Facebook and Google accused of signing secret sweetheart deal on ad exchange

The allegation, amongst others, were brought fourth by Puerto Rico, Texas, and 14 other states in their latest version of a federal antitrust suit against Google, according to Politico.

The suit alleges that a 2018 deal gave Facebook potentially unlawful advantages when the social media company used Google's advertising exchange.

The suit was originally filed in December of 2020, with an updated version containing heavily-redacted information coming out in November.

After a judge ruled that the additional details should be made available to the public, a version with fewer redactions was filed on Friday.

This new filing accuses Sheryl Sandberg, Facebook's chief operating officer, of helping to negative an agreement between the two companies, and urging Zuckerberg's approval. She reportedly called it "a big deal strategically."

According to Politico, the complaint says the team that negotiated the deal sent Zuckerberg an email telling him, "We're nearly ready to sign and need your approval to move forward."

"Facebook CEO [REDACTED] wanted to meet with COO [REDACTED] and his other executives before making a decision," says the complaint, with Zuckerberg's and Sandberg's names still redacted despite their positions being revealed.

The lawsuit stated that Sandberg and a Google senior vice president signed the agreement in September of 2018. "Google CEO Sundar Pichai also personally signed off on the terms of the deal," it adds.

While previous versions of the lawsuit revealed the existence of the deal, dubbed Redi Blue, the newest details show that the deal was negotiated and approved by highest ranking members of both companies.

Sandberg was a top Google executive in charge of online sales before joining Facebook.

Google spokesperson Peter Schottenfels rejected the suit Friday as one full of inaccuracies and lacking legal merit. The company said it will ask a judge next week to dismiss the case.

"Despite Attorney General Paxton's three attempts to re-write his complaint, it is still full of inaccuracies and lacks legal merit," Schottenfels said. "Our advertising technologies help websites and apps fund their content, and enable small businesses to reach customers around the world. There is vigorous competition in online advertising, which has reduced ad tech fees, and expanded options for publishers and advertisers."

The company also denied that Pichai was involved in approving the deal. "We sign hundreds of agreements every year that don't require CEO approval, and this was no different," Schottenfels said.

Meta, formerly known as Facebook, defended its agreement, echoing similar sentiments expressed in support of the agreement.

"Meta's non-exclusive bidding agreement with Google and the similar agreements we have with other bidding platforms, have helped to increase competition for ad placements," Meta spokesperson Christopher Sgro said in a statement Friday. "These business relationships enable Meta to deliver more value to advertisers while fairly compensating publishers, resulting in better outcomes for all."