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March 11, 2008
4 Min Read
Google on Tuesday received approval from the European Commission and quickly announced the completion of its acquisition of Internet advertising company DoubleClick.
The decision ends almost a year of uncertainty surrounding the $3.1 billion deal, which is opposed by privacy and consumer groups, not to mention Microsoft. It also appears to have restored some measure of investor confidence. As of 3 pm EST on Tuesday, Google's stock had risen almost 5%, up from near its 52-week low of $413 per share on Monday.
"The Commission's in-depth market investigation found that Google and DoubleClick were not exerting major competitive constraints on each other's activities and could, therefore, not be considered as competitors at the moment," the European Commission said in a statement. "Even if DoubleClick could become an effective competitor in online intermediation services, it is likely that other competitors would continue to exert sufficient competitive pressure after the merger. The Commission therefore concluded that the elimination of DoubleClick as a potential competitor would not have an adverse impact on competition in the online intermediation advertising services market."
In a blog post, Google CEO Eric Schmidt welcomed the decision and expressed excitement about finally being able to bring the benefits of the combined companies to market.
"As the combination of Google and DoubleClick delivers better, more relevant display ads, we're also looking forward to delivering an improved online experience to users," said Schmidt. "Because user trust is paramount to the success of our business, users will continue to benefit from our commitment to protecting user privacy following this acquisition. And our scale and infrastructure mean that users will also be spending less time waiting for Web pages to load."
The addition of DoubleClick's display advertising platform, said Schmidt, will help publishers and advertisers generate more revenue, which will support the creation of more Internet content.
Display advertising tends to involve a graphic component, like online banner ads, which are often used for branding in addition to, or in lieu of, soliciting online clicks. Google's strength has been in pay-per-click ads, through its AdWords and AdSense programs.
Schmidt also said that Google's long-delayed integration planning can finally begin. "As with most mergers, there may be reductions in headcount," he said. "We expect these to take place in the U.S. and possibly in other regions as well."
Penry Price, Google VP of advertising sales, said that since Google was not able to view DoubleClick's products closely before gaining regulatory approvals, he is unsure how quickly Google can integrate DoubleClick's technology with its platforms.
Price told reporters at a press event at Google headquarters in New York City headquarters that DoubleClick's contracts will stay in place, but there is no news yet regarding pricing plans.
"We're excited," Price said. "It's obviously great news for us."
Privacy Groups Still Concerned
Google first announced its plan to acquire DoubleClick on April 13, 2007. Following the Federal Trade Commission's decision to approve the deal in December, the Center for Democracy and Technology's (CDT) President Leslie Harris urged Google to offer a clear, public statement about its plans to protect consumer privacy.
The CDT and other groups worry that behavioral ad targeting online -- in which Google will gain greater competence through its DoubleClick deal -- will allow advertisers to assemble to detailed profiles that threaten consumer privacy rights. "This 'behavioral tracking' -- the practice of collecting and compiling a record of individual consumers' activities, interests, preferences, and/or communications over time -- places consumers' privacy at risk, and is not covered by federal law," the CDT warned last October.
The CDT and eight other privacy groups proposed that the FTC create a "Do Not Track List" to shield Internet users from behavioral advertising in the same way that the FTC's "Do Not Call List" protects individuals from telemarketers.
The FTC's reluctance to impose a regulatory regime on online marketers stands in contrast to the position of the Consumer Protection Board of New York, which in comments submitted to the FTC said, "This powerful marketing technique must be regulated."
Internet users who chose to submit comments to the FTC took a similar position.
"The prospect of "behavioral marketing" makes me INCREDIBLY uneasy," said Mark Hammond of Utah. "Companies should require an opt-in, not an opt-out, for behavioral advertising, so they would have to offer some sort of incentive for consumers to allow it." "It has long been a frustration of mine that absolutely EVERYONE thinks they need more and more of my personal and private information!" said Lynn Inmon. "I have to give it to stores, Web sites, credit companies, restaurants, hotel chains, doctors, jobs, and the list goes on and on. I can't make a transaction without giving it."
"In my opinion, you are being way too accommodating to the companies, and not protecting the public enough," said Mike Wall.
K.C. Jones contributed to this report.
About the Author(s)
Editor at Large, Enterprise Mobility
Thomas Claburn has been writing about business and technology since 1996, for publications such as New Architect, PC Computing, InformationWeek, Salon, Wired, and Ziff Davis Smart Business. Before that, he worked in film and television, having earned a not particularly useful master's degree in film production. He wrote the original treatment for 3DO's Killing Time, a short story that appeared in On Spec, and the screenplay for an independent film called The Hanged Man, which he would later direct. He's the author of a science fiction novel, Reflecting Fires, and a sadly neglected blog, Lot 49. His iPhone game, Blocfall, is available through the iTunes App Store. His wife is a talented jazz singer; he does not sing, which is for the best.
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