FTC Approves Google-DoubleClick Deal - InformationWeek

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12/20/2007
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FTC Approves Google-DoubleClick Deal

Reviewers determined the acquisition would not harm competition and that privacy concerns should be dealt with through additional guidelines.

The Federal Trade Commission on Thursday cleared the way for Google's proposed $3.1 billion acquisition of DoubleClick.

Members voted 4-1 to end an investigation into whether the acquisition would substantially reduce competition in the online advertising market. One commissioner predicted the acquisition would radically alter the nature of online marketing.

"The markets within the online advertising space continue to quickly evolve, and predicting their future course is not a simple task," the commissioners wrote, promising to keep a close eye on Google and act swiftly if the company engages in anti-competitive practices.

The FTC also addressed privacy concerns raised over the proposed acquisition by stating that those concerns apply to the whole Internet advertising market, rather than Google's proposed acquisition. Critics said the acquisition would consolidate vast amounts of information on Internet users and their habits.

The FTC's majority on the issue released a statement saying that the commission reviews mergers and acquisitions for potential antitrust violations only. Commissioners said they lack authority to block or limit acquisitions that won't harm competition, but they proposed behavioral marketing guidelines to protect privacy. One commissioner issued a dissenting statement.

The review, based on federal horizontal merger guidelines, as well as legal and policy precedent, found that Google and DoubleClick are not direct competitors in any relevant antitrust market.

The review indicated strong competition in the third-party ad-serving market, and Google isn't likely to reduce potential competition.

The FTC also examined whether the acquisition could harm competition by allowing Google to exploit DoubleClick's position in the third-party ad-serving market to boost Google's AdSense software product.

The FTC found that a dominant seller could harm competition by exclusively bundling its product with the acquired firm's product after the acquisition.

"Such a strategy, however, can only be anticompetitive if the merged firm has market power," the FTC explained in its announcement.

The FTC said it has no evidence showing that DoubleClick has market power in the third-party ad-serving markets, so "it is unlikely that Google could effectively foreclose competition in the related ad intermediation market following the acquisition."

The FTC said it's unlikely that Google could manipulate DoubleClick's third-party ad-serving products in a way that would competitively disadvantage Google's competitors in the ad market.

Finally, the FTC said the combination of consumer and competitive data resulting from the acquisition is unlikely to harm competition.

Commissioner Pamela Jones Harbour dissented, saying she thinks the acquisition will transform the market. In a 13-page explanation, she said she believes the acquisition will decrease competition. Harbour also disagreed with the FTC's decision not to address the privacy concerns. She said the commission is in a unique position to examine the implications of a data merger that could allow a merged company to "dominate the database of intentions," while also raising consumer protection issues.

Google has indicated it will not complete the acquisition until it gains approval from European Commission officials.

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