Breaking: FTC Greenlights Google-AdMob Deal–A Giant Bouquet of Flowers Immediately Sent to One Infinite Loop
In the regulatory equivalent of a surprise switcheroo, the Federal Trade Commission announced that it had officially closed its investigation of the $750 million AdMob deal with Google (GOOG), which had been at risk over the past months, citing adequate competition in the mobile advertising market, especially from Apple (AAPL).
It was a 5-0 unanimous vote.
In a press release, the FTC said:
“The Commission said that although the combination of the two leading mobile advertising networks raised serious antitrust issues, the agency’s concerns ultimately were overshadowed by recent developments in the market, most notably a move by Apple Computer Inc.–the maker of the iPhone–to launch its own, competing mobile ad network.”
This comes after two days of arrogant and petty Apple-bashing by Google at its I/O conference in San Francisco this week by the search giant’s execs–including CEO Eric Schmidt.
Guess it’s time to send some love to Apple CEO Steve Jobs, Eric, given that his company’s entry into the market tipped the balance against what could have been a thorny investigation of Google by regulators!
Not that Google is out of the regulatory woods in Washington, D.C., by any means. Both the FTC and the Justice Department have been carefully scrutinizing the search giant as its power in the digital arena has grown, especially over antitrust and privacy concerns.
That federal attention is sure to continue.
Google was only saved from a preliminary injunction to stop the transaction this time because of recent moves by Apple in the mobile ad market.
Apple bought AdMob competitor Quattro Wireless in January and later announced its iAd mobile offering.
In addition, first pointed out by MediaMemo’s Peter Kafka, since Apple lost out to Google in its attempt to buy AdMob, the pair were facing a less-than-cooperative company whose iPhone has been one of AdMob’s key devices to place ads on.
Apple recently issued some new rules–thus far, unenforced–that could hurt AdMob’s ability to take advantage of the powerful iPhone smartphone platform.
Such growing rivalry is the main argument that Google and AdMob have been pushing, noting that the mobile ad business is still small and pointing to a recent survey that showed the combined entity had only 21 percent of the market.
Google CEO Eric Schmidt also took a much more aggressive stance recently on fighting the FTC if the deal was stopped, and sources said the agency was not keen to lose a legal battle over the issue.
Still, until recently, Google’s effort had not seemed to move the FTC, which has been asking for reaction to the deal from a range of sources, such as advertisers, even as Google has been soliciting official support from a number of tech sources.
In addition, lawmakers have been agitating for the FTC to act, and there has been intense lobbying by Microsoft (MSFT) and public interest groups.
The FTC is likely to catch some fire for not moving on Google.
AdMob was also caught in the crossfire, unable to move forward after Google forked over $750 million to buy it last fall.
The San Mateo, Calif.-based AdMob released a statement on the outcome: “We are extremely pleased with today’s decision from the Federal Trade Commission to clear Google’s acquisition of AdMob. Over the past six months we’ve received a great deal of support from across the mobile industry–and we deeply appreciate it. Our focus is now on working with the team at Google team to quickly close the deal.”
Here’s the official press release from the FTC, as well as blog posts from Google’s Susan Wojcicki and AdMob CEO Omar Hamoui on the development:
FTC Closes its Investigation of Google AdMob Deal After Thorough Review, Agency Finds Transaction Not Likely to Harm Competition
The Federal Trade Commission has closed its investigation of Google’s proposed acquisition of mobile advertising network company AdMob after thoroughly reviewing the deal and concluding that it is unlikely to harm competition in the emerging market for mobile advertising networks.
In a statement issued today, the Commission said that although the combination of the two leading mobile advertising networks raised serious antitrust issues, the agency’s concerns ultimately were overshadowed by recent developments in the market, most notably a move by Apple Computer Inc.–the maker of the iPhone–to launch its own, competing mobile ad network. In addition, a number of firms appear to be developing or acquiring smartphone platforms to better compete against Apple’s iPhone and Google’s Android, and these firms would have a strong incentive to facilitate competition among mobile advertising networks.
