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Antitrust battle latest: Google, Facebook 'colluded' to smash Apple's privacy protections
Amended Texas complaint alleges backroom efforts to maintain ad dominance and more
Several years ago, to deal with the competitive threat of header bidding – a way for multiple ad exchanges to get a fair shot at winning an automated auction for ad space – Google allegedly hatched a plan called "Jedi" to ensure that its ad exchange always won.
And in 2017, after Facebook announced plans to support header bidding, Google, it's claimed, struck a deal with Facebook – dubbed "Jedi Blue" – in which the two internet behemoths would "work together to identify users using Apple products," and set up "quotas for how often Facebook would win publishers’ auctions."
The Jedi project is described in an amended complaint, filed Friday, that expands the December 2020 antitrust claim against Google, brought by Texas, 14 other US states, and the Commonwealth of Puerto Rico.
The Texas antitrust case against Google is one of four ongoing government-backed claims in the US alleging the web search giant competes unfairly. A year ago, the US Justice Department filed a federal antitrust lawsuit. Colorado also filed a complaint last December on behalf of a group of 38 states. Then there's the complaint filed in July over Android and the Google Play Store, backed by 36 US states and commonwealths, along with Washington DC.
The amended complaint in the Texas litigation expands on a claim in the initial complaint about Google's alleged effort to delay privacy legislation, with help from Apple, Amazon, Facebook, and Microsoft, at a closed-door meeting between the corporations on August 6, 2019.
We have been successful in slowing down and delaying the [European ePrivacy Regulation] process and have been working behind the scenes hand in hand with the other companies
To make the case that Google's publicly stated concern about privacy is a sham, the new text describes a Google document prepared in advance of the meeting that said, "we have been successful in slowing down and delaying the [ePrivacy Regulation] process and have been working behind the scenes hand in hand with the other companies," referring to the European Commission's data protection rules.
Header bidding emerged around 2015 as a way to bypass Google's control of the ad auction ecosystem and the fees it charged. By 2016, the court filing explains, about 70 per cent of major publishers were using header bidding to offer their ad space to multiple ad exchanges at the same time, not just Google, to get the best deal from advertisers.
"Google quickly realized that this innovation substantially threatened its exchange’s ability to demand a very large – 19 to 22 percent – cut on all advertising transactions," the revised complaint says. "Header bidding also undermined Google’s ability to trade on inside and non-public information from one side of the market to advantage itself on the other – a practice that in other markets would be considered insider trading or front running."
Google secretly made its own exchange win, even when another exchange submitted a higher bid
Initially, the amended complaint says, Google appeared to accommodate publishers by allowing them to use its servers to send their ad space inventory to be sold on more than one exchange at a time.
"However, Google secretly made its own exchange win, even when another exchange submitted a higher bid," the amended complaint says. "Google’s codename for this program was Jedi – a reference to Star Wars."
"And as one Google employee explained internally, Google deliberately designed Jedi to avoid competition, and Jedi consequently harmed publishers. In Google’s words, the Jedi program 'generates suboptimal yields for publishers and serious risks of negative media coverage if exposed externally.'"
Google's dominance of the online ad ecosystem, the complaint argues, allows it to collect between 22 and 42 per cent of ad dollars that would otherwise go to publishers and web content producers.
'Forestall and diminish child privacy protections'
It's also alleged that Google tried to coordinate efforts among other tech firms "to forestall and diminish child privacy protections in proposed regulations by the FTC" and legislators. The document Google prepared for the August 6, 2019 tech company cabal indicated the ad biz wanted its peers to align their positions on child safety and "sought to rein in Microsoft" so it would not compete on privacy.
The alleged Jedi Blue partnership between Google and Facebook, outlined in the initial complaint, is explained in more detail in the latest filing. The two companies, it's said, have been working closely to help Facebook "recognize users in auctions and bid and win more often."
"For example, Google and Facebook have integrated their software development kits (SDKs) so that Google can pass Facebook data for user ID cookie matching," the amended complaint says. "They also coordinated with each other to harm publishers through the adoption of Unified Pricing rules…"
The filing continued:
The companies also have been working together to improve Facebook’s ability to recognize users using browsers with blocked cookies, on Apple devices, and on Apple’s Safari browser, thereby circumventing one Big Tech company’s efforts to compete by offering users better privacy.
The Register asked Google whether it wished to comment on the allegations in the amended complaint, and in particular to explain how the company reconciles past statements like, "We take privacy very seriously," with alleged internal sentiment about working behind the scenes to hinder privacy regulation.
"Just because [Texas Attorney General Ken] Paxton says something doesn't make it true," a Google spokesperson said in an email to The Register. "We've been clear about our support for consistent privacy rules around the globe. For example, we have been calling on Congress to pass federal privacy legislation for years."
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In a message to El Reg, Zach Edwards, co-founder of web analytics biz Victory Medium, said the expanded claims in the complaint should alarm publishers.
"The newly unredacted documents paint a picture of Google and Facebook's behavior that should not surprise anyone, but publishers and ad buyers should be deeply concerned about the tricks, exploits, backroom deals and arbitrary fees that have gutted their revenues over the past decade, all while both Google and Facebook knew they were being deceptive," he said.
"The references to 'Jedi Blue' and various Star Wars references in the now-unredacted sections of these documents are extremely gross, and everyone needs to understand that Google was attempting to poison the head bidding advertising standard by creating numerous problems, and apparently overtly lying about certain problems to publishers, in order to 'convince publishers to make changes themselves.'"
"Google thinks so little of publishers and other advertising buyers that they executed on plans to lie to these partners, in order to cripple a separate advertising standard that was competing against Google on certain publisher websites," Edwards said. ®