Analysis: The FTC clears our acquisition of DoubleClick
Posted by David Drummond, Senior Vice
President, Corporate Development and Chief Legal
Officer
Earlier today, the U.S. Federal Trade Commission (FTC)
id="g78_" >cleared
our acquisition of DoubleClick. This is obviously excellent
news for both companies, and I would like to comment on its
significance and what it means for us going forward.
Perhaps most importantly, the FTC’s decision publicly affirms what
we and numerous independent analysts
id="sl3h" >have been saying for
months: our acquisition does not threaten competition in what is a
robust, innovative, and quickly evolving online advertising space.
In fact, we firmly believe the transaction will increase
competition and bring substantial benefits to consumers, web
publishers, and online advertisers.
Looking at the FTC's
>clearance statement, a few key points
jump out as noteworthy:
Transaction was cleared with no conditions. The FTC
cleared the acquisition unconditionally, without demanding any
changes in or commitments concerning the companies’ business
practices. This will allow us to remain flexible as we continue to
innovate and provide the best services to our customers and
users.
Google and DoubleClick are not competitors. The FTC
stated that its "thorough analysis of the evidence showed that
the companies are not direct competitors in any relevant antitrust
market." Furthermore, the FTC concluded that the merger would
not eliminate beneficial potential competition, writing that
"it is unlikely that the elimination of Google as a potential
competitor in the third party ad serving markets would have a
significant impact on competition." We agree with both of
these findings. Google and DoubleClick provide complementary
services, and competition between the companies was not necessary
to create benefits for consumers. To the contrary, consumers will
benefit from the two companies working together and combining our
resources.
Third party ad serving markets are highly competitive.
The FTC noted that "the evidence shows that the third party ad
serving markets are competitive," and said that "the
evidence also shows that firms can and do switch ad serving firms
when it is in their self-interest to do so." This is an
important finding, because it means that ad serving customers will
continue to benefit from innovation and product development by the
many players in this space, and that they can always select the ad
serving provider that offers them the best services.
Privacy not a part of the merger review. Though we
strongly believe in protecting our users' privacy, the FTC
clearance decision reaffirmed the law by
noting that privacy concerns played no role
in its merger review. This is an important principle, as
privacy issues need to be addressed on an industry-wide basis, and
not on a company-by-company basis. The FTC wrote, "although
such issues may present important policy questions for the Nation,
the sole purpose of federal antitrust review of mergers and
acquisitions is to identify and remedy transactions that harm
competition. Not only does the Commission lack legal authority to
require conditions to this merger that do not relate to antitrust,
regulating the privacy requirements of just one company could
itself pose a serious detriment to competition in this vast and
rapidly evolving industry." The FTC also noted, however,
"that the evidence does not support a conclusion" that
this particular transaction will harm consumer privacy.
Data combination wouldn't pose problems. The FTC
rejected the suggestion from competitors that Google would combine
user information with DoubleClick's customers' data to
obtain an advantage in the market, writing that the data is owned
by DoubleClick’s customers and that "at bottom, the concerns
raised by Google’s competitors regarding the integration of these
two data sets — should privacy concerns not prevent such
integration — really amount to a fear that the transaction will
lead to Google offering a superior product to its customers."
Moreover, "a number of Google’s competitors have at their
disposal valuable stores of data not available to Google. For
instance, Google’s most significant competitors in the ad
intermediation market, Microsoft, Yahoo!, and Time Warner have
access to their own unique data stores."
Advertisers and publishers aren't concerned. The FTC
noted that "the clear majority of third parties expressing
[competitive] concerns [about the deal] were Google’s current or
potential competitors." Additionally, Commissioner Jon
Liebowitz noted in his
>concurring opinion that "my
staff and I independently spoke with publishers and advertisers
potentially affected by this deal and, somewhat surprisingly, they
raised few anticompetitive concerns. In fact, many seem unruffled
by the alternatives in the post-merger market." It is telling
that while our competitors tried hard to come up with theories of
how our customers and partners could be harmed by the deal, those
customers and partners themselves did not agree with those
theories. In fact, we know that many of these advertisers and
publishers are excited about the transaction and look forward to
benefiting from it.
But as I said at the outset, perhaps the most important aspect of
the clearance decision is its recognition of the fact that both
Google and DoubleClick do business in a competitive and rapidly
evolving arena. Indeed, as the FTC noted, all of the recent
acquisitions that have occurred in the online advertising space
have confirmed this. "The entry and expansion
of…well-financed competitors has transformed the ad
intermediation marketplace over the last six months," the FTC
wrote. "All of these firms are vertically integrated, and all
appear to be well-positioned to compete vigorously against Google
in this new marketplace."
I should also note that, separate from its clearance decision, the
FTC this morning released some suggested
>principles to guide online companies
engaging in online advertising. We support the FTC's effort to
develop industry-wide standards in this area, and we are studying
these proposals carefully.
Receiving clearance from the FTC is of course an important step
forward, but it does not mean that we can now close the
acquisition. For that, we must also receive clearance from European
Commission (EC), which is still conducting its review. We are
cooperating fully with the EC and are hopeful that they will soon
reach the same conclusion as their U.S. counterparts.
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