The purchase would give Google valuable demographic data, ad management technology, and advertising clients.
Google on Friday said it has reached an agreement to acquire Internet advertising company DoubleClick for $3.1 billion in cash.
For its money, Google gets valuable demographic data, ad management technology, and advertising clients. It also denies Microsoft and Yahoo a potential shortcut in the race for search advertising supremacy.
"The most compelling argument for this is it's accelerating our display advertising business," Google CEO Eric Schmidt said in a conference call for investors late Friday afternoon. "...The DoubleClick platform touches so many Google customers it accelerates our entry into some of these businesses by a number of years."
"This transaction will strengthen our advertising network by expanding our access to publisher inventory and enabling us to serve the needs of a broader set of advertisers and ad agencies," said Tim Armstrong, Google's president of advertising and commerce for North America, in a statement.
On the investor call, David Drummond, senior VP of corporate development and chief legal officer for Google, declined to characterize the intensity of the bidding for DoubleClick. AOL, Microsoft, and Yahoo were reportedly interested in acquiring DoubleClick. Drummond also said he expected that government regulators would approve the deal. Assuming approval is granted, the deal is expected to close before the end of the year.
For DoubleClick, the acquisition looks a lot like redemption. In the late '90s, following its merger with data broker Abacus Direct, the possibility that DoubleClick might be able to create profiles of individuals based on aggregated data raised the ire of privacy advocates and eventually forced the company to disavow doing anything of the sort.
Schmidt seemed to acknowledge this obliquely by emphasizing that "Google is very committed to preserving privacy," as if to reassure everyone that DoubleClick's past would not haunt Google's future.
Fast-forward to 2007 and worries about privacy violations by advertisers have largely been supplanted by worries about privacy violations by the government and telecom companies.
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