has not commented.
In the lawsuit, Google is accused of striking up an illegal deal with Facebook, a major competitor for online ad sales, to manipulate advertising auction
Texas Attorney General Ken Paxton announced the lawsuit against Google on Wednesday afternoon. It has been filed in the Eastern District of Texas
The complaint also alleges that Google and Facebook engaged in fixing prices of ads and have continued to cooperate.
That section of the lawsuit was heavily redacted, leaving it unclear how and when Google and Facebook allegedly used their 'market allocation agreement'.
'Google and Facebook were highly aware that their agreement could trigger antitrust violations. The two companies discussed, negotiated, and memorialized how they would cooperate with one another,' the complaint said.
As more marketers have increased their spending online, digital ads have turned Google into a moneymaking machine. Through the first nine months of this year, Google's ad sales totaled nearly $101 billion, accounting for 86 percent of its total revenue.
The lawsuit accuses Google of intending to use its alleged stranglehold on digital ads to choke off other avenues of potential competition and innovation.
'Google has an appetite for total dominance, and its latest ambition is to transform the free and open architecture of the internet,' the lawsuit alleges.
In the 'ad tech' marketplace that brings together Google and a huge universe of online advertisers and publishers, the company controls access to the advertisers that put ads on its dominant search platform. Google also runs the auction process for advertisers to get ads onto a publisher's site. Nine of Google's products in search, video, mobile, email, mapping and other areas are estimated to have over a billion users each, providing the company a trove of users' data that it can deploy in the advertising process.
Google officials say the company shares the majority of its 'ad tech' revenue with publishers, such as newspaper websites.
The lawsuit was announced by Texas Attorney General Ken Paxton and filed in the Eastern District of Texas on Wednesday afternoon.
The nine states that joined Texas are Arkansas, Indiana, Kentucky, Missouri, Mississippi, South Dakota, North Dakota, Utah and Idaho.
'Google repeatedly used its monopolistic power to control pricing (and) engage in market collusions to rig auctions in a tremendous violation of justice,' Paxton said in announcing the suit.
He added that Google 'eliminated its competition and crowned itself the king of online advertising'.
'If the free market was a baseball game, Google positioned itself as the pitcher, the batter and the umpire,' he said.
In response to Paxton's comments specifically, a Google spokeswoman said: 'We will strongly defend ourselves from his baseless claims in court.
'Digital ad prices have fallen over the last decade. Ad tech fees are falling too. Google's ad tech fees are lower than the industry average. These are the hallmarks of a highly competitive industry.'
The lawsuit is the fourth in a series of federal and state lawsuits aimed at reining in alleged bad behavior by the big tech platforms that have grown significantly in the past two decades.
Texas and 11 other states had already previously joined the Justice Department's landmark antitrust lawsuit against Google that was filed in October.
That federal lawsuit argued that Google illegally used its market power to hobble rivals.
It accused Google of building a great search engine but then fending off competition through exclusive deals with Apple and others.
The suit also alleged that Google abused its dominance in search advertising.
Google has called the Justice Department lawsuit 'deeply flawed'.
Texas has long been expected to follow the Justice Department's lawsuit against Google.
Colorado, Nebraska, New York and another group of states are also expected to file a separate lawsuit over Google's search results.
That lawsuit is expected to argue that Google abused its power when ranking its own offerings in search results.
Separately, the FBI is investigating whether Paxton, a close ally of President Donald Trump, broke the law in using his office to help a wealthy donor who is also under federal investigation.
This fall, eight of the attorney general's top deputies accused him of bribery, abuse of office and other crimes in the service of an Austin real estate developer who employs a woman with whom Paxton is said to have had an extramarital affair.
All eight of Paxton's accusers have since been fired or resigned, including the deputy attorney general who had been leading the office's probe of Google. The court complaint list attorneys with private firms in Houston, Chicago and Washington, D.C., as the lead lawyers on the case.
Paxton announced the lawsuit the week after the US Supreme Court rejected his legal push to overturn Joe Biden's victory in the presidential election, a case that prompted widespread speculation that the attorney general is angling for a preemptive pardon from Trump.
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