The EU said their 'Jedi Blue' deal may thwart ad tech rivals and disadvantage publishers in online display advertising.
European Union and British antitrust authorities launched parallel investigations on Friday into a 2018 online display advertising deal between Google and Facebook, adding to a long list of regulatory challenges facing the US tech giants.
Alphabet unit Google and Facebook, whose parent company is now called Meta, defended the "Jedi Blue" deal, which the EU said may thwart ad tech rivals and disadvantage publishers in online display advertising.
So-called header bidding allows publishers, such as news providers, to offer ad space to multiple ad exchanges and networks simultaneously, potentially generating more ad revenue.
The Jedi Blue agreement enables Meta via its Meta Audience Network, to participate in Google's Open Bidding programme, which is a rival to header bidding.
"A competing technology to Google's Open Bidding may have been targeted with the aim to weaken it and exclude it from the market for displaying ads on publisher websites and apps," EU antitrust chief Margrethe Vestager said in a statement.
While one angle of the EU investigation focuses on the deal, another looks at whether Google abuses its dominance, which could mean that Facebook is off the hook if this is found to be the case.
"This is a publicly documented, pro-competitive agreement that enables Facebook Audience Network (FAN) to participate in our Open Bidding program, along with dozens of other companies," Google said in response to the investigations.
"Meta's non-exclusive bidding agreement with Google and the similar agreements we have with other bidding platforms have helped to increase competition for ad placements," Meta said in a statement.
Google has already been hit by more than €8 billion in EU antitrust fines in the past decade. Facebook has also been investigated by the bloc's executive over other issues and both companies could face fines of as much as 10 per cent of their global turnover for breaching its rules.
Britain's antitrust authority is also investigating the deal and the EU competition watchdog said it intends to cooperate closely with its British counterpart.
Texas and 15 other US states alleged in an antitrust complaint against Google that the deal with Facebook was struck as part of its effort to counter header bidding, which publishers wanted to use to make more money from advertising on their websites.