The U.S. Justice Department is reviewing Google's bid for display ad provider Admeld, sources familiar with the DOJ's plans told Bloomberg and others.
Google June 13 agreed to buy Admeld, which helps large publishers select and support ads from myriad ad networks, including Advertising.com, Google's own DoubleClick Ad Exchange and Yahoo's Right Media. The purchase is rumored to be in the $400 million range.
The DOJ, which declined to comment, will consider whether adding Admeld would be anti-competitive given Google's strength in search advertising, Bloomberg said. Investigations into Google's large acquisitions have become a regular occurrence, dovetailing with the company's growing power online.
The DOJ wants to make sure Google isn't stepping over any boundaries for fair competition with Admeld, whose so-called "yield optimization" software could help the search engine boost its growing lead in the market for display ads.
Though it has long been the undisputed leader in text-based search ads, Google until last quarter had lagged behind Yahoo in display ads, those often flashy banners that catch Web users' attention when they visit their favorite Websites.
IDC said Google's U.S. display ad revenue share grew to 14.7 percent in the first quarter of 2011 from 13.3 percent from the fourth quarter of 2010, passing Yahoo for the first time.
Many ad experts have argued Admeld's technology is one of the last major puzzle pieces Google has yet to add as it seeks to expand it ad purview. Asked whether the DOJ had contacted it about a possible review, a Google spokesperson told eWEEK:
"The acquisition is designed to help publishers get the most from the rapidly growing display advertising industry, which is both complicated and incredibly competitive--the emergence in recent years of a huge variety of technologies for publishers, like Admeld's, is great evidence of that."
That statement makes it clear that Google will argue that the deal is pro-competitive at a time when the display ad market is growing increasingly competitive.
This is similar to the arguments Google made to the Federal Trade Commission, which reviewed both the company's $3.1 billion bid for DoubleClick in 2007, as well as the search engine's $750 million play for mobile ad maker AdMob last year. The FTC ultimately cleared both bids.
Interestingly, despite the FTC's prior experience with mulling Google's ad market moves, it is the DOJ that is setting its sights on the latest bid.
This could be because the FTC is reportedly mulling a broad scope investigation into Google's search and search ad practices. Smaller rivals have accused the company of abusing its power in the markets it serves.
The DOJ and the FTC negotiate over which agency will handle major antitrust investigations; the winning investigator tends to have some knowledge of how an industry works. The DOJ investigated and cleared Google's $700 million bid for ITA Software this year.