Google, Facebook Colluded To Rig Ad Auctions, 10 US States Allege In New Lawsuit

Alphabet Inc GOOGL GOOG subsidiary Google stands accused of colluding with rival Facebook Inc FB in a lawsuit filed by ten states for rigging ad auctions, the Wall Street Journal reported Wednesday.

What Happened: The lawsuit filed in the United States District Court in Texas and accuses the Sundar Pichai-led tech giant of giving Facebook special treatment in the ad-auctions it runs in exchange for curbing its competitive moves, according to the Journal.

Texas Attorney General Ken Paxton called Google a trillion-dollar monopoly that “brazenly” abuses its “monopolistic power.”

A Google spokesperson said the Mountain View, California company would strongly defend itself from Paxton’s “baseless claims” in court.

“Attorney General Paxton’s ad tech claims are meritless, yet he’s gone ahead in spite of all the facts. We’ve invested in state-of-the-art ad tech services that help businesses and benefit consumers,” said the spokesperson.

Why It Matters: Nine other Republican attorneys general joined Paxton, but the Democrats, who had earlier joined the legal effort were notably absent, noted the Journal.

Other states could still join the Texas lawsuit, according to the Journal. A separate bipartisan group of state attorneys could also file an antitrust case against the search giant as soon as Thursday.

Arkansas, Idaho, Indiana, Kentucky, Mississippi, Missouri, North Dakota, South Dakota, and Utah are the states joining the Texas-led lawsuit.

In October, the U.S. Department of Justice filed a separate antitrust case against Google which accused the company of locking out competitors using exclusionary agreements worth billions of dollars.

Price Action: Alphabet Class A shares closed nearly 0.2% lower at $1,757.19 on Wednesday and fell 0.12% in the after-hours session. The company’s Class C shares closed 0.27% lower at $ 1,763 and fell almost 0.1% in the after-hours session. On the same day, Facebook shares closed mostly unchanged at $275.67.