Facebook and Google have agreed to reduce competition in the advertising sector, revealed the Wall Street Journal a few weeks ago. The New York Times has just revealed details of this secret contract thanks to documents obtained in the context of an antitrust lawsuit conducted by Texas.
Eliminate the competition
This pact, nicknamed “Jedi Blue”, aims to oust competition in the online advertising market, where the two American giants already reign supreme.
It is the sector of “header bidding” in question here, which designates a way of selling advertising banners. Instead of several consecutive auctions, all auctions take place simultaneously through a script implemented in the section
of the publisher’s website to provide the estimated number of advertising displays available to several supply-side platforms (SSP) and Ad Exchange. The highest bidder wins.
The documents obtained by the American media show how Google agreed to help Facebook identify the recipients of the ads, in this case 80% of mobile phone users and 60% of web users. In return, Facebook has pledged to bid on at least 90% of auctions when it can identify the end user and has pledged to spend up to $ 500 million per year under the deal.
For Adam Heimlich, CEO of Chalice Custom Algorithms, a marketing and data science consultancy, it’s like the social network can get going. “each tournament to the final“.
A fixed percentage for each auction
And that’s not all. The two companies are also said to have agreed that Facebook will win a fixed percentage of the auctions it is bidding on. “Unbeknownst to other players in the market, regardless of the height of the auction, the parties have agreed that the hammer will fall in Facebook’s favor a number of times,” the documents said. This allegation was denied by a spokesperson for the Mountain View firm who said that Facebook had to make the highest bid to win an auction, just like other players in the market.
More generally, Google and Facebook recognize the existence of this contract which would absolutely not be anti-competitive, according to them. A Facebook spokesperson claimed that such deals contributed to the contrary “to increase competition“in advertising auctions. Google also denies these claims and clarified its objections in a blog post in which it explains that Texas” distorts “the agreement.
This is not the first time that Google’s advertising practices have come under fire. In France, the Competition Authority imposed a record fine of 150 million euros on the company because of “opaque and difficult to understand” rules which would de facto exclude certain companies. At European level, accusations of non-compliance with the General Data Protection Regulation (GDPR) hang over Google.