Judge Dismisses Jedi Blue Lawsuit, Rules Google and Facebook Deal Isn't Anticompetitive

On Tuesday, Google won its motion to dismiss an allegation that its 2018 open bidding agreement, codenamed Jedi Blue, with Facebook (of Meta) was unlawful. The tech giant had been accused of violating antitrust law for bolstering its already-dominant ad business, but U.S. District Judge P. Kevin Castel said Google and Facebook had valid business reasons for the deal. Still, Google must face the remaining allegations in Texas’ multistate lawsuit, which accuses the company of market monopoly in digital advertising, a New York judge ruled yesterday. Google has yet to refute these allegations. “What has ultimately hurt publishers and consumers is the lack of competition and innovation in digital advertising for nearly a decade,” said Shiv Malik, CEO and founder of data company Pool Data. Google, which is facing antitrust scrutiny from all sides, allegedly created plans to break up its ad-tech business to avoid more antitrust lawsuits spearheaded by the U.S. government, according to people familiar with the matter, as the WSJ previously reported. While the dismissal of Jedi Blue allegations is a win for Google, the company still has a long way to go to ward off all antitrust lawsuits. The court dismissal was based on two elements, according to a source who spoke on background. Google and Facebook inherently collaborated for vertical integration and to avoid competition, but the companies claimed the agreement didn’t prevent Meta from building its own solution. A win, for now Although the court documents found the deal hurt the publisher’s ad revenue, Google asserts live competitive bidding on its AdX exchange was an important technological innovation that drove publishers to use its DFP ad server, arguing there is no plausible claim of actual coercion, according to the court documents. "I’m not certain it’s the last we’ll hear of Jedi Blue considering the lawsuits underway elsewhere, particularly the class action suit against Facebook in the northern district of California," said Jason Kint, CEO of researcher Digital Content Next. Unline before, regulators and Congress are beginning to understand how digital advertising works, according to Kint. Details of Jedi Blue between Google and Facebook previously emerged when Texas Attorney General Ken Paxton, along with 16 other states, accused Google of dominance in the ad-tech market. The lawsuit, among other allegations, said Google entered a secret deal with Meta’s platforms to give them preferential rates and priority choice for ad placement on Google’s ad exchange to buy and sell ads. In return, Meta abandoned plans to adopt any technology that would diminish Google’s ad-tech market monopoly or use rival services. How the Walled Gardens Get More Power From Privacy Regulations Google sought to dismiss the lawsuit earlier this year. While it failed to entirely convince Castel, it noted in a blog post that Paxton’s case was “deeply flawed” and Jedi Blue was a pro-competitive agreement. The company also pointed out that the antitrust law does not require a company to help out its competitors, saying, "that would be antithetical to the purpose of antitrust law, which is to encourage robust competition and innovation." In addition to dismissing claims about Jedi Blue, the judge narrowed the complaint by dismissing Google’s alleged conduct of AMP and Open Bidding. More to come It's still not a complete win for Google, though. The Justice Department, which sued the tech giant in October 2020 for using its market muscle to undercut rivals, is expected to file an antitrust lawsuit against the company as soon as this month, per Bloomberg. Meanwhile, the U.K.’s Competition and Markets Authority (CMA) launched a similar antitrust investigation in March to see whether Google and Meta conspired over advertising efforts. Additionally, the CMA is scrutinizing Google’s ad bidding conduct in its entirety. “The pressure is clearly piling up on Google,” Malik said.