The advertising agreement between Alphabet’s Google and Meta’s Facebook is under investigation in parallel probes launched by the EU’s European Commission (EC) and the U.K.’s Competition and Markets Authority (CMA).
At the center of both inquiries is the agreement between the two U.S. tech giants — code-named Jedi Blue — and whether it curtailed market competition for online display advertising services. The once-secret 2018 Jedi Blue deal surfaced during a 2020 U.S. lawsuit brought by 10 state attorneys general led by Texas.
The gist of the agreement gives Facebook advantages and guarantees for Google ad space auctions and positions if Facebook agreed to spend a certain amount on display ads.
“We’re concerned that Google may have teamed up with Meta to put obstacles in the way of competitors who provide important online display advertising services to publishers. If one company has a stranglehold over a certain area, it can make it hard for startups and smaller businesses to break into the market — and may ultimately reduce customer choice,” Andrea Coscelli, CMA chief executive, said in a statement on Friday (March 11).
The EC said it is concerned that the Jedi Blue agreement between the two companies could be part of a plan to stonewall rival tech firms from fairly competing in Google’s Open Bidding program, which results in a weakened competition that would harm customers, according to a press release on the EC’s website.
“Many publishers rely on online display advertising to fund online content for consumers. Via the so-called ‘Jedi Blue’ agreement between Google and Meta, a competing technology to Google’s Open Bidding may have been targeted with the aim to weaken it and exclude it from the market for displaying ads on publisher websites and apps,” said Margrethe Vestager, EC executive vice president in charge of competition.
“If confirmed by our investigation, this would restrict and distort competition in the already concentrated ad tech market, to the detriment of rival ad serving technologies, publishers and ultimately consumers,” she added.
“Meta’s non-exclusive bidding agreement with Google and the similar agreements we have with other bidding platforms, have helped to increase competition for ad placements,” a Meta spokesperson told CNBC. “These business relationships enable Meta to deliver more value to advertisers and publishers, resulting in better outcomes for all. We will cooperate with both inquiries.”