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12/28/2009
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Google AdMob Buy Opposed

Consumer groups said the acquisition would diminish competition in mobile advertising and raise privacy concerns.

Two consumer groups on Monday said they have asked the Federal Trade Commission to stop Google from buying mobile advertising company AdMob, saying the acquisition would diminish competition.

In addition, Consumer Watchdog and the Center for Digital Democracy said in a joint letter to the FTC that the proposed acquisition raises privacy concerns that the commission must address.

"The mobile sector is the next frontier of the digital revolution," the groups said in the letter. "Without vigorous competition and strong privacy guarantees this vital and growing segment of the online economy will be stifled."

Google said last week the FTC had asked it for more information on its plans to purchase AdMob for $750 million. The request meant that Google would likely have to wait longer than expected in closing the transaction.

Google's dominance of online advertising related to search has led to heightened regulatory scrutiny from the Department of Justice, the Federal Communications Commission, and the FTC. On Monday, the two consumer groups claimed Google was trying to buy its way into dominating the mobile advertising market.

"Consumers will face higher prices, less innovation, and fewer choices," the letter said. "The FTC should conduct the appropriate investigation, block the proposed Google-AdMob deal, and also address the privacy issues."

The privacy concerns arise from the vast amount of information about consumers' online behavior that would be held by one company. Such data would greatly heighten Google's ability to track, profile, and target U.S. mobile consumers.

"Permitting the expansion of mobile advertising through the combination of these two market leaders without requiring privacy guarantees poses a serious threat to consumers," the letter said.

Google, which announced in November plans to buy AdMob, has maintained from the start that the deal wouldn't stifle competition, but would be a catalyst of innovation and competition. The company has also said it doesn't see any regulatory issues with the deal, because the growing mobile advertising market is highly competitive with more than a dozen ad networks.

Mobile ad spending is estimated to reach $416 million this year, accounting for 0.4% of all ad spending, according to eMarketer. Industry experts have said that the AdMob acquisition would likely prompt Google competitors, such as Microsoft and Yahoo, to seek similar acquisitions.

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