Google-DoubleClick merger go-ahead raises fears

20 Dec 2007

Privacy groups have claimed that the US Federal Trade Commission (FTC) has sidestepped its responsibility after giving the thumbs up to the merger of Google and DoubleClick.

The FTC today voted 4-1 to approve Google’s US$3.1bn purchase of DoubleClick without condition.

The commission rejected concerns by consumer groups that the deal may hurt consumers’ privacy. The FTC action now leaves the final decision on the deal to the European Commission.

“The FTC’s strong support sends a clear message: this acquisition poses no risk to competition and will benefit consumers,” said Eric Schmidt, chairman and CEO, Google.

“We hope that the European Commission will soon reach the same conclusion, and we are confident that this deal will deliver more relevant ads for consumers, more choices for advertisers and more opportunities for website publishers.”

New York-headquartered DoubleClick helps businesses to place and track online advertising, including the search ads business that Google has turned into a profitable business.

Google says the combination of Google and DoubleClick will offer superior tools for targeting, serving and analysing online ads of all types, significantly benefiting customers and consumers.

However, US privacy group, the Center for Digital Democracy (CDD), says the extended data protection reach will give Google unprecedented access to track every move on the digital landscape.

“By permitting Google to combine the personal details, gleaned from our searches online and YouTube downloads, with the vast repository of information collected by DoubleClick, the FTC has sanctioned the creation of a new digital data colossus,” said Jeff Chester, executive director of CDD.

Chester said the excuse offered by the majority of the commission – that consumer privacy can’t be addressed by current anti-trust law – reveals a lack of leadership and determination to protect consumers.

“It’s clear that this merger – and the ones that follow – will be about companies creating the 21st-century’s equivalent of railroad, steel and oil monopolies in the past. The FTC was created to protect Americans from the dangers of such monopolies, something the agency failed to do today.”

Chester said CDD provided abundant evidence to the FTC that Google will be able to further extend what he described as the search giant’s market dominance over online advertising.

“But several commissioners mistakenly believe that we are still living back in the dotcom boom of the Nineties, when barriers to market entry were low. Its analysis of the market is flawed.”

As a result Chester says online consumers are living under the shadow of an even bigger digital giant “with a privacy bomb ticking in the background”.

He says the US Congress will need to conduct oversight hearings into how the FTC conducted its Google-DoubleClick merger review.

Chester also said privacy advocates are likely to press the European Commission to impose the necessary safeguards on the Google acquisition of DoubleClick.

Possibly anticipating privacy groups’ reactions, Schmidt pointed out that Google’s acquisition of DoubleClick is just one of several recent transactions that underscore strong competition in the online media space.

These include Yahoo!’s acquisition of Right Media; AOL’s acquisition of Adtech AG and Tacoda; WPP Group’s acquisition of 24/7 Real Media; and Microsoft’s US$6bn acquisition of aQuantive and acquisition of AdECN Inc.

“For us, privacy does not begin or end with our purchase of DoubleClick,” Schmidt said. “We have been protecting our users’ privacy since our inception, and will continue to innovate in how we safeguard their information and maintain their trust.”

By John Kennedy