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| Advertising agreements between Google and Facebook reappear |
Four Democratic members of Congress have asked to investigate whether a secret digital advertising deal between Google and Facebook in 2018 violated federal antitrust laws.
The members wrote a letter to the attorney general of Texas and the acting attorney general of the United States asking them to determine whether the federal allegations were reasonable.
The letter indicated that the conduct, if the report is correct, appears to be a clear violation of Section 1 of the Sherman Antitrust Act, which criminalizes contracts that restrict trade.
In December, ten plaintiffs sued the search giant over a deal called Jedi Blue. This is based on an unedited Wall Street Journal preview.
The Texas attorney general has filed a lawsuit accusing Google and Facebook of disrupting an important attempt that allowed advertisers to beat Google's ad bids.
The lawsuit alleges that the search giant has repeatedly used its monopoly power to control prices.
He claimed that the Jedi Blue deal ensured that Facebook would receive a fixed percentage of advertising revenue through Google.
The lawsuit alleges that Facebook, in turn, agreed to reduce its participation in the ad auctions.
In February, the parent company of a West Virginia newspaper chain filed an antitrust lawsuit against the two companies.
He claims that they take digital advertising revenue from news agencies. HD Media said in its complaint that the Jedi Blue deal was an illegal barter.
Members of Congress now hope the Justice Department will investigate whether the two companies should be sanctioned, including possible criminal penalties.
Both companies have vehemently denied any wrongdoing and completely refuted the allegations.
Advertising agreements between Google and Facebook reappear
"Facebook is one of more than 25 open bidding partners," Google Chief Economist Adam Cohen said in a January blog post. The Facebook Audience Network commitment helps publishers by increasing the demand for publisher ad spaces so that publishers can achieve more profits.
"The Facebook Audience Network has to put in the highest bid to get any given impression," Cohen wrote. If another network qualifies, it wins the auction.
He added that Facebook Audience Network's participation in open auctions does not prevent Facebook from participating in vertical auctions or similar systems. Facebook Audience Network participates in similar auctions on many competing platforms.
Facebook's December statement on the matter stated that such partnerships are common in the digital advertising market. The claim that such agreements are not conducive to competition is unfounded.
However, the allegations identified in the Texas case are sufficient for further action. In the letter, members of Congress were particularly interested in the statement that Philip Schindler, Google's senior vice president, and Shirley Sandberg, Facebook's chief operating officer, signed the Jedi Blue deal.
The letter states that both sides may have realized that they had violated antitrust laws, and as the paragraph indicates, if the government conducted certain investigations into the deal, either party could terminate the deal, which is evidence of criminal intent.
The letter stated that the Jedi Blue deal was auction rigging and in violation of Sherman Act. Criminal penalties for companies that violate the rules can be up to $100 million. If someone is found guilty, they can face a fine of up to $1 million and up to 10 years in prison.