FTC To Take A Closer Look At Google-AdMob Transaction
The 30-day window for the FTC’s review of Google’s $750 million acquisition of AdMob is now up and the regulatory agency has decided it’s going to take a closer look at the impact of the deal (“second request”) on the nascent but rapidly evolving mobile advertising sector. This means that the FTC will be gathering […]
The 30-day window for the FTC’s review of Google’s $750 million acquisition of AdMob is now up and the regulatory agency has decided it’s going to take a closer look at the impact of the deal (“second request”) on the nascent but rapidly evolving mobile advertising sector. This means that the FTC will be gathering more information from Google, AdMob and potentially others.
According to the Google Public Policy blog:
As we said when we announced the deal, we don’t see any regulatory issues with this deal, because the rapidly growing mobile advertising space is highly competitive with more than a dozen mobile ad networks.
That said, we know that closer scrutiny has been one consequence of Google’s success, and we’ve been talking to the U.S. Federal Trade Commission over the past few weeks. This week we received what’s called a “second request,” which means that the FTC is asking for more information so that they can continue to review the deal.
While this means we won’t be closing right away, we’re confident that the FTC will conclude that the rapidly growing mobile advertising space will remain highly competitive after this deal closes. And we’ll be working closely and cooperatively with them as they continue their review.
Google has the dominant mobile search engine; Nielsen ranked “Google Search” the top mobile website in the US in 2009. Yahoo Mail was second.
Google also benefits directly and indirectly from the proliferation of Android devices — there may be as many as 50 in the market next year — and it appears poised to release the first Google-branded handset (Nexus One) to the market in January. By all accounts and measures Google is beating its search and other online competitors to mobile leadership.
I wrote previously that the Google acquisition of AdMob was a “watershed moment for mobile advertising.” I wrote that from the perspective of validating mobile advertising and to also explain that mobile has become highly strategic for Google:
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.”
There are some critics of Google who believe that the FTC should block the transaction. And there are a number of privacy advocates who fear Google’s capacity to bring together huge amounts of user behavior data from online and mobile and combine that (eventually) with third party or public databases.
I believe that privacy is something we must all be concerned about in this world of consolidating data and databases. However it’s not a part of the anti-trust review process; it’s something that needs to be handled separately by regulators and legislators.
While it was probably inevitable that a proposed acquisition of this size and visibility would draw scrutiny as a matter of routine — given Google’s size and success — the question here is: does AdMob’s acquisition adversely impact competition in the market?
Google, as you’d expect, argues no:
Mobile advertising is a rapidly growing and competitive space, and Google and AdMob are currently specializing in different areas. Though Google offers many forms of mobile advertising, its focus to date has been on mobile search ads, while AdMob’s focus has been mobile display ads and in-application ads.
As a practical matter that’s not entirely accurate; “focus” is the operative word in that last sentence. AdMob was simply much better and farther along than Google in mobile display. But Google had not long ago rolled its own program (AdSense for mobile).
AdMob’s disappearance as an independent player in mobile display doesn’t make the market substantially less competitive; there are are many other networks that include Quattro, Millennial Media, JumpTap, Mobclix (an exchange), AOL-owned Third Screen, Nokia-owned Enpocket, Yahoo, Microsoft among a number of others. In other words there is no shortage of mobile ad network competitors.
Yahoo and Microsoft, for their part, could equally use consumer data and enable display ad buying across online and mobile in the same way that AdMob will ultimately enable Google to do. These companies also have mobile search assets that could be leveraged as well. The central “problem” from a competitive standpoint is that Google is executing faster and more effectively than its competitors.
How do you regulate that?