Behind a secret deal between Facebook and Google

In 2017, Facebook said it was testing a new way of selling online advertising that would threaten Google’s control of the digital ad market. But less than two years later, Facebook did an about-face and said it was joining an alliance of companies backing a similar effort by Google.

Facebook never said why it pulled back from its project, but evidence presented in an antitrust lawsuit filed by 10 state attorneys general last month indicates that Google had extended to Facebook, its closest rival for digital advertising dollars, a sweetheart deal to be a partner.

Details of the agreement, based on documents the Texas attorney general’s office said it had uncovered as part of the multistate suit, were redacted in the complaint filed in federal court in Texas last month. But they were not hidden in a draft version of the complaint reviewed by The New York Times.

Executives at six of the more than 20 partners in the alliance told The Times that their agreements with Google did not include many of the same generous terms that Facebook received and that the search giant had handed Facebook a significant advantage over the rest of them.

The executives, all of whom spoke on condition of anonymity to avoid jeopardizing their business relationships with Google, also said they had not known that Google had afforded such advantages to Facebook.

Google and Facebook said that such deals were common in the digital advertising industry and that they were not thwarting competition.

Julie Tarallo McAlister, a Google spokesperson, said the complaint “misrepresents this agreement, as it does many other aspects of our ad tech business.” She added that Facebook is one of many companies that participate in the Google-led program and that Facebook is a partner in similar alliances with other companies.

Christopher Sgro, a Facebook spokesperson, said deals like its agreement with Google “help increase competition in ad auctions,” which benefits advertisers and publishers. “Any suggestion that these types of agreements harm competition is baseless,” he said. Google and Facebook declined to elaborate on the specifics of their deal.