🏹 The sweetheart, potentially anti-competitive Facebook-Google deal

The federal government is prominently suing Google and Facebook under antitrust law, alleging they used illegal practices to stifle competitors. But in an interesting side plot, the companies have now been accused of affording each other special advantages in an agreement known as -- we’re not making this up -- “Jedi Blue.” 

  • This happened in 2017, when Facebook was experimenting with online ads: Facebook was already gaining on Google and had started a new plan for a complicated, exchanged-based ad system known as header bidding. Google had totally dominated this market. 

  • But Facebook’s strategy would’ve been a major issue: In a court case filing reviewed by the NYT, a Google executive described the strategy as an “existential threat.” A year later, in 2018, Facebook suddenly joined an alliance of companies that agreed to follow header bidding rules favored by Google. 

  • Facebook got something out of the deal: As part of joining the alliance, Facebook was given an advantage for learning identities of users and being able to better target the related ads. No other companies got the same advantage, which another executive described to the NYT as the equivalent of starting “every tournament in the finals.”    

The agreement has antitrust written all over it

Literally. According to the NYT, FB and Google’s deal includes the word “antitrust” at least 20 times. Plus, the deal included language that both companies would assist each other if competitive concerns arose. (Both companies released statements denying any anti-competitive behavior).

The Verdict

It’s unclear how much this particular deal will matter in the government’s case against the tech titans. But Sally Hubbard, a lawyer with the Open Markets Institute think tank, told the NYT these types of deals among dominant players show another side of antitrust. “This idea that the major tech platforms are robustly competing against each other is very much overstated. In many ways, they reinforce each other’s monopoly power.”