The Federal Trade Commission unanimously agreed to close its investigation of Google’s agreement to purchase mobile advertising provider AdMob for $750 million, paving the way for Google and Apple to compete more fiercely in the mobile Web market.
The FTC, which in recent weeks had been considering filing a lawsuit to block the deal, May 21 cited Apple’s impending iAd platform in coming to its conclusion that a Google-AdMob marriage would not harm competition among mobile ad networks.
Mobile ad network sell ad space for mobile publishers, who create applications and content for Websites geared for smartphones such as Apple’s iPhone and those running Google’s Android operating system.
The agency said its initial concerns that the merger would be anticompetitive were unfounded thanks to activity from smaller companies in the market and iAd, a mobile ad network it fashioned after acquiring Quattro Wireless.
Slated to become available in June with the launch of iPhone 4.0, iAd is an application platform that runs ads within applications instead of pulling people into a new browser window. It is a departure from the search-based keyword ads Google is known for rolling out on the desktop and mobile Web.
“As a result of Apple’s entry [into the market], AdMob’s success to date on the iPhone platform is unlikely to be an accurate predictor of AdMob’s competitive significance going forward, whether AdMob is owned by Google or not,” the FTC said in its statement.
The FTC noted that while Google and AdMob “have economies of scale that give them a major advantage over smaller rivals in the business,” Apple is “poised to become a strong competitor in the mobile advertising market.”
Google, whose CEO Eric Schmidt told Reuters the company would fight to buy AdMob to fend off Apple, was pleased with the FTC’s decision and vowed to close the deal in weeks.
Google Wins AdMobs Hand, to Others Dismay
“As mobile phone usage increases, growth in mobile advertising is only going to accelerate,” wrote Susan Wojcicki, vice president for product management at Google. “This benefits mobile developers and publishers who will get better advertising solutions, marketers who will find new ways to reach consumers, and users who will get better ads and more free content.”
AdMob founder and CEO Omar Hamoui similarly enthused, noting that “we are excited to get to what’s next and to start working with Google to develop new products and services for our advertisers, developers and publishers.”
Not every party was happy with the FTC’s decision. Simon Buckingham, CEO of mobile app maker Appitalism, lamented: “Allowing Google and AdMob as the clear No. 1 and 2 players in the mobile advertising market to merge will dramatically increase the cost of advertising for app developers.”
Consumer Watchdog advocate John Simpson said the deal was bad for consumers and accused Google of pulling political strings on Capitol Hill to get the OK for the deal.
“Clearly Google is willing to pull in political chits from the White House to influence FTC deliberations. Did the White House attempt to influence the AdMob decision? The public deserves to know,” Simpson said.
As part of its scrutiny of the acquisition bid, the FTC spoke to Google rivals, mobile ad players and other industry experts to gauge whether or not Google’s bid would be help or hinder competition. Mobile ad players and other industry experts blogged that the FTC did not have a firm grasp of how the mobile ad market works.
The FTC, whose five commissioners voted to approve the deal, defended its actions and vowed to keep a close eye on the mobile marketplace, noting that mergers in new markets like mobile advertising should get the same antitrust scrutiny it levies on those in other markets.
Looking forward, the approval allows Google and Apple to more aggressively pit their respective Android and iPhone platforms against one another in the smartphone space. Armed with AdMob, the premier in-app ad provider for the iPhone, Google expects to better challenge iAd in the future.