AG Paxton’s false claims still don’t add up

Today we’re filing a motion asking the court to dismiss Texas Attorney General Ken Paxton’s antitrust lawsuit over our advertising technology (“ad tech”) business.

This lawsuit has now been rewritten three times. With each version, AG Paxton follows the same pattern: make inaccurate and inflammatory allegations, publicize them widely, and repeat. This playbook may generate attention, but it doesn’t make for a credible antitrust lawsuit.

AG Paxton's allegations are more heat than light, and we don't believe they meet the legal standard to send this case to trial. The complaint misrepresents our business, products and motives, and we are moving to dismiss it based on its failure to offer plausible antitrust claims.

Why this lawsuit misses the law and the facts

At its heart, AG Paxton is asking the court to force us to share user data and design our products in a way that helps our competitors rather than our customers or consumers. But American antitrust law doesn’t require companies to give information to, or design products specifically for, rivals. This lawsuit fails to acknowledge that ad tech is a highly dynamic industry with countless competitors. It’s been recognized that competition in ad tech has led to reduced fees, encouraged new entry, led to increased investment and expanded options for advertisers and publishers alike.

Correcting AG Paxton’s false and misleading allegations

AG Paxton overlooks, or misstates, a litany of clear facts. We want to publicly and unequivocally refute the more egregious allegations:

• We don’t force “tying”: A central allegation in AG Paxton’s lawsuit is that publishers are forced to use our ad server in order to access our ad exchange. This allegation is simply wrong, and AG Paxton offers no evidence to prove otherwise. If a publisher wants to use our ad exchange with a different ad server, they are free to do so.
• Header bidding is thriving: A core claim is that we prevented rivals from using a technology, header bidding, through our Open Bidding program. But again, the facts don’t support that. Since we launched Open Bidding, header bidding’s popularity has continued to grow. Recent surveys show a vast majority of publishers currently use header bidding. We simply haven’t held header bidding back.
• Our auctions are fair: The complaint uses deliberately inflammatory rhetoric to accuse us of a litany of wrongdoings: “misleading” publishers, “rigging” auctions through special data access, running “third price auctions,” “pocketing the difference.” But quite simply, we have – provably – done none of these things. AG Paxton is distorting various optimizations that we have created to improve publisher yields and returns for advertisers. To be clear, contrary to his claims, these optimizations did not and do not result in Google “pocketing” additional revenue share and do not make auctions unfair. And our auction was always a second price auction (until 2019 when it became a first price auction).
• Out-of-date claims: And more broadly, much of AG Paxton's lawsuit is based on out-dated information that bears no correlation to our current products or business in this dynamic industry (and in any event never amounted to a violation of antitrust laws).

Facebook Audience Network’s participation in Open Bidding

The allegation that has generated the most attention is that we somehow “colluded” with Facebook Audience Network (FAN) through our Open Bidding agreement. That’s simply not true.

To set the record straight, we are today including the full text of our agreement with FAN in our motion to the court. Here are some facts that contradict AG Paxton's claims:

• This is far from a secret deal: We announced FAN’s participation as one of over 25 partners in our Open Bidding program, all of whom have signed their own agreements to participate.
• This is a procompetitive agreement: FAN’s participation benefits advertisers because it gives them additional ways to reach their desired audiences. And it benefits publishers because it introduces additional bidders to compete for their ad space, earning them higher returns. In fact, if FAN weren’t a part of Open Bidding, AG Paxton may have claimed we were preventing a rival from accessing our products and depriving publishers of additional revenue.
• FAN’s involvement is not exclusive: The agreement doesn’t prevent FAN from participating in header bidding or other competing auctions. In fact, FAN participates in several similar auctions on rival platforms. The agreement also doesn’t prevent FAN from building a competing product. Our agreement explicitly states that FAN’s participation is not exclusive (and nowhere in our agreement is header bidding even mentioned). And the entire Open Bidding program (of which Facebook is one of 25 participants) accounts for a small fraction of the display ads we place.
• We do not manipulate the auction: Finally, this agreement does not provide FAN with an advantage in the Open Bidding auction. FAN competes in the auction just like other bidders: FAN must make the highest bid to win a given impression, period. If another eligible network or exchange bids higher, they win the auction. We don’t allocate ad space to FAN, they don’t receive speed advantages, and we don’t guarantee that they win any auctions.

Our advertising technology helps fund digital content that benefits everyone, and it supports thousands of businesses, from small advertisers to major publishers. Our work in this space is designed to balance and support the needs of publishers, advertisers and consumers.

We’re confident that this case is wrong on the facts and the law, and should be dismissed. However, if it does move forward, we’ll continue to vigorously defend ourselves.

by Adam Cohen via The Keyword