WASHINGTON--It was supposed to be a tame gathering of economists evaluating the marketplace implications of Google's planned $3.1 billion purchase of ad tech firm DoubleClick, but a think tank event here on Wednesday briefly threatened to devolve into yet another.
It began calmly enough, with a buffet lunch and presentations from Harvard University's Thomas Eisenmann, Stanford University's Robert Hall, the University of Pennsylvania's Lorin Hitt and David Evans of the private analyst firm LECG. Invited by the American Enterprise Institute and Brookings Institution to speak, they each described--at times in dense economics-speak--what a consolidation of Google and DoubleClick would mean for the industry.
Hitt and Eisenmann intentionally didn't take clear sides on the issue but merely raised various questions that regulators eyeing the deal may be wise to consider. Evans, who has been paid by Microsoft to do research on the topic, and Hall, who formerly was a paid Google consultant and has had informal discussions with the search giant on the proposed merger, came the closest to betraying somewhat of a leaning for or against the deal, but even they didn't make any grand proclamations. (Microsoft is among the companies that has openly called for federal scrutiny of the proposed union.)
But all of that didn't stop a brief episode from erupting during the question-and-answer session after the economists' talks concluded.
David Gelfand, the Washington-based attorney representing Google in issues surrounding the deal, stepped up and attempted to put Evans in the hot seat. (Gelfand is also one of the lawyers who has been helping Google in Microsoft's ongoing antitrust enforcement proceedings before a federal judge here.)
In his presentation, Evans had argued there may reason to be concerned about the combination, which he argued is of a "horizontal" nature--that is, melding two firms with similar product lines. A greater concentration of market power can theoretically lead to the merged firm charging higher prices and reducing its output of goods. According to Evans' research, the deal would result in Google and DoubleClick controlling 78 percent of the advertising tools available to publishers and 45 percent of those available to advertisers.
"If that were to happen in this deal, that would be good for your client," Gelfand told Evans, referring to the specter of higher prices. "They're in the same business, they just made a bid for (online ad firm) Aquantive, they're building an ad network, they have a huge display site, they've got lots of things, like a monopoly browser."
Was it more, Gelfand added, that Microsoft was just concerned Google could gain ad-tech prowess that would effectively put its rival out of business?
Evans, who appeared a bit taken aback by the query, mostly punted. "In terms of whether this is a good investment for Microsoft or not," he said, "I'm not going into that."
The think tank event isn't the only place in Washington that was abuzz about the Google-DoubleClick deal this week. Rep. Bobby Rush (D-Ill.), who leads a House of Representatives consumer protection panel, released a letter announcing his intention to open an investigation into the matter and to hold a hearing sometime after Congress' August recess.