Marketing

A primer on Jedi Blue, the backroom deal between Facebook and Google

A newly unredacted lawsuit against Google has more details on the arrangement.
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It’s no Bennifer, but another high-profile relationship has been making headlines lately: Jedi Blue. Alas, it has nothing to do with the new season of The Mandalorian.

It’s related to an anti-trust lawsuit brought against Google last year, led by more than a dozen state attorneys general accusing the company of relying on unfair practices and what look like secret deals between Google and Facebook to dominate digital advertising.

According to an unredacted suit, reported by the Wall Street Journal last month, Google is taking anywhere between 22% and 42% of US ad dollars spent on its platform.

  • The suit also claims Google uses preferential strategies on its ad exchange AdX, helping its own ad-buying tools win 80% of auctions.
  • It alleges publishers are paying between 19% and 22% in fees to Google’s exchange, which the suit argues is “double to quadruple the prices” of some of its competitors.

Because Google operates an exchange in addition to its buy-side and sell-side offerings, the suit says the company is “pitcher, batter, and umpire, all at the same time,” effectively giving it “monopoly power.” A senior Google employee is quoted in the suit as saying, “[t]he analogy would be if Goldman or Citibank owned the NYSE.”

Google’s response: “This lawsuit is riddled with inaccuracies and our ad tech fees are actually lower than reported industry averages,” Google spokesperson Peter Schottenfels told the Wall Street Journal.

Wait. What does this have to do with Star Wars? The suit highlights a deal Google and Facebook struck a few years ago called Jedi Blue that saw the latter give up support for its own header bidding (an industry attempt to knock down Google’s dominance by letting publishers offer up ad inventory to several exchanges at once) to get preferential treatment, like cheaper rates and quicker access to inventory, from Google’s bidding system.

Details about Jedi Blue emerged last year, but the recently unredacted suit includes more info about how it came to be. According to the suit, internal docs from Facebook show that the company “believed strongly” a deal with Google was “relatively cheap” when compared to having to compete in the “zero-sum ad tech game.” That “zero-sum ad tech game” is the game everyone else is playing.—RB

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