As expected, the European Commission today cleared Google’s $3.1 billion purchase of DoubleClick, paving the way for the search giant to close the deal hours later and clearing the EC’s plate to focus on the impending Microhoo merger.
The watchdog concluded the deal would not harm “consumers, either in ad serving or in intermediation in online advertising markets.” The group further said the deal would not impede competition in Europe.
The EC’s rationale was based on the fact that Google and DoubleClick provide two different services. Google offers the consumer search engine millions of people use, as well as services to publishers and advertisers for the sale of online advertising through the AdSense network.
DoubleClick meanwhile sells ad serving, management and reporting technology publishers, advertisers and agencies, allowing them to ensure that ads are posted on the relevant Web sites and to report on the performance of such advertisements.
The EU ruled out competitive harm as such: “Even if DoubleClick could become an effective competitor in online intermediation services, it is likely that other competitors would continue to exert sufficient competitive pressure after the merger.”
Moreover, the EC also said it explored the possibility that Google will raise the cost of, and force people to use, DoubleClick’s ad-serving tools and decided advertisers and partners could just switch to Microsoft, Yahoo or AOL as alternatives. This is probably not what some advertisers and publishers want to hear, but alas, the EC has made it so.
That the deal passed muster both by U.S. regulators and now the EU is no shock. With DoubleClick, Google isn’t buying a competitor, such as Yahoo or AOL. It’s not buying market share…. yet.
What’s clever about this deal is that while Google isn’t buying customers and consumers, it will better help its ad partners and publishers target consumers with ads. The advertisers and publishers will make more money, so Google will make more money with its paid links.
Google badly needs these targeting capabilities as competition from Microsoft and Yahoo increases, but that points to the looming reason it blessed the deal.
Microsoft is pursuing Yahoo, and should the company succeed in swaying shareholders or ousting Yahoo board members, only the regulatory watchdogs such as the FTC, the Department of Justice and the EC stand in its way.
As I’ve written before, this deal, with its many overlaps and complicated moving parts, will get a lot more scrutiny from the governments going forward.
The EC needed to clear its plate and get ready to digest the ramifications of a more serious deal on the horizon: Microhoo. That the organization did so more than three weeks before its April 2 deadline to reject Google’s bid is a testament to this pending case.
Read the EC’s decision here and Google CEO Eric Schmidt’s bluster about it here.