US states accuse Google and Meta of illegal collusion

business legal action

US states accuse Google and Meta of illegal collusion

The Facebook group Meta announced that there were similar agreements with other platforms

The Facebook group Meta announced that there were similar agreements with other platforms

Source: dpa/Fabian Sommer

An alliance of several states is taking action against the Internet companies Google and Meta. The accusation: Both companies had manipulated the auction of online advertising in order to eliminate any competition.

MSeveral US states accuse senior executives of Google and the Facebook parent company Meta of being directly involved in illegal collusion for a dominant position in online advertising. The Texas-led coalition filed a revised version of its December 2020 lawsuit against Google on Friday (local time). According to this, Google boss Sundar Pichai and his deputy Philipp Schindler as well as apparently Meta co-managing director Sheryl Sandberg were involved in the agreements.

The states accuse Google of manipulating online ad auctions to eliminate any competition. The auctions are a sophisticated system that decides which advertisements appear on websites based on anonymous user profiles.

According to the prosecutors of the states involved, Google and Facebook reached an agreement in September 2018. This was signed by Schindler and the “CEO and member of the Facebook board, who herself had headed the advertising department at Google for a while”. This Facebook representative’s name has been redacted. However, the information shows that it must be Sandberg.

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The lawsuit also cites an email to Facebook CEO Mark Zuckerberg that appears to have come from Sandberg. It describes the agreement with Google as “strategically very important”. It goes on to say, “We are close to signing and need approval to proceed.” The lawsuit also states that the deal was also “personally approved” by Pichai, who runs Google and its parent company Alphabet .

Google initially did not respond to requests for comment. The Internet giant has repeatedly rejected allegations of market manipulation.

In its response to a request from the AFP news agency, Meta spoke of a “non-exclusive bidding agreement with Google”. Meta has also made similar agreements with other platforms, thereby increasing competition in the placement of advertising.

States want to continue to sue Facebook

After the US government was able to bring its competition lawsuit against Facebook to court, dozens of states are not letting up. Forty-eight state and territory attorneys general on Friday appealed the judge’s decision that dismissed their lawsuit last year.

The central allegation in the lawsuit brought by the states and the US trade authority FTC is identical: Facebook bought the services Instagram and WhatsApp to protect its monopoly in online networks in an unfair way. Therefore, Facebook must be forced to sell them again.

Judge James Boasberg initially dismissed both lawsuits last summer. In the case of the FTC (Federal Trade Commission), he criticized that the monopoly accusation against Facebook had not been sufficiently proven. However, he gave the Commission the opportunity to rectify the complaint. He accepted the second version of the lawsuit, which was backed up with numbers, this week.

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But Boasberg gave the states no chance. He argued that they had waited an unreasonably long time before filing a lawsuit and their claims had therefore expired. In the appeal, the Attorneys General countered that, on the one hand, this principle was not applicable to states. On the other hand, the extent of Facebook’s anti-competitive behavior only became apparent over time.

Facebook bought Instagram for around $1 billion in 2012 and WhatsApp in 2014 for around $22 billion. Instagram now has around one billion users, WhatsApp around two billion. The US competition authorities had approved the takeovers at the time.

In a reaction to the acceptance of the FTC lawsuit, the Facebook group Meta was convinced “that the facts will reveal the fundamental weakness of the allegations”. Facebook’s investments in WhatsApp and Instagram have been good for competition and users, a spokesman said.

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