Our heart, of course, belongs to the ratings, but there is also a secluded place in it for news about litigation of IT corporations. It’s time to tell you what are accused of Google and Facebook this time, and what exactly the plaintiffs are seeking. Let’s start with?
Ten states of America against Google and Facebook
According to Bloomberg, on December 16, Ken Paxton, the Attorney General of Texas, filed a lawsuit against Google, accusing the corporation of monopolizing the online advertising market and an insidious conspiracy with Facebook.
Nine more states decided to support Texas by joining the lawsuit: Idaho, Arkansas, Indiana, Kentucky, Mississippi, Missouri, North and South Dakota, and Utah.
More about the charges
Mr. Paxton claims that the Alphabet subsidiary, using its position and power, falsified the results of advertising auctions on its own Open Bidding site. Allegedly, the higher bids of other auction participants were ignored, and the victory went to Google.
And that is not all! The corporation is accused of creating a contractual scheme with Facebook, its main competitor in the advertising segment. The purpose of the collusion is to divide the market. According to Bloomberg, under the terms of the deal, the social network had advantages at auctions, and Google – the ability to raise advertising prices.
Thus, according to prosecutors, IT giants have deprived respectable Americans and other bidders of the advantages of fair competition, and the mechanisms of pricing and distribution of advertising – transparency and fairness.
What are the plaintiffs seeking?
Of course, compensation for the damage caused. But something else is much more interesting: prosecutors insist on restructuring the corporation. In other words, the company will need to sell part of its assets.
Recall that in October, eleven states and the Department of Justice already accused Google of violating antitrust laws. They are also trying to get the IT conglomerate to sell assets – Chrome and part of advertising technologies.
According to antitrust officials, only such measures will allow maintaining legal control over large representatives of the technological segment and preventing the creation of a monopoly on the market.
On December 16, the value of Google shares fell by 0.22%, to $ 1,757.19 per unit, and the next day – by 0.95%, to $ 1,740.51. Securities of “Facebook” on Wednesday, albeit slightly, but still rose in price – by 0.04%, to $ 275.67, and on Thursday – became cheaper by 0.43%, to $ 274.48.
Smaller ad tech providers, on the other hand, posted impressive gains. For example, Pubmatic gained 15.53% and Magnite rose 5.98%.
Summing up the result
Once again, the Alphabet subsidiary was sued, and again the charges relate to violations of antitrust laws. The case is interesting because prosecutors claim collusion between two main competitors in the online advertising segment – Google and Facebook.
Here and the manipulation of advertising auctions, and the creation of a contractual scheme, and the deliberate artificial complication of mechanisms for pricing and distribution of advertising – in short, an excellent combo.
As a reminder, advertising sales account for over 80% of Alphabet’s revenue. In its most recent fiscal quarterly report, the company reported that industry revenue exceeded $ 37 billion.
Naturally, IT conglomerates deny their guilt and boldly declare their full readiness to defend their interests and defend their good name in court. We just have to be patient and wait for further developments. We hope you are with us.