Google and Facebook (News - Alert) are the biggest technology companies in the world. Google focuses on search engine technology, artificial intelligence (AI) and advertising. Facebook is primarily a social networking site aimed at connecting people worldwide.

Over the years, both companies have grown to add other functions to their offerings. They overlap in the advertising space. This overlap would normally pit them as competitors, but according to their collaboration, this isn’t the case. This alliance shows what we perceive as rivalry between brands is sometimes the opposite. So, how did this partnership happen?

A Look Back

In 2012, Facebook launched FBX (Facebook Exchange). This exchange platform would allow real-time bids for their site's advertising space. Scrolling through Facebook, you get advert pop-ups on the sidebar. These are representative of the sites on the exchange platform.

The ads would be curated according to your preferences based on the cookie data Facebook has collected from you through cookie tracking over time. So, if you have expressed interest in live casino sites or slots while on Facebook, you’ll see ads about online gambling and betting apps.

FBX was supposed to be a success. They had access to over one billion users and were still growing. They also had plenty of data from their bidders. So, the bidding companies could combine their user data with Facebook data and target the right users.

Conversely, Google (News - Alert) had data access limitations because they were restricted to incidental data. At the time, it was clear that the biggest competitor to the FBX Bid Exchange would be Google Ads DoubleClick (News - Alert).

By 2015, it was clear FBX wasn’t doing as well as expected financially. The main reason was that FBX was targeting only desktop users. The platform didn’t feature any mobile or video ads. Meanwhile, mobile users accounted for over 80% of Facebook users. So, there was an entire mobile user market Facebook was losing out on. Another issue was that ad buyers weren’t using FBX exclusively. They were still using other exchange platforms.

Fast forward to 2016/2017, and Facebook announced the move to header bidding through its Audience (News - Alert) Network. They didn't build their header bidding but were going to open up their Audience Network to mobile app publishers who used header bidding technology provided by major suppliers like Amazon and Index Exchange.

Header Bidding

The header bidding concept was excellent because it reduces reliance on Google ads. Header bidding starts when the page loads in your browser. A bidding code calls all partners to bid on this impression within seconds between your mouse clicks. In that split second, the partners send the highest bids, which are then forwarded to the publisher's ad server.

Advantages of Header Bidding

• The publisher controls which bids to accept and which partners to work with. This process also lets the publisher increase or decrease pricing, unlike before, when they relied on a single-supply platform. Publishers can also prioritise their advertisers based on their bids and no longer rely on a small group of advertisers.

• Facebook's acceptance and promotion of header bidding placed them in the direct line of Google's competition. Google then introduced its own Open Bidding as an alternative to header bidding. So we now had a standoff between Facebook's FAN and Google Open Bidding.

• The header bidding process allows for multiple bid offers to be placed. So, this secures and ensures that ad spots will always be filled. In turn, it secures a consistent flow of revenue.
• With header bidding, advertisers have access to a wider selection of premium ad space, unlike before, where premium space was available for a select few.
• There’s better transparency for both the publishers and the bidders, both sides can see the value of the impressions and the bid prices on offer. In turn, there’s more control and better analysis and optimisation.

The Partnership

In 2018, Facebook and Google agreed to integrate Facebook's Audience Network (FAN) with Google's Open Bidding. This means that Google clients can participate in FAN real-time bidding via DoubleClick Bid Manager.

Google has partnered with other companies for different reasons, just like Facebook has done. What made this partnership so newsworthy was the amount of revenue involved. There was no clear indication of the revenue that this partnership would generate, but we know it's substantial.

Google's ad revenue for 2020 was around $146.92 billion, while Facebook got $86 billion in ad revenue in the same year. In 2019, Google and Facebook accounted for over half of the world's digital ad spend.

While a Facebook spokesperson has explained that the partnership will increase competition in ad auctions, it’s still unclear how it’ll affect other smaller tech companies in this bidding agreement. At face value, this agreement looks excellent for the publishers and the companies bidding for ad space.

A significant point of contention with this deal has been transparency, not just for the other companies in the alliance but also for consumers. So, what does this mean for data privacy policies? Will consumer data from Meta and its subsidiaries be transferable to Google? If a site wins a bid, will it have access to Google and Facebook data?

In a lawsuit against tech giant Google in 2021, it was alleged that this partnership created a monopoly that edged out other platforms, going against the rules of fair competition. Both techs are shrouded in a cloud of controversy from other lawsuits from different regions of the world.

Final Thoughts

Details of how this 'Jedi-blue' deal came about are unclear. Some claim it reflected a hostage situation from Facebook, while others believe it was in response to the potential losses Google would face.

The partnership should have focused on benefitting everybody in the alliance. It now seems like the two tech giants took what was a perfectly good model into a scheme that would only benefit them.

Facebook and Google should have been more transparent about their partnership and the benefits they would benefit. Despite the commission closing the enquiry and the case against Google being closed, there’s still a lot of speculation and mistrust surrounding the tech giants.