Comments for F.T.C. Eyes Antitrust Action in Google DoubleClick Acquisition

F.T.C. Eyes Antitrust Action in Google DoubleClick Acquisition

2007-05-29T03:01:46Z

In developing news, the NY Times is reporting that The Federal Trade Commission has "opened a preliminary antitrust investigation into Google's planned $3.1 billion purchase of the online advertising company DoubleClick". Ironically two of the companies that called for this were Microsoft and AT&T, both of whom have colorful histories battling antitrust suits. According to the NYT:

"Within a few weeks, perhaps within days, the F.T.C. will decide whether to escalate its investigation into the Google deal, antitrust experts say. That step, known as a "second request" for information, would suggest that the proposed acquisition raises more serious antitrust issues.

Google said it was confident that the deal would withstand scrutiny."

]]> Central to any antitrust action (if it occurs) will be the fact that Google collects the search histories of its users, while DoubleClick tracks what Web sites people visit. When combined, this gives a lot of user data to one company. However, as the NYT notes, "privacy issues are not typically the concern of antitrust officials." Of more importance is how a merger/acquisition affects competition - in other words, would it give Google a monopoly in online advertising?

It's been a big month or so for online advertising deals, kicked off by Google's acquisition of Doubleclick for $3.1B on April 13. On May 18 Microsoft announced its $6B purchase of aQuantive, a 10-year-old publicly traded digital marketing company - the biggest acquisition in Microsoft history. In other action over the past month, Yahoo! spent $680M to purchase Right Media, AOL acquired a controlling stake of German ad-serving company ADTECH AG, and WPP purchased 24/7 for $649M.

Very early days yet, but it's the first time Google has been put under any major antitrust scrutiny. The YouTube deal in 2006 was worth $1.65B and it gave Google a huge lead in the online video space, but they received no scrutiny from government on that. The online advertising space is a LOT more profitable at this point in time though, so many of Google's competitors will be hoping (if not pushing) for action by the F.T.C.

Let us know in the poll below what you think.

Comment from Matt Stark on 2007-05-29

2007-05-29T15:57:53Z

I wrote a blog posting a while ago on this and made up a term called the GoogleNet (http://mattstark.blogspot.com/2007/04/so-long-internet-twas-nice-knowing-you.html).

Advertising powers most media and this is scary because it:
- Gives Google a lead on industry trends.
- Gives Google lead on acting on industry trends.
- Stifles innovation by the little guys.
- Gives Google power to monopolize traditional advertising channels like TV, Magazine, Newspapers etc.

Comment from CoryS on 2007-05-31

2007-05-31T18:39:57Z

As a marketer, DoubleClick has been considered a return on marketing investment (ROMI) dream. Notably, a main reason the FTC would review the acquisition is because of the backlog of user data Google has accumulated. Combined with DoubleClick's technology (which have been patented), we covered the most salient points of interest for Google in our post (http://www.patentmonkey.com/PM/Default.aspx?tabid=63&EntryID=71)

Specifically including:
* Automatic ad placement and feedback
* Unique visitor website tracking of purchase and ad interest
* User specific ad delivery based on user preferences/history

Would the combination of volumes of user search history combined with patent protected ad delivery systems restrict competition? Google has to be able to demonstrate that entry barriers to get into the search business are low and DoubleClick's ad delivery system is one of a number of online marketing options with low share. That argument has a good chance of getting approval (share #'s would add more color here).