Congress to Sift Through Google-DoubleClick Deal Details

After months of controversy and global outcry, Google's (Nasdaq: GOOG) proposed US$3.1 billion acquisition of DoubleClick (Nasdaq: DCLK) will undergo congressional scrutiny later this year in a planned closed hearing before the House of Representatives' Commerce, Trade and Consumer Protection Subcommittee.

Rep. Bobby Rush (D-Ill.), chairman of the subcommittee, on Tuesday announced his intention to hold the hearing in a letter to Federal Trade Commission Chairman Deborah Majoras. Rush also requested a briefing on the FTC's investigation of the proposed merger, which was launched in May.

'Widespread Concern'

"There is widespread concern about the proposed merger between Google and DoubleClick that the Federal Trade Commission (FTC) currently is reviewing," Rush wrote.

"Concerns have focused not only on the implications for competition -- in online advertising and other possibly affected markets -- but also on the potentially enormous impact on consumer privacy," he added. "I share these concerns and am writing to notify you that the Subcommittee is considering holding a hearing when an appropriate date becomes available after the August District Work Period."

Google officials could not be reached for comment. Shares in the company fell $3.96 to $549.50 in Wednesday trading.

Global Outcry

Following Google's announcement in April that it intended to buy DoubleClick, outspoken opponents of the deal have included Microsoft (Nasdaq: MSFT), AT&T (NYSE: T) and other industry leaders; privacy groups including the Electronic Privacy Information Center (EPIC), the Center for Digital Democracy (CDD) and the U.S. Public Interest Research Group; and European consumer group BEUC.

Industry peers charge that the proposed acquisition would give Google too much control over the online advertising market.

"We continue to believe that Google's acquisition of DoubleClick raises a number of questions about the impact it will have on advertisers, publishers and consumers and believe it warrants closer scrutiny," a Microsoft spokesperson said Thursday.

Indeed, such is the level of concern that one company -- consultancy Precursor -- on Tuesday even launched a virtual press conference to explicate those concerns, predicting optimistically that the FTC would ultimately block the merger.

Privacy fears, meanwhile, center on the notion that Google and DoubleClick, after they are combined, would have access to an unprecedented amount of data on consumers' Web and Internet search habits.

'Bad Deal for Consumers'

"I think it's important that Congress examine the online marketplace," Jeffrey Chester, executive director of the Center for Digital Democracy, told the E-Commerce Times.

"At the end of the day, the merger must be rejected on competitive and privacy grounds," Chester added. "If Google is allowed to swallow up DoubleClick, what will be merged ultimately is a vast array of consumer information. It's a bad deal for consumers."

Google's announcement of the planned DoubleClick takeover also sparked a flurry of other industry acquisitions, including Yahoo's (Nasdaq: YHOO) purchase of syndication firm Right Media and Microsoft's snatching up of online advertising firm aQuantive.

New Markets, New Rules

Merger mania is a phenomenon that has affected many industries over many years, and antitrust issues are a common concern. "The difference here is that these are emerging markets," Yankee Group analyst Laura DiDio told the E-Commerce Times.

"How do you say someone has a monopoly when the market is not yet fully formed?" DiDio noted. "The question then becomes, what is the intent?"

Fifteen to 20 years ago, when computer security and privacy threats started becoming more evident, there were few laws in place to guide policing and prosecution, DiDio noted. "Now we're out of the infancy of the information age and have moved into the precocious teenage years," she added. "Things are more mature, but we're still left with the dilemma of how to regulate all this.

"What is too much, and what is not enough? What is reasonable to really protect Internet users' privacy, consumers and corporations?" she asked.

The merger is likely to make it through the congressional hearing, DiDio concluded, "but I hope tough questions are asked," she said. "We're still finding our way, and there's got to be a middle ground."