It’s no longer a secret that Facebook, Inc. (NASDAQ: FB) and Alphabet Inc. (NASDAQ: GOOGL) face mounting scrutiny from antitrust authorities over their advertising businesses. Even as regulators were trying to curtail their monopoly, it appears the two tech giants had already foreseen the future and prepared adequately.
It has since emerged that the two companies signed a pact agreement to help one another whenever one of them was the subject of investigations over online advertising. The pact agreement is now the subject of a new lawsuit filed by 10 U.S states.
Under the terms of the deal made in 2018, Facebook allegedly agreed not to compete with Google’s online advertising tools. In return, the search giant agreed to accord the social media company preferential treatment whenever it used the tools to bolster its advertising business.
Concerned that the deal would amount to antitrust violations in the future, the two companies signed an agreement requiring each one of them to defend the other in case of antitrust investigations. In response to the claims, a Google spokesperson insists that such agreements over antitrust threats are not new but very common.
Claims that the deal was a secret is all wrong, according to the Google’s spokesperson. “We’ve been public about this partnership for years,” said in a statement. The alleged deal underscores how tech giants are intertwined and continue to sign deals all in the effort of safeguarding their core business from the competition.
Regulators face an uphill task to stem the practice, which is believed to have curtailed competition in the highly lucrative advertising business. Facebook and Google are the two heavyweights that continue to deploy unconventional tactics to ensure they remain the preferred destination for advertiser’s dollars.
For instance, Google has been accused in configuring its search engine in such a way that it gives its products a competitive edge against similar products from rival brands. Facebook has also resorted to acquiring rival apps that it deems pose a significant danger to its main app.