FTC regulators had been reviewing the proposed merger for eight months for possible antitrust violations, after Google announced plans in April to acquire the online ad-serving company. The commission, in issuing its decision to let the merger move forward, said the companies are not direct competitors in any relevant market.
"The markets within the online advertising space continue to quickly evolve, and predicting their future course is not a simple task...Because the evidence did not support the theories of potential competitive harm, there was no basis on which to seek to impose conditions on this merger," according to an FTC statement.
The approval for the merger came in a 4-1 vote by regulators. In her dissent, Commissioner Pamela Jones Harbour said she was inclined to make "alternate predictions about where this market is heading, and the transformative role the combined Google/DoubleClick will play if the proposed acquisition is consummated." She said she determined that the two companies' product markets overlap in key ways that could "substantially lessen competition" down the road.
that it would give Google an unfair advantage in search and publisher-based advertising tools.
Google, in its response to the FTC ruling, cited the merger's potential benefits for consumers.
"The FTC's strong support sends a clear message: this acquisition poses no risk to competition and will benefit consumers," said Eric Schmidt, Google's chairman and CEO. "We hope that the European Commission will soon reach the same conclusion, and we are confident that this deal will deliver more relevant ads for consumers, more choices for advertisers, and more opportunities for website publishers."On Wednesday, Microsoft and entertainment media giant Viacom announced a
The search titan said it cannot formally close its DoubleClick acquisition until it gets clearance from European regulators, who are expected to announce their findings on April 2. The Australian Competition and Consumer Commission approved the deal in October.
Serving up ads
Both Google and DoubleClick have an ad-serving business, when defined in a larger sense. But when drilling down, the two companies operate in different segments of the ad-serving market.
Google's AdSense serves up to Web sites within its publisher network, offering up pay-per-click text ads that are generated from keyword searches, or based on the context of a Web site. DoubleClick, which markets a product called Dart to publishers, advertisers and corporate customers, places banner ads on Web sites. It also runs an advertising exchange, which matches advertisers and advertising networks with Web sites that sell ad space, and it operates search-engine marketing business Performics.
The FTC's decision to allow the Google-DoubleClick merger to proceed falls in line with actions over the past three decades, regarding nonhorizontal, or vertical, mergers. These mergers involve companies in adjacent businesses and are designed to push the buyer into a new market, whereas horizontal mergers involve two companies in exactly the same line of business and result in the removal of a competitor.
The commission evaluated the Google-DoubleClick under three nonhorizontal merger theories that examine potential harm to competition.
Under one theory, the FTC determined the two companies were not direct competitors and, as a result, would not eliminate substantial or direct competition between the two.
Second, regulators reviewed the merger to see if it would eliminate potential competition that would be beneficial. The FTC found that even if Google were successful in its efforts to enter the third-party ad-serving markets, there are a number of players in the industry and competition is likely to become fiercer.