The attorneys general of a total of ten US states have filed a lawsuit against Google. The issue is abuse of market power in the online advertising market. A secret agreement with Facebook on header bidding is particularly sensitive.

US states sue Google

A total of ten US states have sued Google for abuse of power and distortion of competition. The document in question is 130 pages long in total and was filed by Attorney General Ken Paxton from Texas.

In summary, the attorneys general of the plaintiff states accuse Google of preventing publishers from marketing their free ad space on platforms that do not belong to Google. As a result, even more advertisers and publishers have marketed their ads through Google.

Secret collusion between Google and Facebook

However, a secret agreement between Google and Facebook is particularly explosive. According to the report, the two monopolists concluded a deal in September 2018. This shows that Facebook will market its own advertising space using Google’s technology.

What is interesting about this, however, is that behind the pretended partnership is an exclusive deal from which Facebook profits enormously.

What was the reason for the cooperation between Facebook and Google? For a long time, Google alone had dominated the market for automated booking and marketing of ads via so-called header bidding.

Facebook had therefore planned to launch its own solution on the market, which would presumably have led to significant losses for Google. As a concession for Facebook stopping work on its own project, the social network received advantages in header bidding auctions.

This has been expressed, for example, in Facebook winning the bid even though other competitors offered more money for placement.

What is Header Bidding?

Header bidding represents a mechanic in programmatic advertising. It is the automated marketing of free advertising space before the page is loaded.

This means that before the user sees an ad, several advertisers are given the option to bid on the free space via several marketplaces. Header bidding thus ensures that more companies compete for a space.

This in turn increases the bids for placement with a publisher. Likewise, the utilization rate improves and advertising revenues for publishers increase.

Google and Facebook dominate the online advertising market

Such collusion is questionable in itself. However, the position of Google and Facebook in the global online advertising market makes the collusion even more significant.

According to a current forecast by analysts at Emarketer from October 2020, Google and Facebook will account for more than half of the revenues generated by online advertising in 2020.

Google takes first place with 29 percent. Facebook follows in second place with 23.2 percent. Far behind in third place is the Chinese e-commerce giant Alibaba with a market share of just 9.2 percent.

Google fights back

Google itself cannot understand the accusations of the attorneys general from Texas, Arkansas, Idaho, Indiana, Kentucky, Mississippi, Missouri, North Dakota, South Dakota and Utah.

A spokesperson for the company said the fees on its own platform were below the industry average. All allegations are unfounded, he said. Accordingly, Google also intends to defend itself in court.