FTC Clears Google-DoubleClick Merger

I'd be remiss if I left for the holidays without covering the now FTC approved merger between Google and DoubleClick. As E-Week makes clear, this is a biggie:

"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 question being posed to both the FTC and the European Commission is how will this deal effect the consumer, in terms of it's privacy implications, the cost and affordability of the services themselves, and the more general effect on market competition. Consumer rights and privacy groups, in the United States and Europe, have aligned strongly against the merger.

In response to the FTC's decision, the groups that filed the original complaint ( The Electronic Privacy Information Center, the Center for Digital Democracy and U.S. PIRG ) with the FTC shortly after Google announced the deal - arguing the acquisition would give Google unprecedented ability to "record, analyze, track and profile" the activities of Internet users - made their disappointment clear:

"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 FTC's primary argument for not stepping in to prevent the merger was that Google and DoubleClick aren't direct competitors and therefore there are no "relevant antitrust" issues.

Further, as E-Week reports:

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."

But, as E-Week also reports, the European Commission still must weigh in:

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.

And this leads me to what European consumer advocates are saying about the deal, as all eyes are now on them. If the new report by the BEUC (The European Consumers' Organisation), which represents 41 pro-consumer groups from across Europe is any indication, this merger is far from a "done deal".

Click Z reports:

Following its initial warnings issued in late June, consumer group BEUC has once again written to the European competition commissioner Neelie Kroes to express concerns over Google's proposed $3.1 billion acquisition of Doubleclick...The letter cited three main areas of concern: pricing and competition, harm to consumers, and matters of privacy.
...

Finally the letter expresses concerns over consumer privacy and welfare, stating that the merger would create a structure that would "almost certainly be less respectful of user privacy." It argues that privacy protection is a competitive differentiator in the ad serving market, and that the merger would eradicate incentives for Google to innovate in the area since competition will have been diminished.

The European Commission is now carrying out a second-phase investigation into competition concerns surrounding the deal. As previously reported by ClickZ news, disapproval from the European Commission is likely to result in a collapse of the entire deal irrespective of the FTC's decision, since both companies generate significant revenue from within Europe.

This story should provide sufficient intrigue for everyone in the coming months...

Happy Holidays to all!