UK and EU authorities investigate alleged Google and Meta deal

British and European competition authorities have launched a joint antitrust probe into allegations of a sweetheart deal between Google and Meta, known as ‘Jedi Blue’, that “restricted or prevented the uptake of header bidding services”, thereby affecting potential rivals’ ability to compete with Google ad products.

Why it matters

This is an investigation about whether two dominant players abused their position to gain an advantage over potential rivals. Facebook’s service for placing display ads on third-party sites was allegedly offered better-than-market rates to use Google’s Open Bidding.

This could and probably will take years before any repercussions are felt, but these companies are now facing investigations or suits across their most lucrative markets, the US and Europe. If found guilty, both firms could be fined up to 10% of global turnover.

As Margrethe Vestager, the EU’s competition commissioner explains it to the FT: “What we suspect here is that there may have been an agreement between Google, and then Facebook, only to use Google services and not competing services. That’s a giant problem.”

It’s the second time both regulators, the UK’s Competition and Markets Authority (CMA) and the European Commission have launched a joint probe – the first was into Meta’s use of customer data.

The deal

“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,” explained Andrea Coscelli, CMA chief executive in a statement.

Details first emerged in early 2021, when Texas prosecutors alleged that Google and Meta – then Facebook – struck a sweetheart deal in 2018. Both companies say that the deal was not anti-competitive.

In it, the companies are alleged to have agreed that Facebook would shelve a competitor product in return for preferential terms in a deal to join a Google-led ad auction alliance nicknamed Jedi Blue. 

Summarising the allegations in a statement, Vestager noted that in “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.

“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.”

What’s header bidding, again?

Per the CMA’s definition, outlined in a release announcing the probe, it is “a service which allows sellers, such as news publishers, to offer their online advertising space to multiple buyers at the same time, rather than receiving offers one by one.” This is designed to make auctions more competitive.

Together, a CMA market study found, Google and Meta received more than 80% of the UK’s digital ad spending. Header bidding was said to threaten this dominance, especially Google’s extremely strong position in the ecosystem.

Sourced from the CMA, European Commission, FT, WARC