Google Cleared To Buy Ad Firm

By Molly Moore and Kim Hart
Washington Post Foreign Service
Wednesday, March 12, 2008

PARIS, March 11 -- European regulators Tuesday cleared Google's proposed $3.1 billion acquisition of Web-advertising giant DoubleClick, a cyber-marriage that would combine their abilities to track individuals' private lives and interests online.

It also strengthens Google against its fiercest rival, Microsoft, another titan of technology that is also trying through acquisitions to win more of the online advertising market. Both companies seek the ability to better target ads at consumers based on their Web habits and tastes, a marketing practice that relies on amassing huge databases about online behavior.

Approval of the deal was granted over the objections of privacy advocates, who argued that consolidation of companies that control these databases further erodes consumers' control over their personal information.

The commission ruled Tuesday in Brussels "that the transaction would be unlikely to have harmful effects on consumers, either in ad serving or in online advertising markets."

The global reach and consumer base of Internet companies have complicated the regulatory process, requiring agencies in Europe and the United States to consider many acquisitions. The European Commission did not impose any conditions on the deal, removing the final regulatory hurdle for Google. The U.S. Federal Trade Commission approved the acquisition in December, ruling that it would not create a monopoly.

Microsoft opposed the deal on the grounds that it would put too much information about consumers under one company's control.

Microsoft declined Tuesday to comment on the commission's decision. In May, Microsoft bought aQuantive for $6 billion. AQuantive, like DoubleClick, helps advertisers measure the effectiveness of their ads and allows Web publishers to track and manage online advertising.

While defending its takeover of DoubleClick, Google has argued that Microsoft's proposed $44.6 billion acquisition of Yahoo would give the combined company too much control over the e-mail and instant-messaging markets.

Despite nearly a year of waiting, Google chief executive Eric E. Schmidt wrote in the company's blog, "we are no less excited today about the benefits that the combination of our two companies will bring." The combination will make advertising more relevant to consumers, he said. Google declined to comment beyond the blog posting.

DoubleClick, which leads the industry in banner and video advertisements on Web sites, installs software bits known as cookies on Internet users' computers to track the pages they view. Google retains users' search terms so they can be identified through their Internet protocol addresses. The combination of the tools could give companies more specific information about users' Internet habits and allow advertisers to more precisely target individuals.

In his blog, Schmidt said Google would preserve users' privacy. "Because user trust is paramount to the success of our business, users will continue to benefit from our commitment to protecting user privacy following this acquisition," he wrote.

The European Commission said its ruling does not diminish Google's obligation to observe European laws protecting the privacy of individuals in the processing of personal data.

Opponents of the deal, including consumer groups, argued that the commission's decision sets a precedent that will give companies more access to personal information and Web users less control over their privacy.

Jeff Chester, executive director of the Center for Digital Democracy in Washington, said approval of the Google-DoubleClick deal "perversely sets the stage for Microsoft's goal of acquiring Yahoo," which would also need regulatory approval. The decision has "literally paved the way for the emergence of a global digital duopoly over online advertising," he said.

Joseph Turow, professor at the Annenberg School for Communication at the University of Pennsylvania, said the Google-DoubleClick approval means that regulators probably will also approve the sale of ChoicePoint to Reed Elsevier's LexisNexis, a deal announced last month that would create another information-gathering powerhouse.

With more data in the hands of fewer companies, consumers are likely to have less control over that information or how it is used, Turow said.

Hart reported from Washington.

© 2008 The Washington Post Company