Up to 22%: That's the fee Google charges publishers for sales on its online ad exchanges, according to newly unredacted details in a complaint by several state attorneys general.
The figure is just one of the many details that a court allowed the states to unveil Friday. Many had more or less remained secrets inside Google and the online publishing industry, even through prior legal complaints and eager public interest.
The filing is a renewed set of allegations by the Texas-led coalition, which is now part of a class-action lawsuit alleging Google abuses its dominant position in the sale of online ad space.
The company is facing complaints by government competition enforcers on several fronts, including one led by the U.S. Justice Department focused on distribution of the company's marquee search engine and one led by Utah that has zeroed in on Google's mobile operations.
The ads suit, however, aims at the core of Google's profits: the company's operation of the biggest tools for buying and selling online ad space. It also runs the auctions systems that tie publishers and advertisers together, which "processes about 11 billion online ad spaces each day," according to the new complaint.
The lawsuit landed at the end of 2020, alleging in particular that Google made a deal with Facebook to offer the latter a leg-up in ad auctions so that Facebook would back off of support for a technique that publishers used to avoid Google properties.
Google has said it routinely pursues partnerships with major players in the market, has lowered overall fees for ads and gives priority in auctions based on objective criteria like website speed rather than to its own properties.
While the new details don't change the overall substance of the complaint, they flesh out what Google officials thought as they acted, what the company's agreements looked like and how Google referred to its many projects.
Here are the details.
About that 22%...
"Google's exchange charges publishers 19 to 22 percent of exchange clearing prices, which is double to quadruple the prices of some of its nearest exchange competitors," the states write.
The unsealed details build on the original complaint's references to another system that matches buyers and sellers: the New York Stock Exchange. The states contend that Google's ownership of its ads exchange and involvement on both sides of many transactions demonstrate a fundamental unfairness that would never be allowed in high finance.
"As one senior Google employee admitted, '[t]he analogy would be if Goldman or Citibank owned the NYSE,'" the new complaint says. The states add that the analogy would actually be more accurate "if Goldman or Citibank were a monopoly financial broker and owned the NYSE, which was a monopoly stock exchange."
Code names — and more finance
While media reports had quickly established "Jedi Blue" as the redacted name of the Facebook deal when the original suit landed, Friday's filing unveiled further code names. One called "Poirot," presumably in honor of Agatha Christie's fussy Belgian detective, was intended to "detect and reduce spending on non-Google exchanges." There were also "Bell" and "Elmo," which apparently both used "inside information to privilege Google's exchange over rival exchanges."
Then there were more details on Project Bernanke — yes, as in former Federal Reserve chair Ben. The project, which Google itself had accidentally disclosed, allegedly "privileged access to detailed information regarding what advertisers historically bid to help advertisers using Google Ads beat the advertisers bidding through competitors' ad buying tools." It's not clear how the project got its name.
The states had already disclosed an August 2019 meeting Google took with Facebook, Apple, Microsoft and other tech companies, focused on privacy. But the new material shows that, in the words of the states, "Google expressed particular concern that Microsoft was taking child privacy more seriously than Google and sought to rein in Microsoft." Google apparently also worried that Facebook was conceding too much on privacy to appease angry lawmakers.
The longtime antitrust war between Google and Microsoft has gotten hot again, with Microsoft more or less cooperating with the probe leading to the Justice Department's complaint and the two clashing over Microsoft's production of documents for Google's defense in the U.S. lawsuit.
Speaking of privacy, the states' latest complaint says that the initiative that became "Privacy Sandbox" — the now-delayed plan for Google's Chrome browser to phase out support for third-party cookies — started out as something called Project NERA. Google said internally that the project's goal was to "successfully mimic a walled garden across the open web [so] we can protect our margins."
The states alleged that meant using Chrome to track users, rendering publishers' cookies and tracking far less valuable, then offering "to give publishers the ability to tap into Google's now-deeper trove of user data in exchange for the publishers' agreement to give Google exclusive control over their ad space."
According to the states' complaint, Facebook's flirtation with header bidding — the technique that allowed publishers to route more of their inventory around Google's systems, much to Google's alarm — was mainly an 18-month strategy to play on Google's fears rather than an actual plan it expected to implement, and Facebook eagerly pursued a deal it viewed as "relatively cheap compared to build/buy and compete in zero-sum ad tech game."
What Facebook got
The states outline much more about Google's deal with Facebook: The latter was allegedly allowed to circumvent some systems, and Google charged Facebook a lower fee of 5% to 10%. Facebook was also prohibited from speaking publicly about its "special lower pricing terms."
According to the new filing by the states, Google also let Facebook have "direct billing and contractual relationships with publishers," even though Google prohibits similar networks having such relationships. And Google also allegedly told "Facebook which impressions are likely targeted to spam" — something other networks had unsuccessfully sought.
Facebook gets to approve Google's defense too
The redacted version of the complaint suggested that Google and Facebook would "cooperate" in antitrust probes springing from "Jedi Blue," but the newly unveiled details go further, alleging that the two must "coordinate on antitrust defenses, such that Facebook must approve any and all arguments that Google presents relating to their illegal agreement."
Facebook of course has its own antitrust woes, though for now those largely relate to the Federal Trade Commission's lawsuit over its acquisition strategies.