“As a result of Apple’s entry (into the market), AdMob’s success to date on the iPhone platform is unlikely to be an accurate predictor of AdMob’s competitive significance going forward, whether AdMob is owned by Google or not,” the Commission’s statement explains.
The Commission stressed that mergers in fast-growing new markets like mobile advertising should get the same level of antitrust scrutiny as those in other markets. The statement goes on to note that, “Though we have determined not to take action today, the Commission will continue to monitor the mobile marketplace to ensure a competitive environment and to protect the interests of consumers.”
Mobile ad networks, such as those provided by Google and AdMob, sell advertising space for mobile publishers, who create applications and content for websites configured for mobile devices, primarily Apple’s iPhone and devices that run Google’s Android operating system. By “monetizing” mobile publishers’ content through the sale of advertising space, mobile ad networks play a vital role in fueling the rapid expansion of mobile applications and Internet content.
According to the FTC’s statement, evidence gathered by the agency raised important questions about the transaction. Google and AdMob have competed head-to-head for the past few years, with a notable increase in intensity during the past year. This competition has spurred innovation and allowed mobile publishers to keep a large share of the revenue generated from the sale of their ad space. The companies also have economies of scale that give them a major advantage over smaller rivals in the business, the statement says.
These concerns, however, were outweighed by recent evidence that Apple is poised to become a strong competitor in the mobile advertising market, the FTC’s statement says. Apple recently acquired Quattro Wireless and used it to launch its own iAd service. In addition, Apple can leverage its close relationships with application developers and users, its access to a large amount of proprietary user data, and its ownership of iPhone software development tools and control over the iPhone developers’ license agreement.
The Commission vote to close the investigation was 5-0.
Working with AdMob to move mobile advertising forward
5/21/2010 09:25:00 AM
Today, the Federal Trade Commission cleared our acquisition of AdMob, a mobile advertising start up. We’re excited to work with Omar Hamoui and his talented team at AdMob to develop new mobile advertising solutions for marketers, mobile app developers and mobile publishers.
The decision is great news for the mobile advertising ecosystem as a whole. This was reflected in the widespread industry support for our acquisition.
Throughout the FTC’s review process, it’s been clear that mobile advertising is growing rapidly.
As mobile phone usage increases, growth in mobile advertising is only going to accelerate. This benefits mobile developers and publishers who will get better advertising solutions, marketers who will find new ways to reach consumers, and users who will get better ads and more free content.
We’re very excited about the possibilities in this field. As an immediate matter, we’re now moving to close this acquisition in coming weeks. We’ll then start work right away on bringing AdMob’s and Google’s teams and products together. This industry is moving fast, and we’re excited to be part of the race!
Posted by Susan Wojcicki, Vice President of Product Management
AdMob Blog: Working with Google to move mobile advertising forward
May 21st, 2010
We are extremely pleased with the FTC’s decision today to clear Google’s acquisition of AdMob. Over the past six months we’ve received a great deal of support from across the mobile industry – and we deeply appreciate it.
We are excited to get to what’s next and to start working with Google to develop new products and services for our advertisers, developers, and publishers. We share a commitment to helping our customers navigate and take advantage of the mobile opportunity. Together, Google and AdMob will be able to bring a whole host of new products and capabilities to mobile advertising.
I have to pause to acknowledge the AdMob team. It takes a tremendous group to stay focused and remain productive during a process like this review. The Google deal was announced in November of last year. Rather than sit idle for six months, we’ve launched 15 new products, updated 11 more, and continued building a phenomenal business that is serving an ever growing base of customers. I couldn’t be more grateful for all this group has done.
We will now work with Google to close the deal. Once that happens, we will finally get to the fun part–connecting our teams and products to find ways to better serve our customers. Stay tuned.
Omar
