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BIG TECH.

Big Tech Makes Friends.

Backstory: Last week, 10 US States sued Google for cutting a deal with Facebook to avoid competition. The lawsuit states that they Facebook agreed to not compete with Google’s online advertising tools in exchange for special treatments in web ad auctions.

  • But: Much of the details remained unknown because the lawsuit was heavily redacted.

What happened: WSJ reviewed a recent draft of this lawsuit without redactions and found a lot more details.

Here are they:

  • The code name for the deal was “Jedi Blue” inspired from Star Wars.
  • Both companies will “cooperate and assist each other in responding to any Antitrust Action” and “promptly and fully inform the Other Party of any Governmental Communication Related to the Agreement.
  • Starting in the deal’s fourth year, Facebook is locked into spending a minimum of $500 million annually in Google-run ad auctions. And “Facebook is to win a fixed percent of those auctions.
  • An internal Facebook document described the deal as “relatively cheap” when compared with direct competition, while a Google presentation said if the company couldn’t “avoid competing with” Facebook, it would collaborate to “build a moat.” 

The big picture: There’s a trend. If two Big Tech companies have same business models, they collaborate. If they have differing business models, they fight.

  • Facebook collaborated with Google but is fighting with Apple.

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