News
News
9/27/2007
02:32 PM
Connect Directly
Google+
LinkedIn
Twitter
RSS
E-Mail
50%
50%

Google Fights To Save DoubleClick Deal; Microsoft Fights To Kill It

Google's plan to buy DoubleClick is being reviewed by the Federal Trade Commission and was the subject of a Senate hearing on Thursday.

Google Thursday defended its planned acquisition of online ad company DoubleClick, even as a Microsoft-funded think tank, AEI-Brookings Joint Center for Regulatory Studies, released a report arguing against the deal.

Google announced that it would acquire DoubleClick for $3.1 billion in April. The deal has raised antitrust concerns in the U.S., the E.U., and in Australia. It is being reviewed by the Federal Trade Commission and was the subject of a Senate hearing on Thursday.

In testimony to be delivered before the Senate, David Drummond, Google SVP for Corporate Development and Chief Legal Officer, says the deal will benefit consumers, promote free speech, and help small businesses. "Google's acquisition of DoubleClick will help advance these goals while protecting consumer privacy and enabling greater innovation, competition, and growth," he says.

Robert W. Hahn and Hal J. Singer, authors of "An Antitrust Analysis of Google's Proposed Acquisition of DoubleClick," come to the opposite conclusion and predict that Google's acquisition of DoubleClick will enhance Google's market power.

"The implication of such a finding is that a combined Google-DoubleClick would likely have an incentive to increase the price of DoubleClick's offering relative to a stand-alone DoubleClick, thereby harming online advertisers," the report concludes.

To make this argument work, the paper's authors define search ads, contextual ads, and graphic display ads as the same market.

Google, not surprisingly, defines the markets for various types of advertising as separate, which minimizes the impact of the acquisition. "DoubleClick is to Google what FedEx or UPS is to Amazon.com," says Drummond. "Our current business involves primarily the selling of text-based ads -- books in our analogy. By contrast, DoubleClick's business at its core is to deliver and report on display ads."

On its funding page, the AEI-Brookings Joint Center notes that its researchers are not necessarily mouthpieces for the organizations that support the American Enterprise Institute or the Brookings Institution. "The opinions expressed by authors of Joint Center publications, however, do not necessarily reflect those of our sponsors," its site says.

Nonetheless, Henry Blodget, who blogs for Silicon Alley Insider and was formerly a noted securities analyst for Merrill Lynch during the dot.com boom, describes the paper as if it was penned by Microsoft CEO Steve Ballmer himself. And he sees Microsoft as having the upper hand.

"Microsoft is no stranger to getting deals killed by antitrust concerns, and its lobbying efforts here are working," Blodget says. "Regardless of the actual legal merits of Google's position, if any, Microsoft's argument is more persuasive. If Google had bought DoubleClick three years ago, when it could barely give itself away, the deal would have sailed through. Now, however, it seems that Microsoft may finally win one."

Comment  | 
Print  | 
More Insights
Register for InformationWeek Newsletters
White Papers
Current Issue
InformationWeek Tech Digest, Dec. 9, 2014
Apps will make or break the tablet as a work device, but don't shortchange critical factors related to hardware, security, peripherals, and integration.
Video
Slideshows
Twitter Feed
InformationWeek Radio
Archived InformationWeek Radio
Join us for a roundup of the top stories on InformationWeek.com for the week of December 14, 2014. Be here for the show and for the incredible Friday Afternoon Conversation that runs beside the program.
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.