E.U. approves Google-DoubleClick deal

by Peter Sayer

March 11, 2008 —

Google's acquisition of
DoubleClick does not
pose a significant threat to competition in the European online advertising
market, the European Commission said Tuesday. However, it reminded the companies
that they also have an obligation to respect European Union legislation on the
privacy of personal data, one of the grounds on which opponents
lobbied to block the merger.

The Commission's decision removed the last obstacle to completion of the deal,
which has now closed, Google said.

Together, Google and DoubleClick will be able to deliver more relevant advertising
and improve the effectiveness, measurability and performance of digital media
for publishers, advertisers and agencies.

The E.U.'s competition regulator reached its decision after a four-month in-depth
investigation of the US$3.1 billion merger, which received the approval of the
U.S. Federal Trade Commission in December.

The deal is unlikely to harm consumers in ad serving or online advertising
intermediation markets, the Commission said.

A merger of Google and DoubleClick will not hurt competition because the companies
are not competitors, the Commission said: Google provides online advertising
space on its own sites and, as operator of the AdSense service, an intermediary
between publishers and advertisers, while DoubleClick offers ad serving, management
and reporting services to publishers, advertisers and agencies.

The Commission also examined the risk of Google tying sales of its services
to use of those of DoubleClick, or vice versa, to boost revenue. However, it
concluded that Microsoft, Yahoo and AOL present sufficiently strong market alternatives
that a merged Google-DoubleClick would be unable to exploit the link in that
way.

The Association for Competitive Technology (ACT), a Washington, D.C., lobby
group for small and midsize entrepreneurial technology companies, welcomed the
Commission's decision.

"It demonstrates both the dynamism of our industry and the need to give
companies the flexibility necessary to adapt, compete, and meet the needs of
consumers," wrote ACT President Jonathan Zuck.

"The merger will undoubtedly change the competitive landscape of our industry
and fuel the evolution of internet advertising," he said.

Microsoft is likely to be the biggest beneficiary of the antitrust authorities'
approvals, according to Jeff Chester of the Center for Digital Democracy, one
of the lobby groups opposed to the merger.

Microsoft recently offered to buy Yahoo for $44.6 billion. If that deal goes
ahead it will almost certainly attract the scrutiny of antitrust regulators,
as it unites the two biggest players in online advertising after Google.

"By permitting Google to dramatically grow in clout, regulators will have
to likely permit the further growth of a number-two competitor to Google, which
will be Microsoft," Chester said.

The result will be the emergence of a global digital duopoly over online advertising,
Chester warned.

Tuesday's decision only relates to E.U. merger regulations, the Commission
said, and does not alter the merged entity's obligations under E.U. law on the
protection of individuals and the protection of privacy related to the processing
of personal data.

Antitrust regulators have failed to respond to the growing consolidation of
control over online ad delivery and data collection, a failure that will have
unfortunate consequences for the Internet's role as a democratic communications
medium, said Chester.

IDG News Service