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Google’s $3.1 billion acquisition of DoubleClick cleared U.S. regulators Dec. 20 with a 4-1 vote of the Federal Trade Commission. After an eight-month review of the merger, the FTC concluded the deal is “unlikely to substantially lessen competition.”
The deal still needs the approval of the European Commission, which opened an extensive investigation into the merger in November. The EC has until April 2, 2008, to make a final decision on whether Google’s acquisition of DoubleClick would “significantly impede” effective competition within the European Economic Area or any substantial part of it.
While consumer and public advocacy groups and Republicans in Congress have questioned the privacy implications of the deal, the FTC said it lacks authority to block mergers on grounds other than antitrust implications. The FTC review concluded that Google and DoubleClick are not direct competitors in “any relevant antitrust market.”
“This is not the first time that the Commission has been asked to block a merger, notwithstanding that the transaction is not likely to create, enhance or facilitate market power in violation of the antitrust statutes we enforce,” the FTC said in a joint statement. “Although such issues may present important policy questions for the nation, the sole purpose of federal antitrust review of mergers and acquisitions is to identify and remedy transactions that harm competition.”
The FTC statement added, “Not only does the Commission lack legal authority to require conditions to this merger that do not relate to antitrust, regulating the privacy requirements of just one company could itself pose a serious detriment to competition in this vast and rapidly evolving industry.”
The Electronic Privacy Information Center, the Center for Digital Democracy and U.S. PIRG (Public Interest Research Group) were disappointed with the ruling. The groups filed a complaint with the FTC April 20 shortly after Google announced the deal, arguing the acquisition will give Google unprecedented ability to “record, analyze, track and profile” the activities of Internet users.
“Despite the FTC’s claims, privacy is most certainly an antitrust issue,” CDD Executive Director Jeff Chester said in a statement. “A key component of the online market dominance that companies such as Google have achieved is the aggregation and analysis of consumer profiles, including the merger of far-flung data sets and vast data warehouses that only a handful of companies now have at their disposal.”
The acquisition would combine two of the biggest players in online advertising. Google’s text-based AdSense business is based on clickable links, while DoubleClick’s technology places targeted banner ads and other display advertising on popular online sites.
The FTC said its examination of the online advertising market shows “vigorous” competition in the space. Even though the agency found the merger poses no potential competitive harm to the marketplace, the FTC warned it would “closely watch these markets and, should Google engage in unlawful tying or other anticompetitive conduct, the Commission intends to act quickly.”
“The FTC’s strong support sends a clear message: This acquisition poses no risk to competition and will benefit consumers,” Google Chairman and CEO Eric Schmidt said 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.”
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