WASHINGTON – Ten states sued Google on Wednesday, accusing the search engine giant of exploiting an illegal monopoly on digital advertising and luring a competitor.
Facebook Inc.
FB 0.04%.
as part of an alleged bid-rigging scheme called Star Wars characters.
The lawsuit, filed in the United States District Court in Texas, claims that Facebook emerged in 2017 as a powerful new competitor to Google, challenging the established dominance of Alphabet Inc.’s online advertising unit. Google responded with an agreement in which Facebook reduced its competitive offenses in exchange for guaranteed special treatment of ads auctioned by Google.
Google’s internal code name for the alleged Facebook deal refers to the characters of Star Wars, according to the lawsuit, who edited the details. Someone familiar with the case said the code name was Jedi Blue, after the Jedi knights of the science fiction franchise.
Particulars of the antitrust procedure with regard to technology
Google is a trillion-dollar monopoly that blatantly abuses its monopoly power, forcing even senior Facebook executives to accept a contract that undermines the heart of the [competitive] process, the Texas Attorney General said.
Ken Paxton,
who conducted the trial, said in a statement.
These accusations have opened a new front of criticism for the two technology giants, each of which has been the subject of federal antitrust cases in recent weeks.
Facebook refused to comment. Google has denied the existence of anti-competitive practices and reiterated its view that it operates in highly competitive markets.
Attorney General Paxton claims that the advertising technology is unfounded, but he continues despite the facts. We have invested in advanced advertising technology that helps businesses and consumers, said a Google spokesperson Wednesday. We will defend ourselves vigorously in court against his unfounded accusations.
A spokesman said the claim that Facebook is inaccurate and that the company does not receive specific data.
Nine other Attorneys General, all Republicans like Mr. Paxton, have joined the trial. The Democrats were noticed for their absence. They joined Texas in the launch of a bipartisan Google search last fall, although other states could have joined the lawsuit later. A separate two-party group of attorneys-general is preparing another antitrust case against Google, probably aimed at the search industry, which could be filed as early as Thursday.
Texas Attorney General Ken Paxton has accused Google of using its power to manipulate the advertising market, suppress competition and harm consumers.
Photo:
Jay Janner/Austin American Statesman/Associated Press
The case, headed by Texas, contains allegations in the case filed on the 20th. The lawsuit filed against Google by the Ministry of Justice in October has not been discussed in detail. The federal lawsuit focuses on Google’s flagship research business and states that the company maintains its status as an Internet gatekeeper through an illegal network of exemptions and corporate blocking agreements that exclude competitors.
Wednesday’s complaint goes back more than ten years, claiming that Google has quietly built up and protected its dominant position in the digital advertising market, starting with the acquisition of the advertising technology company DoubleClick in 2008.
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Many of these claims relate to Google’s advertising software, which is used to buy and sell ads on sites across the Internet. Google has the dominant tool in every link of the complex chain between online publishers and advertisers, giving it a unique power over monetising digital content. The company also has important platforms to reach consumers, such as B. YouTube.
The lawsuit in Texas accuses Google of illegally linking these products and using its power in part of the advertising chain to force publishers or advertisers to use another Google tool.
These statements are in line with the concerns previously expressed by advertising technology companies and newspaper publishers. Google would have created a system brimming with conflicts of interest in which it used its data superiority and market dominance to favour its own tools and channel money to its own properties.
Google is currently using its enormous market power to impose a very high burden of [REDACTED] percent of advertising revenue that would otherwise go to countless publishers and producers of online content such as newspapers, cookery sites and blogs who survive by selling ads on their websites and applications, the process says.
In the court case it is argued that these additional costs will ultimately be borne by US consumers as a result of the higher prices and lower quality of the goods, services and information provided by these companies.
The complaint is also directed against Google for allegedly influencing an initiative for the development of mobile websites called Accelerated Mobile Pages to force publishers to use a format that would make it more difficult to use alternative technologies to place ads on these pages.
At WSJ Tech Live 2020, technology industry leaders were asked about the impact on their sector of the antitrust lawsuit filed against Google by the Ministry of Justice in October. Pictures: Andy Davis at WSJ; Philip Pacheco/AFP/Getty Images; David Paul Morris/Bloomberg News.
The lawsuit claims that Google developed a secret program to harm publishers, codenamed Star Wars, although the exact name was unmasked in the lawsuit.
The program seems to give publishers more freedom of choice between fairs that link buyers and sellers of digital advertising, according to the lawsuit. But it is said that Google secretly awarded its own subsidy, even though another subsidy made a higher bid. The program was designed… to avoid competition, and so the program has harmed publishers, says the lawsuit, citing Google’s internal communications.
The company has consistently refuted claims that it dominates the advertising technology market.
To say that there is no competition in the sector of advertising technology is simply not true, said a blog last year. On the contrary, the industry is known to be overpopulated. Thousands of companies, large and small, collaborate and compete to advertise digitally online, each with different specialties and technologies.
According to the lawsuit, Google has made every effort to maintain its market power.
When Facebook emerged as a threat, Google made an overture to Facebook, according to the lawsuit, because both parties would have reached an agreement with the Jedi Blue. Facebook came as a direct threat in exchange for the provision of information by Google, speed and other benefits in the auctions that Google holds for mobile advertising publishers, according to the lawsuit.
The parties agreed with [EXACTLY] the frequency with which Facebook would hold [EXACTLY] publisher auctions – they literally manipulated the auctions with [EXACTLY] the frequency with which Facebook would bid and win, according to the lawsuit.
The legal action claims damages from Google and asks the court to stop Google’s behaviour, in particular by taking structural measures to restore the conditions of competition in the markets concerned.
The states joining the Texas-led trial are Arkansas, Idaho, Indiana, Kentucky, Mississippi, Missouri, North Dakota, South Dakota and Utah.
A federal lawsuit filed this fall has shed light on Google’s relationship with another technology giant,
Apple Inc,
which claims that Google is using the billions of dollars raised by advertising to pay mobile phone manufacturers, network operators and browsers such as Apple Safari to support Google as a pre-installed standard search engine.
Government and technology leaders want to rewrite the law that governs the Internet. The WSJ explains what section 230 is, how it has shaped the modern Internet and what legislators and technology leaders want to change. Photographic illustration: Carlos Waters/WSJ
Together, these cases threaten to damage Silicon Valley’s reputation with preferential agreements that harm both consumers and potential competitors.
Disputes can take years to resolve. Ultimately, state and federal lawsuits against Google could be consolidated into a single case. So far, the states have joined the Ministry of Justice, which is also asking more and more detailed questions – to Google’s competitors and executives – about the way in which Google’s advertising industry as a third party deals with publishers and advertisers, according to people familiar with the research.
Editor of the Wall Street Journal
News corporation,
an old Google critic, was one of the publishers targeted by antitrust investigators.
New York Times Co.
,
Gannett Co.
,
Nexstar Media Group Inc.
and Conde Nast, according to some.
David Chavern,
Executive Director of the professional association News Media Alliance, welcomed the lawsuit filed by the States. The quality of local journalism has been directly affected by Google’s anti-competitive behavior and we look forward to the judicial investigation into all of their behavior and activities, he said.
-Keechie Hagee contributed to this article.
Email John D. McKinnon at [email protected] and Ryan Tracy at [email protected].
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