More Fun Together: Google and Facebook Accused Of Conspiracy
3 minutes for reading
Of course, our hearts belong to ratings, but there is a secret chamber in it occupied by lawsuits against IT companies. It’s high time to tell you what Google and Facebook are accused of and what goals pursue the plaintiffs. Let’s get started!
10 states against Google and Facebook
According to Bloomberg, on December 16th, Ken Paxton, the attorney general of Texas, sued Google, accusing it of monopolizing the market of online advertising, and plotting with Facebook.
10 more states supported Texas by joining the lawsuit: Idaho, Arkansas, Indiana, Kentucky, Mississippi, Missouri, North and South Dakota, and Utah.
More on the accusations
Mister Paxton states that a subsidiary Alphabet used its position and power to fake the results of advertising auctions on its platform Open Bidding; as if higher bids were ignored, and Google always won.
And this is not it: the corporation is accused of a contractual scheme with Facebook, its main rival in the sphere of advertising. The plot aims to share the market. As Bloomberg puts it, the social network had more interest in auctions, while Google was allowed to increase the prices for ads.
This is how, plaintiffs state, the two IT giants deprived good Americans and other market participants of the advantages of fair competition, making pricing mechanisms and ads distribution non-transparent and unjust.
What do plaintiffs pursue?
Sure, they seek compensation for the damages, but another claim is more interesting: they demand restructuring the corporation. In other words, the company might have to sell a part of its assets.
Remember that in October, 11 states and the Ministry of Justice already accused Google of violating the anti-monopoly legislation. They also try to make the IT-conglomerate sell a part of its assets – particularly, Chrome and some of its advertising technology.
Anti-monopoly experts say that these are the only measures that provide for legal control over the largest representatives of IT and prevent the market from monopolizing.
Market reaction
On December 16th, Google's stock price fell by 0.22% to 1757.19 USD per stock; the next day, it dropped by o.95% to 1740.51 USD. The stock price of Facebook on Wednesday did grow, though slightly – by 0.04% to 275.67 USD, while on Thursday, it declined by 0.43% to 274.48 USD.
As for smaller providers of ads technology, the stock prices demonstrated impressive growth. For example, the stocks of Pubmatic grew by 15.53%, while those of Magnite – by 5.98%.
Summing up
The Alphabet subsidiary got sued again for violating the anti-monopoly legislation. This lawsuit is peculiar because the plaintiffs claim a conspiracy of the two main rivals in the online ads sector – Google and Facebook.
The accusation includes manipulations with auctions, a contractual scheme, deliberate and artificial complication of pricing and ads distributing processes – in short, this is a perfect combo.
Note that selling ads makes up 80% of the Alphabet's income. In the last financial quarter, the company announced that its income in this sphere exceeded 37 billion USD.
Naturally, the two IT giants deny any fault and announce boldly their readiness to defend their interests and good names in court. As for us, we can only wait patiently for what's next. I hope you are with us.
