Facebook, Google Committed To 'Assist' Each Other If Ad Tie-Up Ever Faced Scrutiny, Draft Lawsuit Says: WSJ

Facebook Inc FB and Google-parent Alphabet Inc GOOGL GOOG formed an agreement to work together in preparation for any potential probe that looked into their advertising deal, several U.S. states have reportedly alleged in a lawsuit.

What Happened: An unredacted draft version of the lawsuit filed by 10 states against Google contains the mention of the cooperation among the two tech giants, the Wall Street Journal reported Tuesday.

Some of the provisions contained in the deal of the two companies state that the two tech firms will “cooperate and assist each other in responding to any Antitrust Action” and “promptly and fully inform the Other Party of any Governmental Communication Related to the Agreement,” as per the Journal.

Facebook Chief Operating Officer Sheryl Sandberg reportedly signed on the deal between the two companies. The draft version of the lawsuit also refers to an email from her to CEO Mark Zuckerberg and others where she told them, “this is a big deal strategically.”

The redacted version of the filed lawsuit does not mention Sandberg.

Why It Matters: Last week, 10 Republican U.S. states, led by Texas, filed a lawsuit against Google — accusing the tech giant of colluding with Facebook for the purpose of rigging ad auctions.

The states are Arkansas, Idaho, Indiana, Kentucky, Mississippi, Missouri, North Dakota, South Dakota, and Utah, and Texas.

Apart from the Texas lawsuit, Google was also sued in a separate antitrust lawsuit by 38 attorneys general last week. They alleged that the company has a monopoly over the internet-search market through both contracts and the way it conducts business.

In October the U.S. Department of Justice filed an antitrust case against Google that accused the tech behemoth of locking out competitors — using billions of dollars worth of exclusionary agreements. 

Price Action: Facebook shares closed nearly 1.3% lower at $272.79 on Monday and fell 0.22% in the after-hours session. On the same day, both Alphabet Class A and Class C shares closed 0.48% higher at $1,734.56 and $1,739.37 respectively.