The Federal Trade Commission said Thursday that it won't block Google's $3.1 billion acquisition of DoubleClick. The vote was 4 to 1 to close the 8 month investigation.
According to the FTC's statement: “After carefully reviewing the evidence, we have concluded that Google’s proposed acquisition of DoubleClick is unlikely to substantially lessen competition.”
In a nutshell, the FTC concluded that Google's acquisition of DoubleClick (all resources) will not harm competition. As for privacy concerns, the FTC said it didn't have the mandate to sweat those worries.
Some key points from the statement and ruling:
- The FTC: "sought to determine whether Google’s acquisition of DoubleClick threatened to eliminate direct and substantial competition between the two companies. Its thorough analysis of the evidence showed that the companies are not direct competitors in any relevant antitrust market, eliminating the need for further analysis."
- "The agency’s evidence showed that current competition among firms in this market is vigorous, and will likely increase. The evidence also indicates that Google’s entry, even if it were to be successful, likely would not have a significant impact on competition."
- "In some instances, a proposed transaction may allow a dominant seller of one product to harm competition in the market for a related complementary product, for example, by exclusively bundling – or otherwise tying together – its product with the acquired firm’s product after the acquisition. Such a strategy, however, can only be anticompetitive if the merged firm has market power."
There was one dissenter from commissioner Pamela Jones Harbour. The gist of her argument is that the FTC should have been more forward looking. In her view, the Google-DoubleClick market power has to be projected into the future.
I dissent because I make alternate predictions about where this market is heading, and the transformative role the combined Google/DoubleClick will play if the proposed acquisition is consummated. If the Commission closes its investigation at this time, without imposing any conditions on the merger, neither the competition nor the privacy interests of consumers will have been adequately addressed.
Based on the majority’s characterization of the relevant product markets, I see at least three areas where the parties currently compete, or likely would compete in the near future. As a result of these competitive overlaps, I have reason to believe that the proposed acquisition may substantially lessen competition.
Those three areas include third party ad serving tools, being an ad intermediary and site specific text and display ads.
The dissent features many interesting points, but in the end the FTC was in a pickle. As of today, Google and DoubleClick don't raise antitrust worries so the FTC is on firm footing. Harbour's argument--which may have some merit--relies on predictions. Do you really want the FTC to assume something will happen? Probably not--especially in a market that is developing as quickly as online advertising.
Now the only real question left is what will the European Union do about this merger. In recent years, it's much harder to get the EU to sign on than U.S. regulators.