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Zuckerberg and Google CEO approved deal to carve up ad market, states allege in court

1 week ago 20

Facebook CEO Mark Zuckerberg and Google chief executive Sundar Pichai personally approved a secret deal that gave the social network a leg up in the search giant’s online advertising auctions, attorneys for Texas and other states alleged in newly unsealed court filings.

The 2018 deal gave Facebook possibly unlawful advantages when the social network used Google’s advertising exchange, according to allegations by Texas, 14 other states and Puerto Rico in the latest version of their federal antitrust suit against Google.

The two companies denied Friday that the arrangement was illegal. Google also described the lawsuit as baseless and "full of inaccuracies."

The states originally filed the suit against Google in December 2020 and updated that with a heavily redacted version of their most recent complaint in November. They refiled a version with far fewer deletions on Friday after a judge in New York ruled that the additional details should be made public.



'A big deal': Among other new details, the new filing alleges that Sheryl Sandberg, Facebook’s chief operating officer, helped negotiate the agreement and urged Zuckerberg’s approval, calling it “a big deal strategically.” The complaint says the team that negotiated the deal sent Zuckerberg an email telling him, “We’re nearly ready to sign and need your approval to move forward.”

"Facebook CEO [REDACTED] wanted to meet with COO [REDACTED] and his other executives before making a decision," says the complaint, with Zuckerberg's and Sandberg's names — but not their titles — still blacked out.

Sandberg and a Google senior vice president ultimately signed the September 2018 agreement, the lawsuit says. "Google CEO Sundar Pichai also personally signed off on the terms of the deal," it adds.

Previous versions of the complaint had revealed the existence of the deal, nicknamed Jedi Blue. But the newest details show that the pact between Google and Facebook, the No. 1 and No. 2 players in the online advertising market, was negotiated and approved at the highest levels of both companies. Before joining Facebook, Sandberg was a top Google executive in charge of online sales.

The suit: The states’ suit accused Google of monopolizing the advertising technology market, the tools used to buy, sell and display the online ads that fund many websites. In November, they updated their complaint with additional details, and the judge overseeing the suit ordered parts of their allegations unsealed this week.

Google spokesperson Peter Schottenfels rejected the suit Friday as a hapless legal maneuver from Texas Attorney General Ken Paxton, who is leading the multistate suit. The company said it will ask a judge next week to dismiss the case.

"Despite Attorney General Paxton’s three attempts to re-write his complaint, it is still full of inaccuracies and lacks legal merit," Schottenfels said. "Our advertising technologies help websites and apps fund their content, and enable small businesses to reach customers around the world. There is vigorous competition in online advertising, which has reduced ad tech fees, and expanded options for publishers and advertisers."

Meta also defended the arrangement between the two companies, as it has before.

“Meta’s non-exclusive bidding agreement with Google and the similar agreements we have with other bidding platforms, have helped to increase competition for ad placements," Meta spokesperson Christopher Sgro said in a statement Friday. "These business relationships enable Meta to deliver more value to advertisers while fairly compensating publishers, resulting in better outcomes for all.”

Meta is not a defendant in the lawsuit.

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