Google hit by antitrust lawsuit from nearly 40 states over alleged search monopoly
And meanwhile in the midst of everything. We've been talking about today. We expect a bipartisan group of more than thirty state attorneys general to announce an antitrust lawsuit against google later today accusing them of favoring their own products in their search results. I'm not gonna hold the show this afternoon just to report the news because we know it's coming the quotes and get some smart analysis of the details of the case tomorrow. But in the meantime i did wanna flag this. Because we've actually had a look at this antitrust suit which is being led by the texas attorney general and interestingly it makes a specific accusation that google facebook special privileges in exchange for not supporting a competing. Ads system this is potentially very very meaningful. A lot of these other anti-trust cases have been kind of arguing. Theory like what is a monopoly. And what isn't what is. The definition of the market given company is operating in what constitutes anticompetitive behavior. Even but this this is potentially something more tangible because this alleges actual cut and dry collusion the actual of a market by two powerful players in that market this would be an actual illegal conspiracy. Were talking felonies here. Allegedly quoting wired as described in the complaint. The scheme between google and facebook has its roots in two thousand seventeen when facebook announced it would start supporting something called header bidding. The details are two key to get into here. Basically google which runs the biggest online ad exchange likes to make publishers give it first dibs on bidding to place an ad publisher just means any website or app that runs ads. Header bidding was a technical hack that allowed publishers to earn higher prices by soliciting bids from multiple exchanges at once. Google hated this because it created more competition. When facebook declared that it would work with publishers that used header bidding. It was seen as a provocation. The millions of businesses that advertise with facebook don't just advertise on facebook through the facebook audience. Network the company also places ads across the web making it one of the biggest ad buyers on the internet if it began supporting header bidding. That could cause google's ad platform to lose a lot of business drawing on internal documents uncovered during its investigation however the texas attorney general claims that facebook's leaders didn't actually want to compete with google. They wanted google to buy them off. This seems to have worked in september two thousand eighteen. The company's cut a deal facebook. The complaint says agreed to quote curtail its header bidding initiatives and send the millions of advertisers in its facebook audience network to bid on google platform. In return. google would give the facebook audience networks special advantages at auctions including setting aside a quota of ad placements to facebook. Even when the company didn't make the highest bid the agreement the complaint says quote fixes prices and allocates markets between google and facebook and quote. Here's why that matters. The other antitrust cases filed against google and facebook this year by the justice department for google and the federal trade commission and state attorneys general for facebook are based on section. Two of the sherman act which is about building a monopoly in a section two case. It isn't enough to show that a company dominates a market. The government must also prove that it got to the top by using anticompetitive tactics rather than by just being the best. The alleged conspiracy between google and facebook is different. It falls under section one of the sherman act which makes it illegal for two or more companies to make any contract or agreement quote in restraint of trade and quote while the texas case is a civil suit. The claims in it could conceivably serve as the basis of federal criminal charges. A section one case is much simpler if there's proof that the companies did agree to fix prices rig bids or just not compete with each other. That's the end of the inquiry quote. If you can prove an agreement between two firms once you have proof of that agreement. It is called per se illegal said sally hubbard director of enforcement strategy at the open markets institute. An anti monopoly. Think tank quote. This is why antitrust enforcers love to bring section cases because if you can find evidence of more than one firm agreeing to fix prices agreeing not to compete agreeing to allocate a market once. You prove that agreement it's automatically illegal. It ends there and quote. Unlike last week's facebook antitrust filing or the house report on big tech from over the summer most of the juicy details and internal documents including a screenshot of the contract terms between facebook and google are blacked out. The heavy reductions are not the only strange thing about the case the texas attorney general's office fresh off a losing effort to overturn. The presidential election announced the suit in a weird amateurish video posted to twitter before the case had been filed. Still there are some tantalising clues. The document alludes to an email about the arrangement from dan. rose facebook's vice president of partnerships to ceo mark zuckerberg that suggests that whatever deal the two companies had was signed off on at the highest levels another heavily redacted section alleges google violated users privacy and quote agreed ways after signing an agreement with facebook in two thousand fifteen that gave the company access to quote millions of americans end to end encrypted. What's at messages photos videos and audio files and quote. So you know don't as roger mcnamee tweeted quote the filing asserts that google conspired with facebook in the digital ads market if they can prove it and they appear to have evidence. Google and facebook are in huge trouble and quote.