Strange couple unites in action against big tech

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The duo are key players in an antitrust lawsuit filed last year on behalf of a group of states against Google, which claims the Alphabet Inc.

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The affiliate uses its control over ad exchanges to promote its own businesses and to collect fees from websites that depend on it for their income.

The case, despite the turmoil in Mr Paxton’s office, remains a key part of a wave of bipartisan action against tech giants that has drawn comparisons to Theodore Roosevelt’s era of trust.

It developed from the Texas Attorney General’s direction of a multi-state investigation and gained momentum after Ms. Srinivasan, an antitrust specialist, uncovered one of the groundbreaking documents from the affair, a 2018 trade agreement between Facebook Inc.

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and Google that the lawsuit argues shows collusion.

Cooperation between Mr. Paxton and Ms. Srinivasan is a rare common ground in hyperpartisan times. “Politics was not on the decision block,” Ms. Srinivasan said in an interview. “When you have state governments that agree to take resources away to right an injustice … that was the only thing that mattered.”

“I’m looking for the best talent to achieve a goal, and Dina has remarkable skills and abilities and an incredible reputation for what she can accomplish,” said Paxton.

Concerns that Big Tech would stifle competition has been raised by state and federal lawmakers, as well as the Trump and Biden administrations. The review targets companies across multiple industries, will likely unfold over the years and could fundamentally change the way companies do business.

Facebook, Amazon.com Inc.

and apple Inc.

facing accusations that they used their dominance of social media, e-commerce and app distribution, respectively, to unfairly profit themselves and hamper competition. At the end of last month, the House Judiciary Committee passed six bills aimed at curbing the dominance of Google, Facebook, Amazon and Apple.

Against Google, in addition to the Texas lawsuit, the Justice Department and 38 state attorneys general filed separate antitrust cases last year alleging its search services are blocking competition. Another antitrust lawsuit was filed this month by three dozen state attorneys general against Google’s app store, alleging the company is blocking competition for apps on mobile devices running its Android operating system.

The Texas-led lawsuit could reshape the digital economy as it focuses on Google’s alleged monopoly in a display advertising industry that funds millions of websites.

Google called the lawsuits flawed and said the Texas lawsuit inaccurately portrayed its business deal with Facebook to portray Google’s involvement in the industry as nefarious. The company said it was charging below the industry average ad fee. Referring to the App Store costume, he said that its open operating system allows customers to download apps directly from developers’ websites.

Mr. Paxton, in his Austin office on Wednesday, conducted a multi-state investigation into Google’s advertising activity.


Photo:

Julia Robinson for the Wall Street Journal

Outside of their views on the tech industry, Mr Paxton, 58, and Ms Srinivasan, 41, have little in common.

A seasoned politician, a graduate of Baylor University and the University of Virginia Law School, Mr. Paxton was first elected in 2002 to the Texas House of Representatives for a district outside of Dallas. In the midst of the Tea Party wave of 2010, he waged an unsuccessful populist campaign to topple the outgoing Republican Speaker of the House, then in 2014 won a race for attorney general.

In 2017, Mr. Paxton reached a national profile by deploying all 750 attorneys from one of the largest state justice departments to service conservative causes such as challenging the Affordable Care Act. He also gained attention after being indicted in 2015 for the misdemeanor of securities fraud. He denied any wrongdoing.

As he sought re-election in 2018, Mr Paxton said, voters complained about Big Tech issues. He assembled a team that traveled to California to learn from tech companies, lawyers and industry experts. Many conversations have focused on Google’s advertising dominance.

In December 2019, the attorneys general of 48 states, all but California and Alabama, signed to support an investigation, which Mr Paxton announced from the stages of the United States Supreme Court. They have since split into separate actions, with Mr. Paxton taking action against 14 states and Puerto Rico.

Mr Paxton, shown with District of Columbia Attorney General Karl Racine, announced the bipartisan Supreme Court investigation in 2019.


Photo:

Andrew Harrer / Bloomberg News

Ms. Srinivasan’s journey to the case was quite different. Born in Seattle to a Lebanese father and an American mother, she spent her childhood in a Beirut at war where she remembers playing with cousins ​​on a balcony and seeing Prime Minister Rashid Karami’s helicopter. explode nearby. She returned to the Pacific Northwest for high school and college, then enrolled in Yale Law School, where she focused on antitrust.

