A secret deal struck between Google and Meta, the parent company of Facebook, is being investigated by antitrust regulators in the European Union and Britain for potentially undermining competition in the multibillion-dollar digital advertising market.
The inquiry, which was announced on Friday by the European Commission and U.K. Competition and Markets Authority, is the latest effort to scrutinize the business practices of the world’s largest technology companies.
The regulators said the investigation centered on a 2018 deal first uncovered as part of a lawsuit against Google by 10 state attorneys general in the United States. The American investigation concluded that Google reached an agreement, referred to internally as “Jedi Blue,” to limit how much Facebook would compete for ad dollars with one of Google’s key services.
“If confirmed by our investigation, this would restrict and distort competition in the already concentrated ad tech market, to the detriment of rival ad serving technologies, publishers and ultimately consumers,” Margrethe Vestager, the European Commission’s executive vice president who oversees competition and digital policy, said in a statement.
Google and Meta said the agreement between the two companies was not exclusive and that a similar arrangement is used by dozens of other companies.
“The allegations made about this agreement are false,” Google said in a statement.
Meta said the agreement was similar to what the company had with other partners for digital advertising. “These business relationships enable Meta to deliver more value to advertisers and publishers, resulting in better outcomes for all,” the company said in a statement.
Announcing a formal investigation is one step in a process that can take years to conclude.
The inquiry illustrates how regulators around the world are ratcheting up pressure on tech companies that dominate the digital economy. The outcome of the investigations, along with new laws being drafted in the European Union and United States, could force major changes in how the companies conduct business with app stores, e-commerce and digital advertising.
The European Commission, the executive arm of the 27-nation bloc, has other investigations underway into Amazon, Apple and Google. British regulators are investigating Apple’s App Store policies, Meta’s use of data and mobile ecosystems controlled by Apple and Google.
The European Commission and British regulators pledged to cooperate on the investigations, in what is one of the first major competition cases in which the two government bodies have pledged to work together since Britain exited the European Union in 2020.
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