Google and Meta are under investigation by EU and UK antitrust regulators over ‘Jedi Blue’ – a deal between the two companies that critics say allows them to prevent smaller tech companies from gaining a foothold in the online advertising market point.
In a press statement, the European Commission said it was concerned that the agreement, signed in September 2018, “could form part of an effort to exclude ad tech services that compete with Google’s Open Auction program, thereby limiting or distorting online display advertising. market competition”. As a result, a formal antitrust investigation is being opened.
The UK’s Competition Markets Authority said it was also investigating the deal, said Andrea Coscelli, the head of the UK’s Competition Markets Authority. “We are concerned that Google may work with Meta to create barriers for competitors who provide publishers with significant online display advertising services.”
The “Jedi Blue” deal was also under investigation in the United States, and 15 state attorneys general have filed lawsuits against the two companies. Multiple legal battles have allowed details of the deal and prosecutors’ charges to slowly emerge. For example, court filings allege that “Jedi Blue” was personally reviewed and approved by top executives at Google and Meta, including Sundar Pichai, Sheryl Sandberg and Mark Zuckerberg.
The origins of Jedi Blue can often be traced back to a 2017 decision by Meta (than Facebook) to support an ad tech system comparable to Google. The U.S. lawsuit alleges that Meta dropped support for the technology in 2018 after Google offered the company preferential access to its online ad bidding system. As part of the deal, Meta got first place when it bought ad inventory from Google, and then stopped investing in rival ad tech systems.
It’s a bit of a complicated backstory, but the result, according to U.S. prosecutors, is that the two companies worked together to save each other money and prevent other adversaries from entering the space.
While regulators are investigating Meta and Google, the European Commission says it’s possible that only Google is to blame. The EU’s competition chief, Margrethe Vestager, told the Financial Times. “We haven’t come to a conclusion as to whether it was Google alone or they conspired together. It’s uncertain whether Meta was aware of the impact of the deal, and that’s what we have to investigate.”
Meta and Google told Reuters that the EU and U.K. investigations were prompted by unnecessary fears and may have been misled.
Google said in a statement. “The allegations about this agreement are false. This is a publicly documented, pro-competitive agreement that enables Facebook Audience Network (FAN) to participate in our open auction program with dozens of other companies.”
Meta subsidiary Facebook said in a statement. “Meta’s non-exclusive bidding agreement with Google and similar agreements we have with other bidding platforms are helping to increase competition for ad serving.”
If Meta or Google are found to be in breach of EU competition law, they could be fined up to 10% of their annual global revenue. However, the investigation could take years to reach a conclusion and would give the companies ample opportunity to appeal any ruling.