Google blocked ad competition and skirted privacy regulations, court filings reveal

Google has been under investigation by the United States Department of Justice over possible anti-competitive practices, primarily related to Google’s search and advertising business. Last year, the Department of Justice released a complaint alleging that Google dominated the search engine market through its advantage of deep integration with Android and other agreements that limited adoption of other search engines. More recently, focus has shifted to the company’s dominance of online advertising, and a new complaint doesn’t paint Google in the best light.

The 168-page complaint was filed by 17 states, most of which are Republican-controlled — Texas, Alaska, Arkansas, Florida, Idaho, Indiana, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nevada, North Dakota, Puerto Rico, South Carolina, South Dakota, and Utah. There’s a lot of information covered in the report, including details about secret Google initiatives to limit competition and privacy measures.

Advertising practices

The filing primarily focuses on Google’s advertising business, and how the company has gained control of every sector of online advertising over the years. That’s probably not surprising to anyone, but the filing does include details about “Jedi,” a secret project that allowed Google to win in bids for online advertising. This came after publishers began to adopt “header bidding,” a way to simultaneously bid on advertisement places on multiple ad exchanges (instead of only Google’s exchange), even if the ads were hosted by Google. The Jedi program ensured Google’s own exchange would win in these automatic bidding wars, even when another exchange submitted a higher bid.

In the same way that eBay choosing the second or third highest bid for an iPhone auction would cut into potential profits for the person selling the iPhone, this impacted advertisers’ revenue. In Google’s own words, the Jedi program “generates suboptimal yields for publishers and serious risks of negative media
coverage if exposed externally.”

Google and Facebook began to work together to identify people using Apple products.

Facebook announced in 2017 that it would support header bidding on its advertising platform, the Facebook Audience Network, which would have been another potential blow to Google’s domination of the ad industry. However, an internal Facebook communication revealed that the announcement’s purpose was mostly to pressure Google into giving Facebook information, speed, and other advantages in Google’s own advertising auctions. Facebook curtailed its involvement with header bidding, and Google and Facebook began to work together to identify people using Apple products. In an agreement internally called “Jedi Blue,” both companies “agreed up front on quotas for how often Facebook would win publishers’ auctions—literally manipulating the auction with minimum spends and quotas for how often Facebook would bid and win.”

The filing details many other monopolistic and anti-competitive practices in advertising. Starting in 2013, Google blocked ad buying tools by other companies from placing ads on YouTube, forcing advertisers to use Google’s own tools. “If advertisers feel like they don’t have to work with Google directly to access video inventory—including YouTube—we will lose our ability to influence decisions about budget allocation.

Privacy price fixing

Google allegedly had a closed-door meeting on August 6, 2019 with representatives of Facebook, Apple and Microsoft, where the companies discussed how to delay efforts to improve user privacy. Google said in a memo prepared for the meeting, “we have been successful in slowing down and delaying the [ePrivacy Regulation] process and have been working behind the scenes hand in hand with the other companies.”

Google was concerned that Microsoft was taking child privacy more seriously than itself.

The companies also discussed their strategy towards child privacy and safety, which has become a significant talking point over the past few years — Google has been heavily criticized over poor content filtering on YouTube Kids, and Facebook’s own internal research found that Instagram is harmful to the mental health of many teenagers. At the meeting, Google was concerned that Microsoft was taking child privacy more seriously than itself. The same memo read, “Whether at this meeting or at another forum, we may want to reinforce that this is an area of particular importance to have a coordinated approach.” Microsoft’s stance was also noted with “we have direction from Kent [Walker] to find alignment with MSFT where we can but should be wary of their activity [in promoting privacy] and seek to gain as much intel as possible.”

Google was also concerned that Facebook wasn’t aligned with its privacy efforts, saying “we’ve had
difficulty getting FB to align on our privacy goals and strategy, as they have at time[s] prioritized winning on reputation over its business interest in legislative debate.” The filing alleges that this behavior is similar to the anticompetitive practice of price fixing, but instead of secretly agreeing on prices, tech companies are forming agreements over privacy measures.

Google AMP

Accelerated Mobile Pages, or AMP, is a technology initially created by Google. The public goal is to allow websites to create faster-loading versions of their articles, which AMP achieves by limiting the amount of scripting and custom styles that a page can use. Much to the chagrin of visitors and publishers, Google later required sites to support AMP before they could appear in Google Feed, Google News, and other promotional platforms. Google only started dropping this requirement in the past few months.

The filing alleges that a private goal for AMP was to reduce the effectiveness of header bidding in advertisements, giving a competitive advantage to Google’s ads. AMP code prohibited publishers from routing bids to more than a few exchanges at a time, but no limitations were placed on exchange bids through Google’s ad server. AMP also gave Google more information about browsing behavior and ad loading, because in most cases (like with Search and News), AMP pages are served by Google itself through cached copies.

Google AMP has been criticized for being anti-competitive and giving Google more control over the internet for years, so the information about AMP is perhaps the least-surprising aspect of the filing. The reason why so many sites (including XDA Developers) added AMP support, even though it’s a worse experience for readers and publishers, is because it was a requirement for appearing in Google’s Discover Feed and the top news carousel on Google Search. If sites didn’t add AMP, they could lose out on web traffic, even if advertising manipulation from Google resulted in less revenue from AMP pages.

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The filing alleges that Google has committed several violations of the Sherman Antitrust Act of 1890 (also known simply as the ‘Sherman Act’), an antitrust law in the United States that prohibits noncompetitive agreements and attempts to monopolize markets. The filing also calls for Google to surrender all profits and information squired through deceptive trade practices, and for the company to pay various fines.

We’ll have to wait and see what happens as the lawsuit works its way through the US legal system. If this filing is anything to go by, we could have another Microsoft-level antitrust bust on our hands. We’ve reached out to Google for a statement, and we’ll update this post when (or if) we get one.

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