Google manages to squeak its new advertising acquisition through the FTC despite concerns

Google made one of the most high-profile advertising acquisitions of the year when it agreed to purchase advertising leader DoubleClick for a total of $3.1 billion USD.  Now the deal is ready to be finalized, having received official FTC approval late last week.

The Federal Trade Commission had been mulling over the acquisition for months.  There was an antitrust investigation into if the acquisition would kill competition in the online advertising market.  In the end, the FTC voted 4-1 to end the investigation and tentatively approve the deal, agreeing to keep a watchful eye on Google.

The FTC feels that, despite the fact that the acquisition may radically alter the market; there is no real evidence that it will destroy competition in the marketplace.

However, one FTC Commissioner acknowledged that the situation is really entirely unpredictable, stating, "The markets within the online advertising space continue to quickly evolve, and predicting their future course is not a simple task."

The FTC was largely unconcerned about privacy fears of consolidation of information resulting from the deal.  The Commission pointed out that these are very real concerns, but are no more applicable to this particular deal than the market in general.  It did propose behavioral marketing guidelines to protect users' privacy.

Commisioner Harbour released a dissenting statement (PDF), which can be found here.  Harbour dissented because he felt Google and DoubleClick are or will soon be competitors in several markets, and a merger would be tantamount to quelling competition. 

Key criteria for FTC approval of mergers is that the businesses involved are not competitors, as dictated by
federal horizontal merger guidelines.  The FTC's majority decided that Google and DoubleClick are not, in fact, direct competitors in any major market.

The FTC also pointed out that DoubleClick by no means had a monopoly on internet advertising, so exclusive bundling -- a typical anti-competitive process -- was less of a threat.

Google's acquisition of DoubleClick is expected to put some heat on internet advertising and service competitors Microsoft, which recently acquired aQuantive for $6 billion USD, and Yahoo, which acquired advertiser BlueLithium for $300 million USD and Right Media for $680 million USD.

"A lot of people pay zero for the cellphone ... That's what it's worth." -- Apple Chief Operating Officer Timothy Cook
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