A secret advertising deal called “Jedi Blue” between Google and Meta is under investigation.
“Jedi Blue” Shady Deal Uncovered
The British and European watchdogs are currently probing into an agreement between the two Internet behemoths, Google and Meta. A US antitrust inquiry revealed the deal called “Jedi Blue”, which could possibly impair competition in the multibillion-dollar digital advertising market.
The UK Competition and Markets Authority, along with the European Commission, disclosed on Friday about the investigation. It’s the most recent endeavour to check over the business procedures of the said world’s biggest technology firms.
According to the regulators, the investigation stemmed from the 2018 deal. It was initially exposed as part of the lawsuit filed by ten US state attorneys general against Google. The US investigation found that Google realised an agreement called “Jedi Blue.” It controls how much Facebook would take in ad dollars with one of Google’s main services.
“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,” said Margrethe Vestager.
Vestager is the executive vice president of the European Commission. She governs competition and digital protocols.
Google and Meta claimed that the accord between them wasn’t exclusive. They also suggested that dozens of other companies entered into a similar deal. Google said that the accusations regarding the “Jedi Blue” agreement are inaccurate.
On the other hand, Meta exclaimed that the deal was comparable to what it had with other affiliates for digital advertising. Moreover, it said that those business relationships allow them to provide publishers and advertisers with more value. Because of this, they can produce better end results for all.
Facebook Revealed its Support for Header Bidding
It was in March 2017 when Facebook revealed its support for “header bidding.” It’s an ad-tech being pushed by outside companies to defy Google’s ad tech dominance. However, after a year, Facebook changed its mind.
After a year, Google and Facebook discreetly agreed to utilize a Google-managed system for proposing and managing online ads. Google would offer Facebook favoured rates and initial privilege on prime and placement.
Facebook will then uphold Google’s efforts and refuse to establish competing ad technologies or touse header bidding. It’s a win-win situation for both companies as they ensure their continued co-distinction of the online ad market. This enables them to earn billions of dollars in yearly profits.
Formal Investigation to Jedi Blue May Take Years to Complete
The investigation demonstrates how regulators globally are supersizing pressure on technology firms that monopolise the digital economy. The implication of the investigations could sway significant changes in the way companies conduct business with e-commerce, digital ads, and app stores. It also involves new laws established in the US and the European Union (EU).
The European Commission has other investigations towards Google, Amazon, and Apple. British watchdogs investigate Meta’s use of data and mobile ecosystems that Apple and Google control. It also probes Apple’s App Store policies.
Both the British regulators and the European Commission agreed to work together on the inquiries. It would be one of the first major competitor cases they agreed to collaborate with each other since Britain left the European Union in 2020.
Texas Attorney General Ken Paxton led the initiative in filing a lawsuit with regard to the “Jedi Blue” agreement. The complaint purported the agreement limited Facebook or Meta’s effort to contend with Google for ad dollars.
Meta’s Audience Network Participation in Google’s Open Bidding Program
The scrutinies will enquire if the deal was part of an effort to ostracise ad tech services with Google’s Open Bidding scheme. Additionally, it includes regulated competition in the world of the online advertising market.
The “Jedi Blue” agreement empowers Meta through its Meta Audience Network. It enables them to partake in Google’s Open Bidding program, a competitor to header bidding.
“Meta’s non-exclusive bidding agreement with Google and the similar agreements we have with other bidding platforms has helped to increase competition for ad placements. These business relationships enable Meta to deliver more value to advertisers and publishers, resulting in better outcomes for all,” said a Meta spokesperson.
On the other hand, Google explained that the program intends to collaborate with various ad networks. It also includes exchanges to boost the market for publishers’ ad space. The publishers, in turn, earn more money and Facebook’s involvement helps.
In the previous decade, Google has been fined over Є8 billion in EU antitrust penalties. Facebook and Google face investigation by the bloc’s executive over other concerns. They could deal with fines of up to 10% of their global revenue for violating its rules.
EU has a multitasking investigation process. As it focuses on the deal, another examines if Google abuses its supremacy. It could mean that Facebook is under no obligation if this is the case.
It’s a publicly documented, pro-competitive deal that allows Facebook Audience Network (FAN) to join in the Open Bidding program, together with other companies.
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