Southwestern Alberta weekly newspaper files suit against Google and Meta

Posted on March 31, 2022 by Sunny South News

By Erika Mathieu
Sunny South News

The small weekly newspaper, the Crowsnest Pass Herald, is suing tech giants Google and Meta, formerly Facebook, for damages amounting to $1 billion. On March 16, Sotos Class Actions of Toronto issued a statement of claim against Google and Facebook on behalf of the Crowsnest Pass Herald. The newspaper is alleging the two tech companies are in breach of the Competition Act as detailed in a 32-page statement of claim. The document also alleges Google and Meta entered into an agreement together which resulted in substantial losses in revenue for digital publishers after the two companies joined forces to put an end to a process between advertisers and publishers known as “header bidding”, and subsequently enacted an agreement which mutually benefitted both tech companies, and excluded digital publishers. Please note that none of the claims have been proven in a court of law.

The Crowsnest Pass Herald, like many digital publishers, sell impressions, or digital ad space on their websites. Most publishers use google’s publisher-facing servers to coordinate selling these impressions, and according to the lawsuit, 90 per cent of digital display ads pass through google’s publisher-facing server. Similarly, most advertisers use an advertising-facing server owned by Google to coordinate buying impressions. As alleged in the claim, what exists in the middle is a space where the transaction takes place between the publisher and advertiser services and involves a process, which neither the publisher nor the advertiser is typically privy to.

Google uses an auction structure known as “water-falling” to prioritize its best interests by ensuring that not all real-time bids are being considered equally. As a result, advertisers who use Google advertising tools can win the auction, even if they have bid lower than other advertisers who do not use Google tools. According to the statement of claim, the Crowsnest Pass Herald, alongside other digital publishers, lose out on money, because they receive a lower price for their impressions, and advertisers not using Google tools lose out on auctions altogether.

To combat this, the publishing industry adopted a system several years ago called, “header bidding,” which would allow for parity in the digital advertising landscape. The lawsuit claims this, “resulted in higher profits for publishers,” amounting to nearly an 80 per cent increase versus under the system being utilized by Google. Upon discovering this, it is alleged that Google began to charge publishers and advertisers who use the header bidding technique higher prices for Google services and that Google began manipulating advertiser auctions, so that their own advertising tools would accept the lower bid rather than from a higher bid using header bidding. Google also rerouted bids for header bidding to Google tools, and de-prioritized sites using the process in search results, making header bidding less interoperable with Google tools. The lawsuit claims this resulted in Google prioritizing mobile sites which prevent header bidding. Additionally, Google allegedly opted to redact performance metrics utilized by publishers to compare profits, from Google tools, to profits from header bidding, “to prevent publishers from discovering, all of the above,” in a campaign known as Jedi.

According to the claim, Google’s greatest advertising competitor, Facebook decided to embrace header bidding in 2017, which would have, “have dramatically increased competition in the Market, benefitting both publishers and advertisers.” The statement of claim filed on behalf of the Crowsnest Pass Herald also alleges that because Google wanted to avoid competing with Facebook, the two companies subsequently entered into an agreement in 2018 whereby Facebook abandoned header bidding altogether in favour of Google’s advertising tools which resulted in Facebook profiting, “at the expense of publishers and advertisers.”

As a result of this alleged agreement, Facebook was given exclusive bidding advantages including lower fees and priority to higher value “views” on advertisements, referring to higher valuation human, non-bot engagement on advertisements. As outlined in the statement of claim, the Crowsnest Pass Herald alleges this, among other exclusive privileges have only been awarded by Google to Facebook.

Furthermore, the newspaper is claiming both tech companies knew this agreement was in breach of the antitrust laws and the Canadian Competition Act, and subsequently agreed to be each other’s informants of regulators pursuing any antitrust litigation by agreeing to give the other company a head’s up if regulatory bodies began to catch on. As outlined in the document, during this time Google continued to assure publishers their practices were in the best interest of digital publishers and would ensure the highest possible revenue for them while also representing the position that they were no longer utilizing the water-falling technique, which the newspaper claims was not the case.

Given the disparity in size between the Crowsnest Pass Herald and these respective tech organizations, the legal action against the two multi-billion dollar tech giants and their subsidiaries is creating a lot of traction within Canada. The Alberta Weekly Newspapers Association revealed in an emailed statement, “similar legal actions against the two companies have been initiated in the U.S., by the Federal Trade Commission, more than 40 states and by a group of more than 200 newspapers across dozens of states.”

In a recent statement, News Media Alliance general counsel Danielle Coffey said, “We fully support this litigation.”