Behind a Secret Deal Between Google and Fb

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Behind a Secret Deal Between Google and Facebook

The Wall Street Journal had previously reported on aspects of the draft complaint.

The recent antitrust proceedings against Google and Facebook have put Big Tech's lucrative businesses at the center. In October, the Justice Department sued Google and signed an agreement with Apple to use Google as the pre-selected search engine for iPhones and other devices.

"This idea of ​​the big technology platforms competing against each other is very exaggerated," said Sally Hubbard, a former assistant attorney general in the New York City Anti-Trust Office who now works at the Open Markets Institute, a think tank. "In many ways they strengthen mutual monopoly power."

Google and Facebook accounted for more than half of all digital advertising spending in 2019. In addition to displaying advertisements on their own platforms like the Google search engine and the Facebook homepage, websites, app developers and publishers rely on the companies to advertise their pages.

The agreement between Facebook and Google, code-named "Jedi Blue" within Google, affects a growing segment of the online advertising market known as programmatic advertising. Online advertising generates hundreds of billions of dollars in global sales each year, and automated buying and selling of advertising space accounts for more than 60 percent of total sales, according to researchers.

In the milliseconds between when a user clicks a link to a webpage and the ads load on the page, bids are placed behind the scenes for available ad space on marketplaces known as exchanges. The winning bid will be forwarded to an ad server. With both ad exchanges and Google's ad server dominating, the company often ran its own exchanges.

A method called "header bids" was developed to reduce reliance on Google's ad platforms. News agencies and other websites could collect offers from multiple exchanges at the same time, which helps increase competition and better prices for publishers. According to one estimate, more than 70 percent of publishers had adopted the technology by 2016.

Google has developed an alternative called Open Bidding that supports an alliance of exchanges. While Open Bidding allows other exchanges to compete with Google at the same time, the search company charges a fee for each winning bid, and competitors say there is less transparency for publishers.