Two consumer groups on Dec. 28 asked the Federal Trade Commission to block Google's proposed acquisition of AdMob on the grounds that the $750 million deal is anti-competitive and raises privacy concerns. Consumer Watchdog and the Center for Digital Democracy contended in a joint letter to the FTC that "Google is simply buying its way to dominance in the mobile advertising market, diminishing competition to the detriment of consumers," according to a news release.
Unlike search advertising, where Google leads with about 90 percent of the market, there is no clear-cut leader in the mobile ad market. Based on IDC's tracking of mobile ad sales, Millennial Media has 18 percent of the market, followed by AdMob with 14 percent. Yahoo claims 11 percent of the market, followed by Google with 10 percent and Microsoft with 8 percent.
"The mobile sector is the next frontier of the digital revolution. Without vigorous competition and strong privacy guarantees this vital and growing segment of the online economy will be stifled," wrote John Simpson, consumer advocate at Consumer Watchdog, and CDD Executive Director Jeff Chester. "Consumers will face higher prices, less innovation and fewer choices. The FTC should conduct the appropriate investigation, block the proposed Google-AdMob deal and also address the privacy issues."
The letter follows a Dec. 23 confirmation by Google that the FTC has asked for more information about the deal. According to the Dec. 28 news release, Google said the FTC issued a "'second request' for additional information about the deal," which was announced Nov. 9 and scheduled to close in early 2010. The FTC's request for further information is a probable signal that the agency has concerns about the purchase.
"The proposed Google-AdMob deal offers the FTC an opportunity to check Google's increasingly anti-competitive behavior," Simpson said in a separate statement. "This deal is yet one more example of Google attempting to eliminate a threat to its power."
Consumer Watchdog and CDD also questioned the privacy implications of the deal.
"Both AdMob and Google gather tremendous amounts of data about consumers' online behavior, including their location. AdMob, for example, targets consumers using a wide range of methods ... Google also provides mobile advertising and data-driven analytical services through its DoubleClick subsidiary," the news release said. The two consumer groups claim a deal between Google and AdMob "would provide significant amounts of data for tracking, profiling and targeting U.S. mobile consumers."
The news release continued, "'Permitting the expansion of mobile advertising through the combination of these two market leaders without requiring privacy guarantees poses a serious threat to consumers,' the letter said. It noted that earlier this year several consumer groups, including CDD, petitioned the FTC to specifically protect consumer privacy on mobile phones, especially involving mobile advertising."
AdMob makes a software platform that helps customize digital display advertisements for small screens on smartphones, which support full Internet browsers that make them a rich new playground for mobile ads.