The Federal Trade Commission (FTC) reportedly is formally investigating Google’s proposed takeover of interactive ad firm DoubleClick, with the agency weighing both the potential antitrust and consumer privacy issues of the blockbuster deal.
The FTC has acknowledged receiving complaints about the possible implications of the merger, with the Electronic Privacy Information Center (EPIC) and the Center for Digital Democracy (CDD) joining efforts last month to ask the agency to block the deal until Google pledges to put privacy protections in place.
Google’s US$3.1 billion acquisition sent shock waves through the interactive marketing world, starting a domino effect that has led to a number of subsequent deals between Internet companies and ad agencies that have a hand in both the traditional media advertising and online marketing worlds.
Consumer advocates have raised flags about the privacy implications of the DoubleClick deal, arguing in part that by combining databases — which in the case of Google include information provided when services such as e-mail were registered for — the companies could easily identify individual users and closely track their online movements.
Meanwhile, questions about whether the deal would stifle competition in the online ad space to an extent that triggered antitrust concerns came up almost immediately after the deal was announced.
Google believes the deal “poses no risk to competition,” the company said. The type of technological advances made possible will benefit consumers by creating more relevant ads, and the deal should be approved by regulators, Google noted.
The FTC’s move follows by a week a similar step by European Commission regulators, who have asked for more information about the privacy implications of the merger.
Other Shoes Drop
Google may be able to argue that the acquisition feeding frenzy it initiated with its DoubleClick buy is evidence that there is plenty of competition in the space. Not long after Google announced the DoubleClick buy, Yahoo purchased the syndication firm Right Media.
A month later, UK-based WPP Group — one of the world’s largest ad agencies — scooped up 24/7 Real Media for $649 million. Just a few days later, Microsoft — which had been known to be kicking the tires of both DoubleClick and 24/7 — grabbed headlines by plunking down $6 billion for online ad firm aQuantive.
The Microsoft buy in particular was seen blunting that company’s complaints about the hook-up between Google and DoubleClick, which Microsoft said raised antitrust issues and threatened to block other players from gaining market share in the booming online ad space.
The consolidation trend itself is very problematic, Jeff Chester, executive director of the Center for Digital Democracy, told the E-Commerce Times.
“If we want to see competition and content diversity thrive online, regulators need to act,” he said, adding that European regulators, not surprisingly, had taken the lead by saying they were looking into the DoubleClick deal.
The FTC should examine both the DoubleClick and aQuantive purchases, and be on guard against other combinations, such as the much-rumored link-up of Yahoo and Microsoft, Chester told the E-Commerce Times. Privacy issues and antitrust concerns go hand-in-hand, since the mergers mean combining overlapping databases about consumers’ online behavior, from search terms and e-mails to digital photo collections and advertising clicks, he argued.
“These are the media mergers public interest advocates and those concerned about Internet freedom should be focused on,” Chester added, noting that CDD and other groups had complained to the FTC even before the latest rash of deals about their privacy concerns with online media consolidation. “The big deals are about controlling the future of much of the digital world.”
Big Bad Google?
As with other companies that become increasingly powerful, Google is in some ways its own worst enemy, said Sterling Market Intelligence analyst Greg Sterling. Consumers who loved the search company as a fast-rising Internet upstart might have a different take on Google as controller of advertising and content across multiple platforms.
“I don’t think the FTC will block the DoubleClick acquisition,” Sterling told the E-Commerce Times. “The real danger for Google now lies in its footprint and market power. Consumers show no signs of abandoning Google, as it continues to gain search share, but if Google becomes seen as too powerful or in control of too much consumer data and thus a privacy risk, it may erode the public’s confidence,” he noted.