Facebook & Google Secret Deal to Reduce Ad Competition

Facebook and Google reportedly settled a deal that reduced ad competition between the two companies. This was revealed by a set of documents obtained from a Texas antitrust lawsuit explaining a “sweetheart deal” Google gave to Facebook back in 2018.

The deal was nicknamed “Jedi Blue” and it gave Facebook a favor in ad header bidding, where websites could get ad space from multiple exchanges at once. In return, Facebook would back Google’s Open Bidding approach to sell those ads, thereby reducing competition for both.

As a result, Facebook had more time to bid for ads, direct dealings with websites hosting ads, and Google’s aid in understanding ad audiences. The social network giant agreed to bid more than 90% of the ad auctions when it could identify users and also promised to spend a minimum of $500 million per year.

Facebook also requested Google to avoid using ad info to manipulate ad auctions in its favor.

Both companies rejected accusations that Jedi Blue was anti-competitive. A Facebook spokesperson said that such deals help Google increase ad competition and the arguments against it were “baseless”. Whereas a Google spokesperson said that the Texas lawsuit “misrepresents” the deal and other aspects of its ad business.

This won’t necessarily sway regulators as there is enough evidence suggesting the two companies were fully aware of the potential scrutiny. At this point, it wouldn’t be surprising to see more regulatory action against the two companies once again.