| |||||||||||||||||||||||
| |||||||||||||||||||||||
Despite getting unconditional antitrust approval in the U.S., Google Inc.'s $3.1 billion acquisition of DoubleClick Inc. will likely face a tougher review from the European Commission, which is in the early stages of reviewing the deal. The European competition authority on Nov. 13 opened an extended probe of the merger and has until an April 2 deadline to decide its fate. After the U.S. Federal Trade Commission on Thursday gave its assent to the transaction, Google senior vice president of corporate development and chief legal officer David Drummond wrote on the company's policy blog that the search giant is "cooperating fully with the EC and [they] are hopeful that they will soon reach the same conclusion as their U.S. counterparts." The merger spurred intense scrutiny on Capitol Hill and an extended FTC review largely because of consumer privacy concerns the deal's critics raised. But calls for government intervention faced an uphill battle in the U.S. because Mountain View, Calif.-based Google and DoubleClick have staked out different sectors of the online advertising business and engage in little direct competition. Google sells text ad space on Web pages generated by its popular search engine. New York-based DoubleClick provides technology for placing banner ads on Web sites and to collect information from Internet users who click on the spots. Yet some analysts predict a sterner review from European antitrust authorities compared with the FTC, which approved the deal by a 4-1 vote. "We've always thought the EC was where real action was going to be," said Rebecca Arbogast, a telecommunications policy analyst with Stifel, Nicolaus & Co. "European antitrust authorities are of the view that they are more determined in enforcing competition law than the U.S. Department of Justice or the FTC." Arbogast predicted the EC would clear the merger, while trying to strengthen industrywide privacy rules, or would impose privacy safeguards as a condition of approving the deal. The commission is unlikely to block it outright, she said. "The real focus should be on whether Europe imposes conditions that make it difficult for Google to monetize its investment in DoubleClick," she said. The first indication of a serious hurdle in Europe would be a so-called statement of objections by EC Commissioner Neelie Kroes that would outline any concerns she has about the merger's impact on competition. If the EC plans to make privacy an issue in its review, the companies would be informed and have an opportunity to take steps to resolve such concerns. Arbogast predicted that any statement of objections would be issued in late January or early February. Merger opponents argue that combining the companies would create such a dominant force in online advertising that consumers would have little way of avoiding the new entity. They fear DoubleClick's database of consumer information collected from ad clicks with Google's record of consumer searches will enable the merged company to create digital "super-profiles" of online users without their permission. European regulators have frowned on mergers and other ventures between complementary businesses. The European Union's high court in September upheld a finding that Microsoft Corp. of Redmond, Wash., unfairly exploited its dominance over PCs by tying its Windows operating system to the company's media player. European regulators also are investigating Apple Inc.'s pricing of iTunes, with some officials criticizing that downloads from the service are playable only on Apple devices. As the Microsoft ruling shows, European regulators and their courts are more willing than their U.S. counterparts to consider arguments against letting big companies use their dominance to thwart competition. The Europeans refer to market leaders stifling rivals as "abuse of dominance." "Europeans don't like verticalization of markets," added Scott Cleland of the Precursor Group in Washington. "They like layered competition." Marc Rotenberg, executive director of the Electronic Privacy Information Center in Washington, held out hope that the EC will impose conditions on the merger. EPIC was one of the groups that had urged the FTC to intervene in the deal. "The FTC failed to address privacy and competitive implications of this merger," he said. "That means others will have to do so. We believe the EC will do so." There are several good options for privacy safeguards, he said, including giving users more control over their personal data collected from online ads, requiring that data amassed by the two companies stay segregated and imposing time limits on data retention.  Deal Video
    Community
 Elsewhere on The Deal.comDealwatch
The Deal MagazineCorporate Dealmaker
The Deal VideoCategories
Blog roll
Archives
| |||||||||||||||||||||||
| |||||||||||||||||||||||
