FTC approves Google-AdMob deal

In what comes as a bit of a surprise, the FTC will not stand in the way of Google's purchase of mobile-ad company AdMob, saying the deal would not harm competition.

Tom Krazit Former Staff writer, CNET News
Tom Krazit writes about the ever-expanding world of Google, as the most prominent company on the Internet defends its search juggernaut while expanding into nearly anything it thinks possible. He has previously written about Apple, the traditional PC industry, and chip companies. E-mail Tom.
Tom Krazit
3 min read

Updated 10:06 a.m. PDT throughout with additional details and background.

The Federal Trade Commission has backed down from a fight that once seemed inevitable, giving Google the go-ahead to acquire mobile-advertising leader AdMob for $750 million.

"The Federal Trade Commission has closed its investigation of Google's proposed acquisition of mobile advertising network company AdMob after thoroughly reviewing the deal and concluding that it is unlikely to harm competition in the emerging market for mobile advertising networks," the FTC said in a statement Friday morning. Regulators appeared to be on the brink of holding up the deal based on the fact that Google would have acquired a significant advantage in the mobile-advertising space, but apparently changed their minds.

Apple and its iAd announcement seem to have weighed heavily on the final decision. "As a result of Apple's entry (into the market), AdMob's success to date on the iPhone platform is unlikely to be an accurate predictor of AdMob's competitive significance going forward, whether AdMob is owned by Google or not," the FTC said. The final vote was 5-0 in favor of allowing Google to proceed.

Google took the high road in its own statement on the decision, after lobbying developers through the review process to support its deal. "We're excited to work with Omar Hamoui and his talented team at AdMob to develop new mobile advertising solutions for marketers, mobile app developers and mobile publishers...As mobile phone usage increases, growth in mobile advertising is only going to accelerate. This benefits mobile developers and publishers who will get better advertising solutions, marketers who will find new ways to reach consumers, and users who will get better ads and more free content."

AdMob agreed to become part of Google in November, but the deal has been held up ever since by concerns that a Google-AdMob combination would join together the world's most dominant desktop-Web advertising company with the leading mobile-advertising company, just as a tectonic shift from desktop to mobile as the platform of choice starts to gain traction.

Google's argument all along has been that mobile advertising is a very new and immature industry, making it difficult to judge whether the leaders of today's mobile-advertising world will necessarily hold that position as the technology matures. There's little doubt people are spending more time online through handheld mobile computers, but mobile advertising is a challenge because of the small size of mobile screens and the technology limitations of the device.

Apple's iAd announcement was immediately heralded by Google and others as evidence that innovation in mobile advertising would not come from just one company, and that appears to have been the tipping point for the approval of the deal. Both Apple and Google sought AdMob, but Google's $750 million offer was apparently too rich for Apple's blood, which settled for Quattro Wireless for a much lower price.

Most surprising about Friday's decision were the steady drip of leaks prior to the announcement that the FTC had essentially already decided to block the deal. Several developers contacted as part of the FTC's review said that the agency appeared to have already made up its mind and was merely looking for anything to support its viewpoint, and others said the agency did not appear to clearly understand the issues currently affecting the mobile-advertising market.

And it's no secret that federal regulators have had a close eye on Google for years, including scrutiny over its DoubleClick acquisition, proposed ad deal with Yahoo, and Google Books settlement with authors and publishers. At some point, regulators like to regulate, and it had appeared that the AdMob deal would have signaled the first big showdown between trustbusters and the search giant.

Google's stock was up on news of the deal, gaining $4.91 or just over 1 percent in attaining a midday trading value of $479.92.