Google Defends Against Allegations Of Collusion With Facebook On Ads

Adam Cohen, director of economic policy at Alphabet Inc GOOGL GOOG subsidiary Google defended the company’s ad-sharing agreement with Facebook Inc FB in a blog post over the weekend after detailed revelations related to an antitrust lawsuit filed in December by ten states emerged.

What Happened: Cohen dismissed the allegations made by Texas attorney general Ken Paxton — who led in making the disputed claims against the company — as “misleading” and termed the agreement with the Mark Zuckerberg-led company as “well-publicized.”

“AG Paxton tries to paint Google’s involvement in this industry as nefarious. The opposite is true,” wrote Cohen.

Cohen listed Adobe Inc ADBE, Amazon.com, Inc AMZN, AT&T Inc T, Comcast Corporation CMCSA, Facebook, Oracle Corporation ORCL, Twitter Inc TWTR, and Verizon Communications Inc VZ as competitors in the “famously crowded” online advertising space. 

The executive acknowledged Facebook as the largest seller of display ads. He wrote that Amazon surpassed Google last month as the preferred ad-buying platform for advertisers.

Google said the Texas attorney general’s claims regarding Facebook’s participation in Google’s Open Bidding program through its Facebook Audience Network were misleading. 

“AG Paxton inaccurately claims that we manipulate the Open Bidding auction in FAN’s favor. We absolutely don’t. FAN must make the highest bid to win a given impression,” wrote Cohen.

The executive said Open bidding makes up for less than 4% of the display ads Google places.

Why It Matters: Cohen’s dismissal of allegations comes after the New York Times published an expose on Sunday containing the details of the Google-Facebook agreement.

The Times claimed that Facebook was provided with special information and speed advantages by Google that helped the social media behemoth succeed in auctions to the detriment of other partners — going as far as to include a guaranteed “win rate.”

Facebook was said to be testing a new method of selling ads as far back as in 2017 that could undermine Google’s dominance but nearly 2 years later it backtracked and joined efforts of an alliance of companies backing Google, as per the Times.

In December, Paxton and nine other Republican attorneys general filed a lawsuit against Google, accusing it of rigging auctions.

A bipartisan coalition of states sued the search engine giant in December alleging monopolistic practices related to the company’s online search business.

Price Action: Alphabet Class A and Class B shares closed nearly 0.2% lower at $1,727.62 and $1,736.19 on Friday.