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Facebook, Google Sued for Inflated Winning Advertisement Bids

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On Tuesday, plaintiff Cliffy Care Landscaping LLC filed a class-action complaint against Facebook, Google, and Google’s parent company Alphabet Inc. for purported antitrust violations in the display advertising market, causing the plaintiff and putative to play inflated prices for a winning bid.

According to the complaint, in 2021 approximately $132 billion “will be spent on (U.S.) display advertising, which is where “advertisers place images, banners, or videos on websites likely to be viewed by the advertiser’s target audience.” The plaintiff noted that around “86% of today’s online display advertising will be bought and sold electronically at high speeds through centralized trading venues known as ‘exchanges.’” The plaintiff added that Google, Facebook, and Amazon control approximately 79% of non-search digital advertising because of their large audiences, content inventory and their network effects and technology power; specifically, Facebook has 2.8 billion monthly users and Google has 1.8 billion Gmail account holders, which “with their identities, search and browsing histories, spending habits, social connections, and locations – endow these firms with unprecedented capacity to reach and target consumers.” The plaintiff stated that Google, Facebook, and Amazon all sell display space on their website, and Google, Facebook, and occasionally Amazon sell advertisers space on third party websites via the open display advertising market.

Reportedly, 67% of open display advertising is sold directly to advertisers through the defendants’ ad networks, namely, the Google Display Network (GDN) and the Facebook Audience Network (FAN). The plaintiff claimed that while GDN and FAN “should vigorously compete for advertisers and publishers…they do not” because the defendants allegedly “conspired to allocate to one another advertisers and publishers affiliated with each network and to eliminate competition between them in the open display advertising market.”

In the alleged agreement, codenamed “Jedi Blue,” Facebook purportedly “agreed to bid FAN’s demand through Google’s ad exchange, rather than directly through multiple exchanges using a competing technology called ‘header bidding.’” In return, Facebook received: “(i) preferential treatment over other bidders,” “(ii) superior information about the advertising opportunity,” and “(iii) increased ‘timeouts’ for Facebook to bid before it was excluded from the auction,” thus allowing Facebook to “bid and win more often relative to non-Facebook bidders.” As a result, the plaintiff averred that the defendants effectively allocated advertisers between them, instead of competing for them. Therefore, according to the plaintiff, this conduct violates Section 1 of the Sherman Act and has injured the plaintiff and putative class because their winning bids were “systematically inflated above the bid that would have won the auction in the absence of Defendants’ unlawful agreement.”

The putative class includes: “All persons who purchased digital display advertising through Google Ads, Amazon DPS, or other non-Facebook demand-side platform to reach consumers in the United States between September 2018 and the present (‘Class Period’).”

The plaintiff has sought class-action certification and for the plaintiff and its counsel to represent the class; an award for damages, including treble damages; equitable relief; an award for costs and fees; and other relief.

Cliffy Care Landscaping is represented by MoginRubin LLP and Shaffer Lombardo Shurin.

Recently, Google and Facebook have both been hit with a number of lawsuits relating to their advertising practices. For example, Google has been sued by the DOJ, a suit led by Texas, another suit by a coalition of states, as well as suits from publishers and others. Facebook was sued over its high advertising prices and a lawsuit from the FTC and 48 attorneys general. Meanwhile, a news publisher sued Google and Facebook and cited the same Jedi Blue agreement.

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