Written by Brenda Nakalema

Google and Meta Ad Pact Probed by EU and U.K Antitrust Regulators

Google (ticker: GOOGL) and Meta Platforms (ticker: FB) are under investigation by antitrust regulators from the European Union and U.K …

Google (ticker: GOOGL) and Meta Platforms (ticker: FB) are under investigation by antitrust regulators from the European Union and U.K concerning whether the companies attempted to restrict competition in the digital advertising space.

The European Union and the U.K’s competition and Markets authority reported opening investigations into the so-called Jedi Blue agreement that allegedly exists between the companies.

“Many publishers rely on online display advertising to fund online content for consumers. Via the so-called ‘Jedi Blue’ agreement that exists between Google and Meta, a competing technology to Google’s Open Bidding might have been targeted with the sole aim to weaken it and eventually exclude it from the market for displaying ads on competing publisher websites and apps,” said Margrethe Vestager, the EU’s antitrust chief.

“If confirmed by our investigation, this action would restrict and distort competition in an already concentrated ad technology market, to the detriment of rival ad serving technologies, publishers and ultimately consumers,” Vestager added.

According to U.S state attorney generals, the ‘Jedi Blue’ deal made it possible for Google and Meta to cheat auctions for online ads and fix prices illegally, while smaller companies suffered the loss. Both companies denied the claims at the time.

Andrea Coscelli, CEO of U.K’s Competition and Markets Authority, there was concern that Google has teamed up with Meta to deliberately place obstacles in the way of competitors who provide vital online display advertising services to publishers.

“If one company has a stranglehold over a certain area, it can possibly make it hard for start-ups and smaller companies to break into the market- and may even restrict consumer choice,” he added.

The origins of the ‘Jedi Blue’ can be traced back to a key decision taken by Meta (formerly Facebook) in 2017 to support an adtech system that would rival their biggest competitor, Google. Lawsuits filed in the US claim Meta dropped its support of the technology as early as 2018 after Google offered the company preferential access to its bidding system for online ads. The deal essentially gave Meta the chance to be first in the queue when buying advertising real-estate from Google, therefore halting the investment in rival adtech systems.

Antitrust regulators in both U.S and Europe have spent a considerable amount of time considering steps to curb the perceived excesses by the technology heavyweights. Congress is considering legislation that would prevent digital platforms like Google from favouring their own properties over those of third parties when consumers use services like Google search.

In November, Google lost its appeal against a European antitrust decision that cost the company a whopping $2.8 billion in fines.