Friday, May 14, 2021

Texas accuses Google, Facebook of illegal conspiracy

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“If you can prove an agreement between two companies, once you have proof of that agreement, it is considered illegal in itself,” said Sally Hubbard, director of enforcement strategy at the Open Markets Institute, an anti-monopoly think tank. “This is why antitrust law enforcement officials love to carry Section 1 cases, because if you can find evidence that multiple companies agree to price, agree not to compete, agree to allocate a deal – once you prove that deal, it’s automatically illegal. It stops there.

Google says there is nothing wrong with the arrangement. A company spokesperson said Facebook was one of 25 companies that participate in Google’s Open Bidding program and did not enjoy any special privileges.

Does Texas have evidence to the contrary? It’s hard to say, as the complaint is exasperatingly redacted. Unlike last week’s Facebook antitrust filing or the House report on Big Tech over the summer, most of the juicy details and internal documents, including a screenshot of the terms of the contract between Facebook and Google, are blacked out. (The heavy redactions aren’t the only weird thing about the case. The Texas attorney general’s office, fresh out of a lost effort to overthrow the presidential election, announced the lawsuit in a weird and amateurish way. video posted on Twitter before the case was filed.) Still, there are some tantalizing clues. The document alludes to an email about the arrangement from Dan Rose, Facebook’s vice president of partnerships, to CEO Mark Zuckerberg. This suggests that whatever deal the two companies have reached was signed at the highest level. Another heavily redacted section alleges that Google violated user privacy “flagrantly” after signing a deal with Facebook in 2015 that gave the company access to “millions of Americans end to end. encrypted WhatsApp messages, photos, videos and audio files. . ” (Facebook acquired WhatsApp the year before.)

Again, the Facebook arrangement is only part of the Texas case. More broadly, the complaint accuses Google of taking advantage of its control over every step of the online advertising chain – from the tool companies use to place ads, to the platform publishers use to make their advertising space available, to the exchange where the two sides meet, so as to stifle competition and strengthen Google’s results.

Google strongly disputes the claims. “Attorney General Paxton’s ad technology claims are baseless, but he has moved ahead despite all the facts,” a spokesperson wrote in an emailed statement. “We have invested in cutting edge advertising technology services that help businesses and benefit consumers. The prices of digital advertising have fallen over the past decade. Advertising technology costs are also falling. Google’s ad technology costs are lower than the industry average. These are the characteristics of a highly competitive industry. We will firmly defend ourselves against its unfounded claims in court. (Facebook did not immediately respond to a request for comment.)

Google, in other words, argues that its role in online advertising has been good for everyone. This is an excellent point to make – for the Section 2 parts of the case. If Google and Facebook strike a deal to withdraw from direct competition – which, again, Google denies – neither these other factors will only save the business from Section 1. Since the early booms of an antitrust movement against Big Tech began, dominant companies have insisted that the industry is competitive, relying on the existence of their competitors to help. refute the claim that they are too big or too powerful. Google may turn out to have bet too much on its competitors.

Update 12/16/20, 7:33 PM ET: This story has been updated with additional comment from Google.


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