Four Democrat lawmakers on Tuesday demanded the Department of Justice (DOJ) investigate allegations that Google and Facebook secretly colluded to fix prices for digital advertising.
The letter, dated Aug. 31 and sent by Sens. Richard Blumenthal and Elizabeth Warren along with Reps. Pramila Jayapal and Mondaire Jones, asked the DOJ to investigate whether an agreement code-named “Jedi Blue” between Facebook and Google violated the Sherman Antitrust Act, The Verge first reported.
Jedi Blue, whose existence was first alleged in an unredacted version of the December antitrust complaint filed by Texas Attorney General Ken Paxton and ten other states that was viewed by The Wall Street Journal, reportedly gave Facebook favorable prices and special access to Google’s ad auction.
Google operates digital exchanges that allow advertisers and publishers to transact with one another, according to The Wall Street Journal. The antitrust complaint alleged that Google gave Facebook secret advantages in these exchanges, known as Open Bidding auctions, thereby harming competition.
“If the reports are accurate, the behavior appears to be a clear violation of Section 1 of the Sherman Antitrust Act (Sherman Act), which criminalizes “mak[ing] any contract” “in restraint of trade or commerce,” the letter read.
A Google spokesperson declined the Daily Caller News Foundation’s request for comment on the letters, but cited a January blog post written by economic policy director Adam Cohen that attempted to refute the allegations made in the antitrust complaint.
“AG Paxton inaccurately claims that we manipulate the Open Bidding auction in FAN’s [Facebook’s] favor. We absolutely don’t,” Cohen wrote, also noting that the Jedi Blue agreement was never secret. “FAN must make the highest bid to win a given impression.”
Facebook did not immediately respond to the Daily Caller News Foundation’s request for comment, but defended the agreement with Google in a December statement to the WSJ.
“Our processes and agreements for bidding on advertising promote choice and create clear benefits for advertisers, publishers, and small businesses — any allegation that this harms competition or any suggestion of misconduct on the part of Facebook is baseless,” a Facebook spokesperson told the WSJ.
The lawmakers are asking the DOJ to investigate the agreement and determine whether it constitutes anti-competitive conduct, and whether the companies should face criminal penalties.
They pointed to the contract formalizing the agreement, which includes “a provision governing the parties’ options to terminate the agreement in the event of certain government investigations of the agreement,” as evidence that Google and Facebook were aware they could be violating antitrust laws.
“Google acknowledged the existence of the Jedi Blue agreement in April 2021 during an ongoing antitrust lawsuit brought against it by Texas and several other states,” the letter read. “This highly problematic Jedi Blue agreement was signed by Google’s Senior Vice President and Chief Business Officer Philipp Schindler and Facebook’s Chief Operating Officer Sheryl Sandberg.”
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Ailan Evans on September 1, 2021
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