Google critics call for FTC's Majoras to sit out merger vote

Two consumer groups threw a Hail Mary pass to upset what is expected to be the Federal Trade Commission's imminent approval of Google Inc.'s $3.1 billion takeover of online advertising giant DoubleClick Inc.

The Electronic Privacy Information Center and the Center for Digital Democracy late Wednesday formally asked FTC Chairwoman Deborah Platt Majoras to recuse herself from voting on the merger because her husband, John Majoras, is a partner at the Jones Day law firm which represents DoubleClick on the deal.

According to the privacy groups' filing, the "proposed merger of the Internet's largest search company and the leading provider of data and technology solutions for marketers, advertising agencies and Web publishers posed a unique and substantial threat to the privacy interests of Internet users around the globe." As a result, they want the FTC "to either block the deal or impose substantial conditions that would safeguard privacy as condition of the merger."

The 11th-hour recusal petition wasn't given much credence among antitrust lawyers. One attorney following the deal characterized it as "obviously well calculated to cause confusion."

All the commissioners have been briefed, said the lawyer, who asked not to be identified, and a decision on the deal was expected this week. Lawyers close to the deal believe that Commissioner Pamela Jones Harbour is the lone commissioner inclined to side with the consumer groups and the deal would not be blocked even if Majoras didn't participate.

Commissioner Jon Leibowitz has said that privacy concerns don't fit into a standard antitrust review of a merger. It's believed Leibowitz would vote with the three Republicans to approve the deal without conditions.

According to Jeff Chester at the CDC, the group's concern is that the chairman oversees the staff investigating cases and making recommendations, and her husband, while not an equity partner, is tied to the growth and development of the firm.

"It's not about the [Google-DoubleClick deal] proceeding," Chester said. "It's about transparency. Transparency is required."

Before the chairman came to the agency, she too was a partner at Jones Day. And, like all commissioners who come from private practice, she was recused from voting on any matters involving her former partners for one year. In her case, until August 2005.

To avoid conflicts from flaring after the year was up, John Majoras took non-equity partner status at the large antitrust firm. Non-equity partners do not share evenly in all the income of the firm, and therefore, the success of any Jones Day representation at the FTC wouldnÕt be considered to provide direct benefit to the Majoras household.

Majoras isn't the only FTC member forced to grapple with potential conflicts arising from a spouse's employment. Commissioner Bill Kovacic's wife, Kathy Fenton, is also a partner at Jones Day. She took non-equity status to alleviate the same problem for Kovacic before he started in January 2006.

The problem of recusals is further complicated by the issue of voting rules for the five-member commission. A majority of the commission is required in any case where the agency wants to block a merger, or take any action, such as adding conditions to a deal or bring a case in a non-merger matter. That means a coalition of three if all commissioners are voting. If only four are voting, a majority is still three.

But before Kovacic and Commissioner Tom Rosch took their seats, there were only four commissioners, and Majoras was sometimes recused, sometimes leaving only two commissioners to vote, which the general counselÕs office said was sufficient under the quorum rules at the agency. As a result, in 2005, the agency approved Procter & Gamble Co.'s purchase of Gillette Co. in a 2-0 vote.

As for Google's merger, critics of the deal are pulling out the stops as approval appears imminent. Rep. Joe Barton, R-Texas, complained in a Dec. 12 letter to Google CEO Eric Schmidt that company officials had rebuffed requests by his staff for a meeting to discuss privacy concerns raised by the merger and online advertising in general.

Two aides to the House Energy and Commerce Committee received a "chilly response" when they tried to schedule a visit to Google's headquarters in Mountain View, Calif., Barton said in his letter. "Google's participation in our research into and consideration of the consumer protection implications of a merger of any online search engine and any behavioral or targeted advertising firm is vital to creating sound national policy."

Barton also asked Schmidt to respond to 24 questions contained in the letter regarding Google's consumer protection practices by Dec. 18.