Lawmakers tell the DOJ that they have, “a responsibility to enforce the nation’s antitrust laws in order to protect consumers, small businesses, and the public.”
WASHINGTON — Representatives Pramila Jayapal (WA-07) and Mondaire Jones (NY-17) joined Senators Elizabeth Warren (D-Mass.) and Richard Blumenthal (D-Conn.) today in calling on the Department of Justice (DOJ) to launch an investigation into an alleged 2018 bid-rigging scheme, called Jedi Blue, between Google and Facebook executives.
The lawmakers’ letter follows disturbing reports of a deal in which Google sought to kill a new industry innovation called “header bidding,” which Facebook publicly announced it would adopt in 2017 — a move that would have threatened Google’s monopoly on ad exchanges.
Consequently, Google negotiated with Facebook to ensure it would not use header bidding and the companies jointly entered the “Jedi Blue” agreement: Facebook agreed “to bid on at least 90 percent of the bid requests it received from Google” and “to spend at least $500 million a year on Google’s” ad auctions by the fourth year of the deal, and Google guaranteed that Facebook would win ten percent of ad bids on Google’s server, according to newly unredacted court filings. This deal, memorialized in writing and signed by Google’s Chief Business Officer Philipp Schindler and Facebook’s Chief Operating Officer Sheryl Sandberg, appears to be a classic example of big rigging, and the DOJ has prosecuted criminal charges for similar tactics as recently as this year.
“The facts presented in the Texas lawsuit suggest that Google and Facebook engaged in a similar bid-rigging scheme and warrant the DOJ’s consideration of whether similar criminal charges are merited here,” the lawmakers wrote.
Several states are currently seeking civil relief against Google regarding this agreement. Google acknowledged the existence of the Jedi Blue agreement in April 2021 during an ongoing antitrust lawsuit brought against it by Texas and several other states. Although the lawsuit primarily focuses on Google’s unilateral actions in its advertising business, the states also allege that Google struck an express, anticompetitive agreement with Facebook that violated Section 1 of the Sherman Act. However, state attorneys lack the authority to bring criminal charges for such violations; only the DOJ may do so.
“The DOJ has a responsibility to enforce the nation’s antitrust laws in order to protect consumers, small businesses, and the public,” wrote the lawmakers. “Given the egregiously anticompetitive nature of the alleged agreement here, we ask that you investigate this matter to uncover any criminal behavior that may have transpired in violation of the Sherman Act.”
The letter is available here.
Issues: Science, Technology, & Antitrust