She co-founded and sold part of a digital advertising company to WPP Global and spent time there as an executive before leaving in 2017. Troubled by the market dominance of Facebook and Google, she began an investigation personal information on the two companies which ultimately led to a 63 page article she published in the Berkeley Business Law Journal titled “The Antitrust Case Against Facebook”.

She said she is an independent politician but leans to the left.

At a 2019 antitrust event at La Villa in the Sky, a rooftop restaurant with a floor-to-ceiling view of Brussels, she met Darren McCarty, a Tory Republican and MP at the time of Mr Paxton who was helping to mount the case against Google.

They connected because she saw similarities between Google’s digital advertising practices and airline ticket service provider Saber Holdings. Corp.

, who was sued for inflating booking fees. Mr. McCarty was familiar with the case, having worked for American Airlines Group Inc.

“We were a bunch of nerds at an antitrust conference,” McCarty said.

While the Texas team pursued their case, Ms. Srinivasan joined an antitrust initiative at Yale called the Thurman Arnold Project, and did research for News Corp.,

The parent company of the Wall Street Journal and a vocal critic of Google. In June 2020, she published a first draft of her second academic article: “Why Google Dominates Advertising Markets: Competition Policy Should Address Principles of Financial Market Regulation.”

Mr. McCarty saw it and called Ms. Srinivasan.

“I’m going to get right to the point,” he said. “Would you like to come and work with us?”

“When?” she asked.

“Immediately,” he said.

In September, Ms. Srinivasan and her family arrived at a three-bedroom Airbnb in Austin. His role was to assist in the review of documents and to advise on the complaint.

But around this time, Mr McCarty and several other Paxton MPs reported to federal authorities that the attorney general had broken the law and abused his office to help a political donor. Mr Paxton said the allegations were false.

Ms Srinivasan considered leaving the case, she said, but a legal friend advised her to complete the job. Growing up during a civil war, she learned to focus in chaos, she said.

Ms Srinivasan, shown in her home office in Kentfield, Calif., Uncovered a document on Tuesday which the lawsuit said shows collusion between Google and Facebook.


Photo:

Christie Hemm Klok for The Wall Street Journal

One afternoon the following week, Ms Srinivasan was hunched over her laptop on the white couch of her Airbnb, leaning over Google docs the state collected as part of her investigation. Months earlier, she had seen a message on Twitter from a software programmer at an analytics company saying he had discovered code suggesting that Google and Facebook were collaborating to share data and support ad sales. .

On one of the pages in front of her, she came across a contract that supported the idea, signed by Facebook COO Sheryl Sandberg and Google Commercial Director Philipp Schindler, people familiar with the matter said. It was part of a little-known 2018 deal dubbed “Jedi Blue,” which saw Facebook join – rather than compete with – an advertising program offered by Google called “Open Bidding” in exchange for lower fees.

She called Mr. McCarty. Over dinner at an upscale Mexican restaurant in downtown Austin, they avoided discussing the unrest at the attorney general’s office as she detailed her discovery.

“We were focused on the breakthrough,” said Mr. McCarty.

Mr McCarty resigned days later, joining an exodus of senior officials. The FBI has launched a criminal investigation into Mr. Paxton to determine if he abused his office.

The allegations played a role in dividing the 48 states that supported the investigation. Some states have also been put off by Mr Paxton’s decision to take legal action against four battlefield states that have declared President Biden the victor over Donald Trump, according to people familiar with the effort.

Several of Mr. Paxton’s staff resigned after accusing him of abuse of office, and the FBI opened an investigation.


Photo:

Julia Robinson for the Wall Street Journal

An outside lawyer has been hired to conduct the Texas case against Google.

In December, Texas filed a lawsuit against Google in the US District Court in Texas. The Google-Facebook project and a program Google reportedly developed to promote its own ad-buying system over its competitors grabbed the headlines.

A Google spokeswoman said the case was without merit and said Mr Paxton had “gone ahead despite all the facts”. The spokesperson added, “We have invested in cutting edge advertising technology services that help businesses and benefit consumers.”

Mr. Paxton called Ms. Srinivasan afterwards and thanked her for her work. “The reason we have made so much progress is that you have played a major role,” he said. “I appreciate it.”

The trial is expected to begin in 2023. Mr. Paxton’s involvement will be left to voters. Next year he is a candidate for re-election.

Write to Tripp Mickle at [email protected]

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