Google-DoubleClick Deal Nears Approval
Thursday, December 20, 2007
The Federal Trade Commission is likely to approve the proposed $3.1 billion merger of Google and DoubleClick today or tomorrow, according to two sources familiar with the agency's review of the deal.
The merger of Google, which dominates online search ads, and DoubleClick, which is the leader in display ads, is expected to be approved over the objections of privacy groups and Google's rivals, chiefly Microsoft, said the sources, who spoke on the condition of anonymity because the vote had not yet been taken.
Separate from the merger review, the FTC is also likely to request public comments on privacy principles that all online ad companies would have to follow.
Microsoft has said in congressional testimony and in comments to the FTC that the Google-DoubleClick deal would greatly reduce competition in the online-advertising market. Yahoo, AT&T and some privacy advocates also oppose the merger.
Microsoft and Google have butted heads and formed alliances several times in the past few months. Google filed an amicus brief in Microsoft's antitrust case last June. Then, in October, Microsoft purchased an equity stake in social networking site Facebook, in which Google had been hoping to invest. Microsoft is now the exclusive ad-serving partner for Facebook, while Google has a similar role with Facebook's rival, MySpace.
Microsoft, which is a relatively recent entrant in the online-ad market, has been bolstering its ad network with a flurry of investments and new deals with publishing sites. Through its acquisition of DoubleClick's smaller competitor aQuantive last August, Microsoft has also recently arranged online ad deals with CNBC.com and Digg.com.
Yesterday, Microsoft landed another ad client in entertainment conglomerate Viacom, which agreed to a five-year, $500 million partnership for online advertising and content distribution. Viacom previously used DoubleClick.
"We're obviously working very hard to build out our ad platform and are making a series of investments to do that," said Whitney Burk, a Microsoft spokeswoman.
As part of the deal announced yesterday, Microsoft's Atlas becomes the exclusive U.S. online advertising platform for Viacom, which owns Comedy Central, MTV, Nickelodeon and other entertainment businesses. If the Google-DoubleClick merger is approved, it could have presented a problem for Viacom, which is suing Google for $1 billion for copyright infringement on Google's video-sharing site, YouTube.
"There's no question that Microsoft has, along with every [online-ad] company out there with one major exception, a healthy respect for intellectual property," Philippe P. Dauman, Viacom president and chief executive, said in an interview. "We knew we could enter this arrangement with a lot of confidence."
Google argues that Microsoft's recent deals, including the Viacom partnership, help its case for the merger.
"We have argued all along that the online advertising space is highly competitive and that there are no barriers to switching," Google spokesman Adam Kovacevich said in a written statement. "While some have apparently argued otherwise, today's announcement would seem to suggest that those arguments are flawed."
Burk countered by saying that the Microsoft-Viacom deal "covers a small part of the Web and is good for competition while the Google-DoubleClick merger would hurt competition and consumers by raising substantial barriers and strengthening the parties' already dominant positions."
DoubleClick declined to comment on the merger or the Microsoft-Viacom deal.