Google, Facebook CEOs Oversaw Illegal Ad Auction Deal, States Say

Facebook Chairman and CEO Mark Zuckerberg (L) and Google CEO Sundar Pichai.


The chief executives of Google and Facebook personally oversaw a 2018 illegal deal that favored Facebook over Google’s ad auction, according to a Texas-led group of state attorneys general in an amended antitrust complaint against Google on Friday.

Facebook, recently renamed Meta, is not named as a defendant in the lawsuit.

The complaint also alleges that Google manipulated its ad pricing levels under a secret program called Project Bernanke that suppressed second-place bids on ad auctions. This allowed Google to pocket some of the difference between the first and third place bids, while also hurting publishers who depend on ad revenue and could have pulled in more from higher bids.

As part of the deal with Facebook, Google and Facebook unlawfully collaborated to lower prices paid to publishers, cut off rival ad networks, and manipulate ad auctions operated by publishers, the complaint says.

The new filing shows how far the arrangement, alleged in earlier documents, went. Facebook COO Sheryl Sandberg, whose name is redacted in the lawsuit, called the deal “a big problem strategically” in an email that included CEO Mark Zuckerberg, whose name was also redacted. Sandberg and Google CEO Sundar Pichai signed the terms of the agreement, according to the states, noting that Sandberg was previously a senior executive in Google’s advertising business. Sandberg’s endorsement was reported earlier by The Wall Street Journal.

According to the third amended complaint in the case, Google entered into the agreement after Facebook announced a decision that would help publishers and advertisers circumvent fees imposed by Google for advertising through its services. The states alleged that Google feared a long-term threat to its ad server monopoly if enough buyers could circumvent its fees.

An internal Facebook document cited in the complaint reportedly said that partnering with Google would be “relatively cheap compared to building/buying and competing in a zero-sum ad tech game.” Google reportedly named the arrangement “Jedi Blue”, referencing Facebook’s blue logo.

The 16-state group and Puerto Rico alleged that this and other actions taken by Google in the online advertising space sought to unlawfully preserve its monopoly power, in violation of the Sherman Antitrust Act.

Google has previously strongly rejected the claims in the Texas-led lawsuit, with economic policy director Adam Cohen calling it out in a blog post 2021 a “deceptive attack”. A Google spokesperson said Friday the company will file a motion to dismiss next week and said the case remained “full of inaccuracies and lacking in legal merit.”

Google’s spokesperson called the states’ characterization of Facebook’s arrangement inaccurate, saying, “We sign hundreds of deals every year that don’t require CEO approval, and that was not no different.”

The spokesperson added that the agreement had been made public at the time, in connection with a Facebook blog post starting in 2018, naming Google as one of its new auction technology partners.

Shares of Meta were up more than 1% by mid-afternoon on Friday, while Google’s parent company Alphabet was up nearly 1%.

The deal, according to the Google spokesperson, simply allows the Facebook advertising network and the advertisers it represents “to participate in Open Bidding, as do more than 25 other partners. This helps increase demand for publisher ad space and helps publishers earn more revenue as we explain here.”

A spokesperson for Meta said in a statement Friday that its “non-exclusive bidding agreement with Google, and similar agreements we have with other auction platforms, has helped increase competition for placements. These business relationships allow Meta to deliver more value to advertisers while fairly compensating publishers, resulting in better results for everyone.”

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