Google took a step closer to its acquisition of online advertising server DoubleClick on Thursday, when the U.S. Federal Trade Commission (FTC) approved the sale. One major hurdle still remaining is approval by the European Commission.
Google CEO Eric Schmidt said that the 4-1 vote by the FTC, following an eight-month investigation, sends a message that the acquisition "poses no risk to competition and will benefit consumers."
In April, Google had announced its agreement to buy DoubleClick for $3.1 billion in cash. Some competing companies, such as Microsoft and AT&T, as well as a variety of consumer advocates and lawmakers, had argued that the purchase could give the software giant an unfair advantage.
COMPLEMENTARY, NOT COMPETING
The acquisition already has been approved by the Australian Competition and Consumer Commission, and has been recommended for approval by one of three Brazilian regulatory agencies, but Google will not close the deal without the European Commissions approval, which has said that it will complete its review by April.
Google made the case that it and DoubleClick are complementary, not competing, businesses. "Googles current business primarily involves the selling of text-based ads," the company said in a statement, "while DoubleClicks core business is delivering and reporting on display ads." It noted that DoubleClick does not actually buy or sell ads or ad space, but provides the technology so that advertisers and publishers can deliver and track ads.
It also pointed out that the FTCs opinion noted the "robust competition" in online advertising, with a variety of recent acquisitions. These include Yahoo buying Right Media, AOL acquiring ADTECH AG, WPP Group snapping up 24/7 Real Media, and Microsoft spending $6 billion to take over aQuantive.
Andrew Frank, an analyst with industry research firm Gartner, noted that Microsofts advertising-and-content deal with Viacom, announced Wednesday, also shows the vitality of the online advertising marketplace. The two companies valued that deal at about $500 million.
Frank said that the FTC approval was "not a big surprise," and that even though the European Commissions approval is still needed, the acquisition is "likely to happen."
PRIVACY VS. ANTITRUST CONCERNS
One implication of a combined Google and DoubleClick, Frank predicted, would be that Googles AdSense program would "be able to do more targeting" by using DoubleClicks cookie technology to track user behavior.
As if to anticipate complaints by Web users about user tracking in AdSense, Schmidt made a point of reiterating the companys commitment to user privacy.
"For us," Schmidt said in a statement, "privacy does not begin or end with our purchase of DoubleClick," and the company will continue to safeguard users information and maintain their trust.
In its opinion, the FTC said that privacy issues were "not unique to Google and DoubleClick" and that they "extend to the entire online advertising marketplace." The agency also noted that its review is intended only to "identify and remedy transactions that harm competition" and that it cannot block a purchase on other grounds.
