Google, Facebook Deny 2018 Ad Deal Was Anticompetitive

Google and Facebook didn’t engage in anticompetitive behavior through a 2018 digital advertising agreement, representatives from the companies told the Senate Antitrust Subcommittee during a hearing Tuesday. A lawsuit from state law enforcers accused the companies of an illegal price-fixing scheme via the agreement.

It’s a pro-competitive deal for advertisers, said Google Vice President-Government Affairs and Public Policy Markham Erickson. Google announced the participation of Facebook and 25 other companies, he added. Enforcers claim Google granted Facebook special access to its ad networks. The auction system isn't rigged in favor of Facebook, said Erickson, saying the deal created more demand for publishers’ inventory. “We compete hard," said Facebook Vice President-Privacy and Public Policy Steve Satterfield. "We compete fairly."

Chair Amy Klobuchar, D-Minn., and ranking member Mike Lee, R-Utah, cited evidence of anticompetitive behavior from both companies. Klobuchar said the hearing is part of a bipartisan review of competition, with her staff working closely with Lee's.

One sign of an antitrust violation is the ability to set prices and control output, said Lee: There’s likely no better example than Facebook demanding user data without disclosing the value or letting users know this has any worth. Facebook doesn’t see data as something provided in exchange for services, said Satterfield: It’s something needed to provide a service to users, to provide value to them.

Every American would accept that the service isn’t free, that it’s paid for through time and data, said Lee. No currency is exchanged, but Facebook is a profitable company and data has value, said Lee. That’s not how Facebook thinks about data, said Satterfield.

Klobuchar asked how important data is to each company. Success comes from building great products, not how much digital information you have, said Satterfield: Data is important to connect people to relevant experiences, but Facebook’s success is from building good products. Google has to understand what people are looking for to provide relevant information, but personal data isn’t a requirement to use the services, said Erickson.

Data is the source of pay and power for these companies, said Sen. Richard Blumenthal, D-Conn. He noted he’s working with Sen. Jerry Moran, R-Kan., on privacy legislation. He asked Satterfield to commit to sending a Facebook witness to a Sept. 30 Senate Consumer Protection Subcommittee hearing. Facebook is discussing the possibility, said Satterfield.

Satterfield responded to reports that Instagram has a negative impact on teens' mental health (see 2109150053). The safety and well-being of teens is a top priority and will continue to be for Facebook, he said: The company is proud of the research and will continue to study the issues. Blumenthal asked why Facebook “concealed” the internal research. To encourage frank and open discussion, replied Satterfield.

Sen. Josh Hawley, R-Mo., asked Facebook to stop developing a kids' Instagram. Satterfield wouldn’t commit, saying Facebook knows there are internet users under 13, and they should have a heathy experience online. It’s an important issue Facebook is investing in, Satterfield said. Given the research, Hawley said he “can’t believe you can sit there and say that teen safety and security is your top priority. Clearly it’s not.” Facebook won’t share the research or restrict harmful advertising because it “makes gobs of money” off teens' use of the apps, said Hawley.

Senate Judiciary Committee Chairman Dick Durbin, D-Ill., during opening remarks urged support for his Clean Slate for Kids Online Act (see 2104280052). S-1423 would require tech companies upon request to “delete all personal information” collected from or about someone younger than 13. Kids deserve the right to have a clean slate once they’re old enough to understand the consequences of online activity, Durbin said. Klobuchar urged support for her Merger Filing Fee Modernization Act (S-228) (see 2106250062) and other competition legislation.

Lee suggested problems might stem from a lack of antitrust enforcement. He noted the FTC has filed seven merger cases, five of them filed by the outgoing Trump administration. There have been lapses in enforcement, said Public Knowledge Competition Policy Director Charlotte Slaiman: There have been cases where the law isn’t in favor of the agency but also cases the agency should have brought.