Facebook and Google agreed, according to The Wall Street Journal, that Facebook would not compete with Google’s ad auction platform. In exchange, Facebook could purchase advertisements from the system at more favorable rates.
The deal involves Google’s ad auction platform, which allows companies to buy and sell ads. Google was afraid that Facebook itself would develop an auction platform, according to The Wall Street Journal. That is why Google decided to agree with Facebook that the latter would not develop a platform itself, in exchange for cheaper rates at Google’s platform. According to the deal, Facebook would pay a minimum of $ 411 million to Google’s ad auction platform every year. Facebook would thereby win a set percentage of auctions.
This deal would be called Jedi Blue and has been running since September 2018. Facebook internal documents call the deal “relatively cheap” compared to direct competition from Google. In an email to CEO Mark Zuckerberg, Facebook’s chief operating officer Sheryl Sandberg would have called the agreement ‘a big deal strategically’.
The two companies realized, according to the paper, that the deal could be a trigger for an antitrust investigation. Therefore, the companies would have agreed to assist each other in such investigations. According to the agreement, the parties would inform each other ‘immediately and completely’ about all government communication regarding the deal.
In a response to the newspaper, Google says that such an antitrust agreement is ‘normal’ and that the claimed agreement about the auction platform is not correct. Facebook would indeed participate in Google’s platform, but would also participate in other auction platforms. In addition, the company would not receive data that other buyers would not receive. Facebook also says that the accusations are incorrect.
According to The Wall Street Journal, the claims are in a draft of the ten states indictment dated Wednesday, Dec. 16. The ten Republican states sued Google for multiple anti-competitive violations. The indictment mentions that Facebook intended to compete with Google in the header bidding market, but that this plan was actually intended as a threat to Google. According to the states, Facebook hoped to be able to negotiate a deal with Google with the threat, which would give the social media company advantages over other participants. Thanks to this deal, Google was able to maintain a monopoly position in the ad auctions market, according to the indictment. Many passages in the document are marked in black, The Wall Street Journal says it has seen a draft version without markings.