May 25, 2022

The European Commission and the UK have announced parallel official antitrust investigations into Google and Facebook over their online promotional ads.

Dual investigations announced today by the EU Competition Authority and the UK Competition and Markets Authority (CMA) focus on allegations of collusion between Google and Facebook (aka META) in a September 2018 domestic settlement that was signed by JD Blue. , has been accused of undermining competitive advertising. The system (also known as title bidding) favors Google’s open bidding system.

Details about JD Blue had previously surfaced as a result of a US antitrust lawsuit filed by the state of Texas against Google’s advertising activities, alleging that Google and Facebook have Compensation Trade-offs to manipulate the market in your favor – Giving Facebook preferential rates and premium priority ad placement options in exchange for the social network giant maintaining its ad system and not creating competing ad methods or a rival publisher system. Using heading bids.

The US lawsuit is pending, but today the European Union said it was concerned that the JD Blue agreement “may be part of an effort to weed out advertising technology services that compete with Google’s open bidding program and therefore limit or distort competition in online bidding. show ads. Markets to the detriment of publishers and ultimately consumers.

Margrethe Vestager, EU Executive Vice President and Head of Competition, said in a statement: “Many publishers rely on online advertising to fund online content for consumers. The so-called “Blue Jedi” agreement between Google and Meta may have hit rival technology with Google’s open bidding that aims to undermine and exclude it from the marketplace that places ads on publishers’ websites and apps. If our research confirms this, it will limit and distort competition in an already focused ad tech market to the detriment of competing ad techs, publishers, and ultimately consumers.”

The British watchdog said its parallel investigation will “look into whether the law violates an agreement between Google and Meta (formerly Facebook), which Google has internally dubbed ‘Jedi Blue’.” [and] it also checks[e] Google’s behavior with respect to Header Bidding services in general, to determine whether the Company has abused its dominant position and gained an unfair advantage over competitors attempting to provide a similar service.”

CMA CEO Andrea Coselli also said in a statement: “We are concerned that Google is partnering with Meta to create barriers to competitors that provide essential online advertising services to publishers. It can be difficult for startups and small companies to enter the market, which ultimately narrows the choice of customers.”

European regulators are holding this particular promotional investigation – and, more broadly, into enforcement against education technology monopolies.

While the European Union finally launched a comprehensive investigation into Google’s ad tech last summer – just a few years after it enforced the Google AdSense product in 2019, when it charged the tech giant $1.7 billion specifically for infringements related to with his fined advertising brokerage. (A decision that Google is challenging.)

Meanwhile, the CMA began In-Depth Market Research of the Online Advertising Industry back in 2019 – what’s happened Mark the degree of damage As well as closing in summer 2020 That a new approach to regulation and dedicated oversight is needed to address what the report describes as “broad and self-reinforcing” concerns about Google and Facebook’s market power. Thus, he has been very concerned about the size of the online advertising market for over a year now.

“The problems we have identified in these markets are so vast and self-reinforcing that our current mandate is not sufficient to address them,” he wrote in July 2020, calling for “a new approach to regulation—setting boundaries simultaneously.” With the authority to act quickly to remove both the sources of market power and its consequences, and with a responsible regulator that can monitor and adjust its intervention in light of data and changing market conditions.

However, at the time of this final report, the CMA did not shy away from taking action against Google and Facebook to address identified systemic issues. Instead, he delayed action until a “competitive” reform of the country’s competition rules to ensure that “problems can be resolved quickly before irreversible damage to competition can be done”, as it was ironically said at the time; He also stressed that the Digital Markets Special Authority (DMU) should be given the authority to “improve interoperability and provide access to data, expand consumer choice, and order platform abandonment when necessary.”

Competition reform in the UK is still pending legislation required for DMU authorization, which likely explains why the CMA has decided to go ahead and has now launched an investigation into JD Blue under existing competition rules.

“We will not shy away from investigating the behavior of big tech companies while we await clearance for the digital markets division, working closely with global regulators to achieve the best possible outcome,” Coscelli said in a statement. Today.

The EU is preparing a similar pre-competitive reform, also known as the Digital Markets Act, that will impose operational and behavioral conditions on so-called watchdog platforms and possibly both Google and Facebook. But even that has not yet been decided. The EU has a detailed proposal from December 2020, but the bill is still going through a trilogy – and even when all EU institutions are adopted, the new plan will have an implementation period before it comes into force, so once again, legal reform on an organically broken The market will not happen overnight.

It should therefore be noted that the EU and the UK are coordinating their statements on a formal investigation into this common competition issue, which means a certain degree of cooperation that could help speed up their parallel investigation, for example if they can find ways to share results or other forms of supportive work.

While both stressed today that their respective investigations remain separate and independent, the EU noted: “As always, the Commission is in contact with the CMA and intends to cooperate closely in this investigation, in accordance with applicable rules and procedures.”

“The CMA will attempt to work closely with the European Commission as the independent investigation progresses,” the UK watchdog said.

Here you need to see how quickly both investigations are completed.

Under Vestager’s watch, the European Union accelerated high-tech competition investigations with a series of court decisions against Google: Google Shopping (2017), Android (2018) and AdSense (2019).

The CMA has also evolved to deal with technology ahead of expected competition reforms. and has recently been working closely with Google to explore its privacy sandbox proposal.

Better cooperation between international regulators — between Europe’s watchdogs and the US Attorney General, who has kept Google up to date on the matter since 2020 — could help speed up investigations in the tech sector, which affects both the digital sector and consumers alike. How it affects companies that have been allowed to masquerade in incomprehensible complexity for too long.

However, it will be at least months before we see any conclusions from these latest studies.

For example, the CMA investigation into Facebook’s acquisition of Giphy ran from June 2020, when the investigation began, until November 2021, when it ordered the deal to be cancelled, and an M&A review is more likely to work than an antitrust investigation. from ,

Google and Meta have been contacted for comment on the Jedi Blue dual antitrust investigation.

Google denies that Meta’s agreement with Facebook’s Audience Network provides an advantage in open bidding auctions, and dismisses any suggestion that the agreement may prohibit bidding in the title, arguing that the popularity of bidding titles has continued to rise since the launch of the open bidding system. .

The tech giant also sent this statement to a Google representative:

“Allegations about this agreement are false. This is a publicly documented competition agreement that allows Facebook Audience Network (FAN) to join dozens of other companies in our open bidding program. FAN’s participation is not exclusive and does not provide any benefits that would help them win the auction. The goal of this program is to work with a range of ad networks and exchanges to increase demand for ad space from publishers, allowing those publishers to generate more revenue. The involvement of Facebook helps with this. We will be happy to answer any questions the Commission or the CMA may have.”

Meta has requested comment and also denies any wrongdoing, sending the following statement:

“Meta’s non-exclusive bidding agreement with Google and our similar agreements with other bidding platforms have helped increase competition for ad placement. These business relationships allow Meta to deliver greater value to advertisers and publishers, resulting in better results for everyone. We will both cooperate with the investigation.”

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