FTC Close to Suing Google Over AdMob Bid, Says Report

By Clint Boulton  |  Posted 2010-05-03

The noose may be circling tighter around Google's bid to buy AdMob, as the Federal Trade Commission reportedly wants to file an antitrust suit to block the $750 million deal.

Google agreed to purchase AdMob last November, a move that would give Google the inside track on in-app advertising, or applications that run inside mobile apps.

This approach is a departure from the traditional ads paired with keyword searches, which Google claims is a solid business. Google and AdMob together would boast roughly 25 percent of the mobile ad market, and more where in-app ads are concerned, analysts and experts claim.

The spectre of an antitrust suit, which Bloomberg said the FTC's staff is pushing for, is reminiscent of the FTC's opposition to Google's agreement to float search for Yahoo in June 2008, which the search engine set up to keep Yahoo from landing in Microsoft's lap.

The FTC has been reticent to comment publicly beyond saying it is investigating the AdMob bid, but the agency suggested a suit was being considered in March when it sought official declarations from Google rivals and advertisers about Google's offer.

Meanwhile, Google continues to put a happy face on the negotiation with the FTC, as a spokesperson told eWEEK: "We're continuing to talk with the FTC about our acquisition of AdMob. We're confident that they'll conclude that the rapidly growing mobile advertising space will remain highly competitive after this deal closes."

Ironically, Apple officially validated the in-app ad approach. After Google outbid Apple for AdMob last year, Apple acquired in-app ad provider Quattro Wireless for a reported $275 million.

Apple earlier this month showed the fruits of that purchase in the form of iAd, a new ad platform that launches ads from applications, but lets users return to their apps when the ad is finished with no hassle. The company plans to roll that platform out for iPhone 4.0 and iPad later this summer, allegedly charging into the millions for campaigns created on iAd.

If Google can't acquire AdMob and rationalize its assets for its own in-app advertising, Apple could race to an early lead in the nascent market. This is a possibility Google is painfully aware of, said a person familiar with the company's plans.

It could also serve as the crux of the defense against any antitrust suit versus Google in this matter. Meanwhile, concern about Google's AdMob bid has trickled down to Senate subcommittees.

Sen. Herb Kohl, chairman for the subcommittee on antitrust, competition policy and consumer rights, argued last month that the deal raises concerns about competition that need to be scrutinized by the Federal Trade Commission.

U.S. lawmakers led by Rep. John Barrow, D-Ga., filed a letter April 30 asking House Energy and Commerce Committee Chairman Henry Waxman for a briefing on the FTC's review of Google's AdMob bid.   

Barrow and his constituents said the deal must be reviewed carefully given Google's dominant position in search advertising and its growing dominance over other forms of online advertising, such as mobile. 

"Given the huge economic potential of the mobile Internet and the important role that mobile advertising will play in its growth, we believe these issues merit serious attention," Barrow said.

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