The Secret Sweetheart Deal between Facebook and Google

Well, this is starting to get interesting. 

When the House Judiciary report on big tech came out last October, it was clear that a lot of information would come to light that could have massive implications for Amazon, Apple, Google and Facebook.

The resulting lawsuits (there are several in play) are bringing behind-the-scenes deals to the light of day, including a sweetheart deal that served to solidify the digital ad duopoly of Facebook and Google.

Daisuke Wakabayashi and Tiffany Hsu break down what’s being learned in a recent piece in the New York Times.

“In 2017, Facebook said it was testing a new way of selling online advertising that would threaten Google’s control of the digital ad market,” the authors write. “But less than two years later, Facebook did an about-face and said it was joining an alliance of companies backing a similar effort by Google.

“Facebook never said why it pulled back from its project,” the article continues, “but evidence presented in an antitrust lawsuit filed by 10 state attorneys general last month indicates that Google had extended to Facebook, its closest rival for digital advertising dollars, a sweetheart deal to be a partner.”

In other words, the duopoly intentionally strengthened itself, leaving the other members of the alliance out of the loop.

“Executives at six of the more than 20 partners in the alliance told The Times that their agreements with Google did not include many of the same generous terms that Facebook received and that the search giant had handed Facebook a significant advantage over the rest of them,” the article notes. 

Clearly this information — which was redacted in the formal complaint but appeared in a draft version — raises even more concerns about competition and fair play, or lack thereof, in big tech. 

Google spokesperson Julie Tarallo McAlister takes issue with the complaint, saying it misrepresents their agreement and other aspects of their ad tech platform. Facebook spokesperson Christopher Sgro defended the agreement, saying deals like this “help increase competition in ad auctions,” and ultimately benefit advertisers and publishers. 

Meanwhile, Sally Hubbard, a former assistant AG in NY, calls it an example of ways “they reinforce each other’s monopoly power.”

Now, it’s on advertisers to decide if it’s worth it to continue sending more than 50% of all their digital ad dollars to these two companies. Factor in the massive plague of ad fraud, and it’s hard to justify the ongoing insistence that digital advertising is a solid approach. 

The article does an excellent job of breaking down the programmatic advertising industry, and definitely worth a read if your brand is relying on (or hopes to rely on) digital advertising revenue to any great extent. 

Finally, I’ll leave you with this.

“Perhaps the most serious claim in the draft complaint was that the two companies had predetermined that Facebook would win a fixed percentage of auctions that it bid on,” the article continues.

“While both companies said that the deal is not an antitrust matter,” the article continues, “they included a clause in the agreement that requires the parties to ‘cooperate and assist’ each other if they are investigated for competition concerns over the partnership.”

No throwing each under the bus, in other words. Meanwhile, the wheels of the duopoly keep rolling on.