Google Dec. 23 said the Federal Trade Commission issued a "second request" for information related to Google's $750 million bid for mobile display ad startup AdMob. The move, a signal that the FTC has concerns about the planned purchase, will likely delay the acquisition to later in the year. Whether that hitch is temporary or permanent remains to be seen, but the second request process is an arduous one that requires loads of documentation. Should Google and AdMob combine, they will have earned $68 million in mobile ad sales to give them 24 percent of the market. Millenial Media, Yahoo and Microsoft command 18, 11 and 8 percent of the market, respectively.
Google Dec. 23 confirmed that the Federal Trade
Commission has asked the search engine for more information regarding its
$750 million bid
for mobile ad provider AdMob.
Google said the FTC issued a "second request
for information related to the deal, which was announced Nov. 9 and was slated
to close in early 2010. The move, a signal that the agency has concerns about
the planned purchase, will likely delay the acquisition to later in the year.
AdMob makes a software platform that helps customize
digital display advertisements to small screens on smartphones, whose full
Internet browsers make them a rich, new playground for mobile ads.
IDC analyst Karsten Weide
AdMob generated some $40 million in 2009, largely thanks to the success of
ads running in applications on Apple's iPhone. The startup branched out to
support smartphones running RIM, Nokia, Palm and Google's own Android operating
Unlike search advertising, where Google leads with some
90 percent of the market, there is no clear cut leader in the mobile ad market,
which is very young even by the standards of digital media. Based on IDC's
tracking of mobile ad sales, AdMob has 14 percent of the market and Google
commands 10 percent.
Should Google and AdMob combine, they will have earned
$68 million in mobile ad sales to give them 24 percent of the market, according
to Weide, who told eWEEK
this shouldn't be enough to warrant serious antitrust scrutiny.
Millenial Media has 18 percent of the market, with Yahoo and Microsoft
following with 11 and 8 percent shares, respectively.
Several mobile ad specialists
to express their support for the Google's attempt to buy AdMob.
Supporters from Millenial, JumpTap and Greystripe said the deal validated the
industry they toil in, but these companies also recognize the potential of a
big payday from Microsoft or Yahoo, both of which could bid for their
businesses and pay a fat premium akin to what Google offered for AdMob.
Still, the FTC's request
threatens to put a damper on the deal and Google knows it has become a company
of interest to regulators. Paul Feng, group product manager for Google, said in
blog post Dec. 23
"We know that closer scrutiny has been one
consequence of Google's success, and we've been talking to the U.S. Federal
Trade Commission over the past few weeks... While this means we won't be
closing right away, we're confident that the FTC will conclude that the rapidly
growing mobile advertising space will remain highly competitive after this deal
closes. And we'll be working closely and cooperatively with them as they
continue their review."
Whether that hitch is temporary or permanent remains to
be seen, but the
second request process is an arduous one that requires loads of documentation.
According to this primer from the FTC
"A Second Request combines a burdensome set of
interrogatories with a burdensome document request. Responding to the
interrogatory specifications of a Second Request may entail tortuous excavation
of financial databases that were not originally designed to capture the data
sought by the government."
To be sure, Google's dominance in search advertising and
expansion into several Web services in recent years have made it a larger
target for federal regulators. The company bought video-sharing power YouTube
and had to fight to acquire
online display ad giant DoubleClick for $3.1 billion.
Google in the last several months came under scrutiny for
its Google Book Search proposal, which the Department of Justice urged
the New York District Court presiding over the settlement to reject on
grounds that it violated antitrust laws.