Google Buys Invite Media, Courting Conflict of Interest Chatter

By Clint Boulton  |  Posted 2010-06-03

Google purchased startup Invite Media June 3, sparking concerns from ad experts, who believe Google is gobbling up too much of the online display ad supply chain.

AllThingsDigtal broke the news June 2 and reported the deal amount to be $70 million.

Invite Media's platform lets advertisers buy display ad space from sellers across multiple ad exchanges, such as Google's DoubleClick Ad Exchange, Microsoft's AdECN and Yahoo's Right Media, through real-time bidding.

Real-time bidding allows advertisers and agencies to craft their bids on an impression-by-impression basis when bidding on Websites whose ad space is available through an ad exchange.

Neal Mohan, vice president of product management for Google, said the company will cultivate Invite Media's platform separately, but will adapt it to make it work the company's DoubleClick for Advertisers (DFA) ad-serving product.

Invite Media's technology will help DFA clients buy ad space across multiple ad exchanges, he added.

This move strikes Internet ad experts as tricky. Some believe companies should not own ad exchanges and the so-called demand-side platforms they are intended to augment for advertisers.

Gartner analyst Andrew Frank wrote June 3 in his blog that it makes sense for Google to buy a DSP because Google didn't own that piece of the Web display ad puzzle.

However, he said "it does rekindle the issue of whether an entity such as Google, which happens to be the largest seller of online advertising, can continue to provide both media and the platforms for trading media in a neutral way."

Google's bid for Invite may warrant more regulatory scrutiny. Google just closed its acquisition of mobile ad network AdMob, which the Federal Trade Commission nearly blocked for anti-competitive concerns.

Acquiring Invite Media is likely to invite another investigation by regulators who aren't clear on how the market works, but who need to ensure Google isn't abusing its market power, Frank noted.

"As Google seeks advantage by integrating Invite with DFA and AdX in subtle and attractive ways, pressure for neutral solutions will build, and Google's competitors are likely to start to find sympathetic ears among antitrust regulators for whom the analogy of a bulge-bracket brokerage house owning a major stock exchange and the trading systems it supports won't seem like too much of a stretch."

Google realizes this, which is why Mohan noted that the Invite Media platform will continue to be available to any agency or advertiser. Mohan added:

"Just as Invite Media works across multiple exchanges, this announcement changes nothing about the operation of the Ad Exchange-it will continue to provide exactly the same open and neutral access to ad space for multiple buyers, partner support and API availability as it has always done."

That may be of little consolation to Google's ad rivals at Yahoo, Microsoft and OpenX, who could pressure the FTC to stalk Google's door again.

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