Google and Meta face mega fines in ad price fix probe

Google and Facebook parent Meta are facing a pan-European probe into alleged anti-competitive conduct in their online display advertising services over claims that the duo illegally fixed prices to shut out rival platforms.

The move, which will see parallel investigations by both the European Commission and the UK Competition & Markets Authority, will investigate the so-called Jedi Blue agreement between Google and Facebook signed in 2018.

It is alleged that through this deal Google and Facebook forged a quid pro quo agreement to rig the market in their favour, with Facebook Meta’s Audience Network ad platform getting preferential rates and priority choice of prime ad placements in Google’s Open Bidding programme.

In return, it is claimed that the social networking giant supported Google’s ad system and agreed not to build competing ad technologies or use a rival system.

The stakes are high; the legal bills are likely to be astronomical. Under both UK and EU legislation, companies found guilty of breaking competition law face fines of up 10% of annual turnover. Google’s annual revenues for 2021 were $257bn (£197bn); Meta’s were $118bn (£90bn), meaning they could face billions of pounds in penalties.

Then again, Google and Meta lawyers are never quiet. Google was fined €1.49bn (£1.35bn) in 2019 by Brussels for abusing its monopoly in online advertising, on top of the €4.3bn (£3.7bn) penalty issued in 2018 relating to its Android mobile operating system and a €2.4bn (£2.1bn) fine for promoting its own shopping service over rivals. The appeals for these rulings have yet to be settled.

CMA chief executive Andrea Coscelli said: “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 start-ups and smaller businesses to break into the market – and may ultimately reduce customer choice.

“We will not shy away from scrutinising the behaviour of big tech firms while we await powers for the Digital Markets Unit, working closely with global regulators to get the best outcomes possible.”

This case follows on from the CMA’s market study into online platforms and digital advertising, which considered Google’s position in relation to header bidding services and the wider “adtech stack” – of which heading bidding services is a part. The CMA has also received complaints in relation to Google’s conduct in this area.

The UK Government has recently proposed powers for the Digital Markets Unit which will sit within the CMA. This unit will ultimately be responsible for deciding which ‘big tech’ firms face legally enforceable codes of conduct to govern their behaviour.

In the meantime, the CMA is also pressing ahead with its probes into Apple’s App Store, Meta’s use of data and Apple and Google’s mobile ecosystems over competition concerns. It recently accepted commitments from Google relating to its proposed removal of third-party cookies from the Chrome browser.

Meanwhile, the EU probe is being headed by European Commission executive vice-president Margrethe Vestager, a constant thorn in the side of US tech giants.

She said: “Many publishers rely on online display advertising to fund online content for consumers. Via the ‘Jedi Blue’ agreement between Google and Facebook, 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.”

TOPICS:Competition & Markets Authority digital marketing duopoly European Commission Facebook Google Meta online advertising