Beyond the iPhone one could convincingly argue that the best thing to happen to mobile advertising in the past year was Google’s announced acquisition of AdMob. It got everyone’s attention — especially the $750 million (stock) price tag.
It also single-handedly boosted the profile of all of AdMob’s competitors. As an almost direct response Apple, which was rumored to have been an unsuccessful bidder for AdMob, bought rival ad network Quattro a couple of months later for $275 million.
Here’s what I wrote immediately after the “GoogMob” acquisition was announced last year:
The fact of Google’s intended acquisition and the price tag ($750 million) help validate mobile (display) advertising in a number of ways. It’s the third largest acquisition price Google has paid, after YouTube and DoubleClick. It also shows how serious Google is about mobile advertising in general. According to an interview with Bloomberg, Google CEO Eric Schmidt said, “Our mobile revenue is growing faster than our regular revenue . . . All of the signs indicate a great success in this space.”And rather than being publicly upset by the acquisition, AdMob’s competitors and others in the mobile ad universe are all but rejoicing. I was sent a link to a “facts” page Google had put together in support of the deal . . .
Late last year the US Federal Trade Commission (FTC) decided to take a closer look at the deal. Interestingly, AdMob’s immediate competitors (e.g., JumpTap, Millennial Media) weren’t complaining about the lack of competition or a negative impact on their market — quite the opposite, they saw it as a big boost for their businesses — but long-time Google critics argued in favor of blocking the GoogMob deal.
At the time of the acquisition Google’s own mobile display ad business was generally weak, which partly explains the transaction, while AdMob was one of the leading independent mobile ad networks. However now it appears that there may be some problems for the acquisition. According to Bloomberg, the FTC scrutiny may be a bit more than routine:
U.S. regulators are seeking sworn declarations from Google Inc. competitors and advertisers as part of their probe of the Internet company’s bid to buy AdMob Inc., indicating the government may challenge the deal, said people with direct knowledge of the matter.
The potential issue here — I’m not sure this is relevant to the immediate anti-trust analysis — is not that “mobile display advertising” itself would be harmed; there are at least 10 mobile ad networks with some scale in the market. The potential issue that arises is how the AdMob transaction may give Google a more complete and compelling mobile ad offering (search + display) than its main competitors: Yahoo, Microsoft and maybe Facebook — although Facebook will eventually emerge as a significant mobile ad platform in my opinion.
Yet those competitors have substantial mobile assets themselves. Yahoo operates one of the largest mobile ad networks in the market and offers mobile search advertising as well. Microsoft is also quite formidable, with mobile search reach soon to include Yahoo’s and a massive search and display ads deal with the largest US mobile carrier Verizon, which has 91 million subscribers. For its part Facebook already has 100 million daily mobile users, and half of the company’s 400 million users have accessed the site via mobile devices.
Approval or challenge will turn in part on how the market is “scoped” and defined. Opponents will probably try and argue that while mobile display itself remains competitive if such a deal goes through the larger competitive outlook for digital advertising generally is potentially adversely impacted because it gives Google even more reach and scale overall vs. competitors. But that’s a challenging argument to successfully make for some of the reasons I’ve already articulated.
Does Google buying AdMob remove a competitor from the market? Yes; Google and AdMob were display ad competitors in mobile, despite Google’s arguments to the contrary. But the mobile display segment remains vital and highly competitive nonetheless.
This is a strange case: the deal’s principal opponents would not appear to be AdMob’s immediate competitors, who benefit from the publicity around the transaction, but general Google critics who don’t want Mountain View to become any more powerful than it already is.
Related Topics: Google: Critics | Google: Legal | Google: Mobile | Top News
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