The European Commission's investigation could delay a decision on the $3.1 billion merger until next year.
The European Commission, concerned about competitive issues in the online ad serving world, is opening an extensive investigation into the proposed $3.1 billion merger of Google and DoubleClick.
The EC, which made its decision Nov. 13, now has until April 2, 2008, to make a final decision on whether Googles acquisition of DoubleClick would "significantly impede" effective competition within the European Economic Area or any substantial part of it.
"The [Commission] will, in particular, investigate whether without this transaction, DoubleClick would have grown into an effective competitor of Google in the market for online ad intermediation," the EC said in a statement. "It will also investigate whether the merger could lead to anti-competitive restrictions for competitors operating in these markets and thus harm consumers."
The acquisition would combine two of the biggest players in online advertising. Googles text-based AdSense business is based on clickable links, while DoubleClicks technology places targeted banner ads and other display advertising on popular online sites.
"We are obviously disappointed," Google CEO Eric Schmidt said in a statement. "We seek to avoid further delays that might put us at a disadvantage in competing fully against Microsoft, Yahoo, AOL and others whose acquisitions in the highly competitive online advertising market have already been approved."
Google officials point to Microsofts $6 billion acquisition of online advertising firm aQuantive, Yahoos deal to buy Right Media and AOLs purchase of AdTech and Tacoda as proof of a strong and vibrant online ad market.
The deal is also facing Federal Trade Commission review in the United States.
Google Chief Legal Counsel David Drummond told a Senate subcommittee on antitrust issues Sept. 9 that his companys "acquisition of DoubleClick does not foreclose other companies from competing in the online advertising space. Rather, the transaction is just one of several that underscore the strong competition."
Drummond said Google and DoubleClick are highly complementary, but fundamentally different companies. "DoubleClick does not buy ads, sell ads, or buy or sell advertising," he said. "All it does is provide the technology to enable advertisers and publishers to deliver ads once they have come to terms, and provide advertisers and publishers statistics relating to the ads."
GOP calls for closer look at Google-DoubleClick deal. Click here to read more.
The Electronic Privacy Information Center, the Center for Digital Democracy and U.S. PIRG (Public Interest Research Group) filed a complaint with the FTC April 20 shortly after Google announced the deal, arguing the acquisition will give Google unprecedented ability to "record, analyze, track and profile" the activities of Internet users.
"Googles proposed acquisition of DoubleClick will give one company access to more information about the Internet activities of consumers than any other company in the world," the complaint states. "Moreover, Google will operate with virtually no legal obligation to ensure the privacy, security and accuracy of the personal data that it collects."
Google denies the accusations. Nicole Wong, Googles deputy general counsel, issued a statement April 20 calling the complaint "unsupported by the facts and the law." She said the complaint "utterly fails to identify any practice that does not comply with accepted privacy standards."
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