Google and Facebook are the two largest mountain ranges in the digital advertising market.
However, when the U.
prosecution filed an antitrust lawsuit against Google, it pointed out Facebook as a’joint conspirator’.
Why did Facebook become Google’s “joint conspirator”?
On the 16th (local time), prosecutors in 10 US states including Texas filed a blitz against Google.
The reason for the lawsuit is that Google committed illegal activities to abolish competition in the ad technology market.
On Google, following the lawsuit by the Ministry of Justice in October, it was again sued for antitrust.
The Justice Department’s lawsuit is questioning the contracts Google has signed with Apple, Mozilla and Android manufacturers to install search engines on their smartphones.
It’s a contract like this that eliminates competition.
The issue of this lawsuit is’digital ad auction technology’.
Google securely dominated this market with the acquisition of DoubleClick in 2008.
They are alleged to abuse this monopoly position to manipulate auctions and raise advertising prices.
However, the US prosecutors who filed this lawsuit refer to Facebook as a “joint conspirator”.
It is that they have colluded with Google’s market monopoly.
At first glance, I don’t understand.
As you know well, Google and Facebook are two companies that are dividing the online advertising market.
But Facebook has colluded with Google for illegal activities? This is an argument that is not easily convinced.
Google tensions after Facebook declares support for header bidding in March 2017
To answer my questions, I read the lawsuit filed by the prosecution in the Texas courts.
Facebook related content is described in 11 pages from 63 pages to 73 pages.
It’s interesting from the title “Facebook helped Google get rid of header bidding through illegal contracts.
To understand this, we need to go back to March 2017.
At the time, Facebook declared that it would “support header bidding”.
Header bidding is a method in which ad publishers conduct auctions for ad inventory ‘in a fair and open manner.
’ The advantage of advertising platforms is that you can maximize your profits.
On the other hand, advertisers can efficiently purchase ad inventory.
In the meantime, Google has dominated the ad auction market through the Google Display Network (GDN).
But the situation goes awry when Facebook, which has strong power, declares that it will start a header bidding service.
There is a sense of crisis that the publisher ad server market monopoly could be broken.
At that time, many media thought that “Facebook was trying to launch a digital advertising coup against Google and the DoubleClick Empire.
” As such, Facebook’s declaration of support for header bidding has had a huge impact on the digital advertising market.
At the time, Facebook publicized how attractive their service was.
First of all, it claims that it can connect 2 or 3 times more users to advertisers.
They also offer a sweet promise that their systems will increase their sales by 10-30%.
Google has dominated the digital ad auction market since its acquisition of DoubleClick in 2008.
The fees paid by participating companies in header bidding were a good source of revenue for Google.
The only potential threat to this market, which had little competition, was Facebook.
That’s why Facebook said it would support header bidding.
Amazon has also joined as a technology partner.
Google’s worries have become reality.
Google abandons Facebook’s header bidding support in exchange for preferential treatment
Google, which was worried about it, immediately mobilizes the ‘old way’.
It brought Facebook to the negotiating table.
Then we sign a contract in September 2018.
The contract with Facebook is said to have been called the code name from the movie “Star Wars” character inside Google.
(By the way, the code name of Google is hidden in the collection.
Could it have been something like’Darth Vader’?)
After this deal, Facebook has significantly reduced header bids.
Instead, they participate in ad auctions through Google.
Instead, Facebook will receive significant benefits from the auction price.
In the public collection, many of the contents related to Facebook are blinded.
This is a measure to prevent the leakage of confidential contract details between the two companies.
Nevertheless, the circumstances in which Facebook actively cooperated in maintaining Google’s dominant position in the advertising technology market are revealed.
This is why the US prosecution referred to Facebook as a “joint conspirator”.