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Close Encounters of the Regulatory Kind: Google-AdMob Brace for the Worst

Kara Swisher — Mon, 03 May 2010 13:12:14 +0000

While executives at both AdMob and Google are pulling out all the stops to convince federal government regulators otherwise, multiple sources close to the situation said that the pair now expect the Federal Trade Commission to try to block the acquisition of the small mobile advertising start-up by the search giant.

While the situation could change, of course, sources said that the lack of any kind of indication of clear direction of the inquiry this late in the game by FTC staff–which recommends action to its five commissioners–is a bad sign.

“The federal government is looking for a way to discipline Google in some way, because of larger concerns about its search power on the Web,” said one source. “And this is where it looks like it will try to show that concern.”

Action could come as early as this week, but is more likely next week, in the form of a request for a preliminary injunction to stop the transaction due to antitrust concerns.

As luck would have it, late last week on a Virgin America redeye to Dulles Airport near Washington, D.C., BoomTown ran smack into AdMob Founder and CEO Omar Hamoui, who was on the same flight.

Unfortunately for Silicon Valley’s luckiest entrepreneur of 2009–he sold the San Mateo, Calif. start-up to Google (GOOG) for $750 million last November–it was yet another of a half-dozen trips back east so far that have taken on a less than pleasant tone.

Hamoui, who usually has a fresh-faced demeanor, was clearly looking a lot more haggard than usual.

He declined to comment in detail about the situation, only noting that, “I have been trying to explain our business, which is still nascent, to the FTC.”

That’s a big problem, of course, since Hamoui’s real job is to keep his start-up cooking with gas until it is officially bought by Google.

Along with keeping up with competitors–such as Quattro Wireless, which was bought by Apple in January–Hamoui is now hampered in hiring new staff for AdMob, as it waits in limbo.

That’s because AdMob has no currency now to offer engineers,

In addition, first pointed out by MediaMemo’s Peter Kafka, since Apple (AAPL) lost out on its attempt to buy AdMob to Google, he’s also facing a less-than-cooperative company whose iPhone has been one of AdMob’s key devices to place ads on.

And 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 also pointing to a recent survey that shows the combined entity has only 21 percent of the market.

But that point does not seem to have moved the FTC, which has been asking for reaction of 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 also been agitating the FTC to act, along with intense lobbying by Microsoft (MSFT) and also public interest groups.

“The FTC really wants to do this and is in search of a legal theory that it can win with,” said a close observer of the situation.

Bloomberg also reported Friday that the FTC was urging the filing of an antitrust suit to challenge the deal.

In other words, big regulatory trouble for Google, and–more to the point–questions over the fate of AdMob.

“It feels like AdMob is going to suffer collateral damage for a bigger fight going on about reining in Google,” said one source.

And, until the verdict is in, here’s a video of an interview I did with Hamoui in late 2008, when life was a lot simpler and bureaucrat-free for him:

[ See post to watch video ]

Please see this disclosure related to me and Google.

Tweet the People: Twitter VC Wilson and Federal CTO Chopra Talk Policy in D.C.

Kara Swisher — Wed, 17 Mar 2010 12:15:40 +0000

Ms. BoomTown went to Washington, D.C., this week to moderate a panel on the future of the digital arena for an event marking the 25th anniversary of the first .com domain.

Surprisingly, the panelists–Union Square Ventures partner Fred Wilson, Federal CTO Aneesh Chopra, Huffington Post founder Arianna Huffington and VeriSign (VRSN) CTO Ken Silva–did not talk about geo-location jet packs and augmented reality for everyone.

Instead, due to their proximity to pols and government bureaucrats, they went wonkish, talking a lot about open government, data-retention regulations and, in Wilson’s case, pondering the “privacy heist” of consumer information by Silicon Valley social networking hotshot Facebook.

Now, to be fair, Wilson is a big and early investor in rival Twitter, so he might have his bias.

But the conversation was a refreshing change from pointless discussions on location wars between Foursquare and Gowalla and reporting-free speculation about whether MySpace is or is not for sale or will spin off or not.

In fact, it was almost erudite, except for the part about how the Federal Communications Commission gave me a giant paper-filled binder of the National Broadband Plan (more on that classic D.C. tree-killing move later!).

So that you too can get all federal, here’s a video I did with Wilson and Chopra, in which they talk tech policy:

[ See post to watch video ]

FCC to Comcast: Cut It Out

John Paczkowski — Fri, 01 Aug 2008 20:35:16 +0000

In essence, Comcast opens its customers’ mail because it wants to deliver mail not based on the address on the envelope but on the type of letter contained therein.”

– Federal Communications Commission order

Saying it wants to “send a message to the industry that bad actors will end up being punished,” the Federal Communications Commission punished Comcast with a precedent-setting reprimand today for slowing some Internet traffic. “Comcast was delaying subscribers’ downloads and blocking their uploads. It was doing so 24/7, regardless of the amount of congestion on the network or how small the file might be,” said FCC Chairman Kevin Martin. “Even worse, Comcast was hiding that fact by making affected users think there was a problem with their Internet connection or the application. Today, the Commission tells Comcast to stop.”

Well, three-fifths of the Commission, anyway. There were two dissenting votes, which will almost certainly figure prominently in those legal options Comcast (CMCSA) says it is considering. From Commissioner Robert McDowell’s dissent:

For the first time, today our government is choosing regulation over collaboration when it comes to Internet governance. The majority has thrust politicians and bureaucrats into engineering decisions. It will be interesting to see how the FCC will handle its newly created power because, as an institution, we are incapable of deciding any issue in the nanoseconds of Internet time. Furthermore, asking our government to make these decisions will mean that every two-to-four years the ground rules could change depending on election results. Internet engineers will find it difficult, if not impossible, to operate in a climate like that. … Will other countries like China follow suit and be able to regulate American companies’ network management practices, with effects that could be felt here? How do we know where to draw the line given that the Internet is an interconnected global network of networks? Given the Internet’s interconnectivity, are we now starting a global race to the lowest common denominator of maximum government regulation, all in the name, ironically, of Internet freedom?”