John Paczkowski

Recent Posts by John Paczkowski

FTC Rules Microsoft's GoogleClick Complaint Too Ironic to Consider

googleclick.jpg

This proposed acquisition raises serious competition and privacy concerns in that it gives the Google DoubleClick combination unprecedented control in the delivery of online advertising, and access to a huge amount of consumer information by tracking what customers do online.”

–Microsoft General Counsel Brad Smith

The Federal Trade Commission isn’t going to let calls for the recusal of Chairwoman Deborah Platt Majoras or the concerns of Microsoft, AT&T and consumer advocacy groups at home and abroad get in the way of Google’s purchase of online ad-serving vendor DoubleClick.

The FTC today voted 4-1 to approve the $3.1 billion acquisition without condition. “After carefully reviewing the evidence, we have concluded that Google’s proposed acquisition of DoubleClick is unlikely to substantially lessen competition,” the commission’s majority wrote in a statement, adding that it planned to keep an eye on the company should it wield its market power unwisely. “The markets within the online advertising space continue to quickly evolve, and predicting their future course is not a simple task,” the commission continued. “Accounting for the dynamic nature of an industry requires solid grounding in facts and the careful application of tested antitrust analysis. Because the evidence did not support the theories of potential competitive harm, there was no basis on which to seek to impose conditions on this merger. We want to be clear, however, that we will closely watch these markets and, should Google engage in unlawful tying or other anticompetitive conduct, the commission intends to act quickly.”

One would hope so. In a lone dissenting opinion, commissioner Pamela Jones said the merger of Google’s data with DoubleClick’s is potentially quite problematic.

The transaction will combine not only the two firms’ products and services, but also their vast troves of data about consumer behavior on the Internet. … I acknowledge that behavioral targeting may create economic efficiencies that would–in the short run–be attractive to the parties’ advertiser and publishing customers (putting aside for a moment the potential impact on consumers on the privacy front). Still, marrying the two datasets raises long-term competition questions that beg further inquiry.

  • In a post-merger online advertising market driven by the value of behavioral targeting, will Google/DoubleClick face meaningful competition?
  • Will any other firm be able to amass a dataset of the same scope and size?
  • Will any other company be able to overcome network effects and offer an equally focused level of behavioral targeting?
  • If advertisers and publishers have to channel their online advertising through Google/DoubleClick in order to access the best dataset that supports targeted advertising, will any other firms have the ability or incentive to compete meaningfully in this market?

“… I am convinced that the combination of Google and DoubleClick has the potential to profoundly alter the 21 century Internet-based economy–in ways we can imagine, and in ways we cannot. I do not doubt that this merger has the potential to create some efficiencies, especially from the perspective of advertisers and publishers. But it has greater potential to harm competition, and it also threatens privacy. By closing its investigation without imposing any conditions or other safeguards, the commission is asking consumers to bear too much of the risk of both types of harm.”

The FTC’s ruling now leaves the final decision on the deal to the European Commission.


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