Google acquisition of DoubleClick closes

12 Mar 2008

Google yesterday finalised its US$3.1bn acquisition of DoubleClick after the European Commission approved the deal.

Google signalled its intent to buy DoubleClick, which offers online ad serving and management technology to advertisers, web publishers and ad agencies, almost a year ago but the European Commission launched an investigation in November to establish whether the acquisition would impede competition within the EU.

The Commission’s in-depth market investigation found that Google and DoubleClick were not exerting major competitive constraints on each other’s activities and therefore, are not currently competitors. Even if DoubleClick could become an effective competitor in online intermediation services, it is likely other competitors would continue to exert sufficient competitive pressure after the merger, the Commission ruled.

The Commission also analysed the potential effects of non-horizontal relationships between Google and DoubleClick following concerns raised by third parties, most notably Microsoft and Yahoo!, in the course of the market investigation. These relationships concern DoubleClick’s market position in ad serving, where Google, by controlling DoubleClick’s tools, could allegedly raise the cost of ad serving for rival intermediaries.

It also examined Google’s market position in search advertising and online ad intermediation services, where Google could allegedly have required purchasers of search ad space or intermediation to also purchase DoubleClick’s tools.

The Commission found the merged entity would not have the ability to engage in strategies aimed at marginalising Google’s competitors, mainly because of the presence of credible ad serving alternatives to which customers (publishers/advertisers/ad networks) can switch, in particular vertically integrated companies such as Microsoft, Yahoo! and AOL.

The market investigation also found that the merged entity would not have the incentive to close off access for competitors in the ad-serving market, mainly because such strategies would be unlikely to be profitable.

“We are thrilled our acquisition of DoubleClick has closed,” said Eric Schmidt, Google’s chairman and CEO. “With DoubleClick, Google now has the leading display ad platform, which will enable us to rapidly bring to market advances in technology and infrastructure to dramatically improve the effectiveness, measurability and performance of digital media for publishers, advertisers and agencies, while improving the relevance of advertising for users.”

Schmidt said in his blog that now the acquisition has gone through, Google will begin conducting detailed integration planning for the combined entities.

“An immediate task we’ll undertake over the next few weeks is matching and aligning DoubleClick employees with our organisational plan for the business,” said Schmidt. “This will involve determining the right staffing levels for all functions and will ensure we have the right people assigned to the right responsibilities within Google.

“As with most mergers, there may be reductions in headcount,” he warned. “We expect these to take place in the US and possibly in other regions as well. We know DoubleClick is built on the strength of its people. For this reason, we’ll strive to minimise the impact of this process on all of our clients and employees.”

By Niall Byrne