FTC Blesses Google's DoubleClick Deal
The Federal Trade Commission has cleared Google's $3.1 billion bid for ad provider DoubleClick, greasing the wheels of Google's online ad engine in 2008.
Acquiring DoubleClick will provide digital ad and search leader Google with plenty of new firepower: the ability to serve graphical display ads in addition to the company's text-based links.
DoubleClick's technology lets advertisers and publishers deliver ads once they have agreed to terms, and provide statistics relating to those ads.
The deal was initially announced in April and would have closed by now were it not for the delays caused by the scrutiny of federal regulators and privacy advocates in the U.S. and in Europe.
Google is not in the clear yet; it still needs the approval of the European Commission, which tends to take a harsher view of potential privacy risks.
However, the EU also tends to follow what the FTC does closely, and the FTC made it clear in its opinion that privacy concerns did not weigh on its decision, so consider the deal all but done.
"The FTC's strong support sends a clear message: This acquisition poses no risk to competition and will benefit consumers," said Google CEO and Chairman Eric Schmidt in a statement. "We hope that the European Commission will soon reach the same conclusion, and we are confident that this deal will deliver more relevant ads for consumers, more choices for advertisers, and more opportunities for Web site publishers."
What it won't do is provide more choices for Microsoft, Yahoo, AOL and anyone else playing in online ads. There are a couple of ways to look at this.
One is that Google will have a chokehold on a market it already leads, thanks to its new ability to provide display ads.
The other is that, as Microsoft ad chief Kevin Johnson has said, the online ad market will be worth $80 billion in the next few years, so there could be plenty of pie for everyone who wants to sit at the table.
I endorse this position. There have been a half dozen big ad deals in the last year that prove that competition is alive and well. Microsoft-aQuantive was the biggest at $6 billion, but Yahoo bought Right Media and AOL nabbed Ad Tech and Tacoda, to name a few.
Privacy and Internet advocates, of course, are shocked and appalled.
"The Federal Trade Commission sidestepped its responsibility today when it approved the merger of two companies whose new, extended data collection reach will give it unprecedented access to track our every move throughout the digital landscape," said Jeff Chester, executive director for the Center for Digital Democracy.
Chester continued: "By permitting Google to combine the personal details, gleaned from our searches online and YouTube downloads, with the vast repository of information collected by DoubleClick, the FTC has sanctioned the creation of a new digital data colossus."
Somebody call George Lucas because it looks like there is a new "Star Wars" movie to be made, with Google playing the role of the Death Star.
Why raise this issue for this deal? It reminds me of the Gmail hullabaloo over Google's contextually targeted ad approach. Google's search algorithms sift through people's data to find keywords to better target users for ads. Notice how that blew over.
With DoubleClick, Google will be able to serve more ads and serve them better. Yes, it will have access to more data about users. Google already has tons of information on its users, so getting DoubleClick isn't going to change that position much.
Perhaps you want to argue that all of that data makes Google susceptible to hackers who can get at people's information. How is getting DoubleClick going to make Google more susceptible to this potential data theft?
Theoretically, more data means more people can potentially be affected, but that doesn't mean Google's security will get looser. No, having more data is not analogous to a privacy threat. If anything, Google will batten the hatches even more.
But privacy isn't the only argument dissenters are making; they are also saying DoubleClick will enable Google to be a monopoly.
With so many acquisitions and the emerging mobile ad and social ad submarkets, it is hard enough to prove that Google is monopolizing online ads, but it is much harder to prove that getting DoubleClick will hurt consumers.
Most people don't even pay attention to online ads, so they won't care who's serving them. Moreover, there is no reason to think getting DoubleClick will suddenly make Google do anything untoward with peoples' data.
I don't forsee any Facebook Beacon episodes in the search giant's future.