Google Acquisition Probed
Wednesday, May 30, 2007
The Federal Trade Commission has asked Google for more details about its proposed $3.1 billion purchase of online advertising company DoubleClick as part of an investigation into whether the deal raises antitrust concerns, a Google executive said yesterday.
The executive said the company learned Friday that an initial 30-day waiting period had expired without the FTC or the Justice Department deciding whether the acquisition could proceed. Instead, the company was told the FTC would take charge of the investigation.
In a filing with the Securities and Exchange Commission yesterday, Google said it had been asked by the FTC for "additional information and documentary materials" relating to the acquisition and was cooperating with the request. If the purchase passes official muster, it would accelerate Google's effort to extend its highly lucrative online advertising business beyond the text promotions that appear alongside Web-search results to include larger display and video ads. DoubleClick specializes in a technology that places banner and video ads on Web sites and helps marketers track their effectiveness in attracting potential customers.
"We are confident that upon further review the FTC will conclude this acquisition poses no risk to competition and should be approved," Donald S. Harrison, Google's senior corporate counsel, said in a written statement.
Google confirmed that the request was made after conflicting media reports about the FTC investigation.
An FTC spokesman confirmed the investigation yesterday but would not comment on its specifics.
All large corporate acquisitions undergo a preliminary review by the federal government to determine whether they would violate antitrust laws. After 30 days, a small number of such deals are carried over, like the Google purchase, for further examination, signaling that the commission has unresolved concerns.
Once the FTC receives the additional details from Google, the commission will have 30 days to decide whether to approve the deal, require modifications, seek an injunction to keep it from proceeding or ask for more time.
When the acquisition was announced last month, several privacy and consumer rights groups urged the FTC to investigate. Microsoft, which lost a bidding war for DoubleClick, also raised antitrust concerns, arguing that Google would control the fast-growing online advertising market.
Since then, there has been a flurry of similar announcements, including Yahoo's intent to complete the purchase of Right Media for $680 million and WPP Group's plan to acquire 24/7 Real Media for $649 million. Microsoft announced last week that it would buy online ad agency aQuantive for $6 billion.
Harrison said the string of deals is evidence that the online marketing industry is "a dynamic and evolving space" with rich competition. He added that as a result, consumers will see more ads relevant to their interests while advertisers and Web site operators will have more marketing choices.
Critics have said the Google deal raises serious privacy issues because of the volume of data a combined company would have. Google could combine its technology for tracking search histories with DoubleClick's technique for tracking the Web sites to essentially create profiles of its users, critics said. Google has minimized such concerns.
Last week, a European Union panel began an investigation into whether Google's search engine violates European privacy regulations.