With Europe's OK, Google closes DoubleClick acquisition

Updated on March 11 at 8:52 a.m.

European antitrust regulators on Tuesday approved Google's $3.1 billion merger with DoubleClick, paving the way for a blockbuster deal in Internet search and publisher-based advertising tools.

Approval by the European Commission, which came without conditions, had largely been expected to occur this week. The Commission's announcement comes three weeks before its April 2 deadline, in which it had to determine whether to nix the deal.

With the Commission's decision in place, Google announced on Tuesday that it has formally closed its merger with DoubleClick.

"We are thrilled that our acquisition of DoubleClick has closed," Eric Schmidt, Google's chief executive, said in a statement. "With DoubleClick, Google now has the leading display ad platform, which will enable us to rapidly bring to market advances in technology and infrastructure that will dramatically improve the effectiveness, measurability, and performance of digital media for publishers, advertisers, and agencies."

According to the Commission's announcement, the deal was approved based on several factors:

The Commission's in-depth market investigation found that Google and DoubleClick were not exerting major competitive constraints on each other's activities and could, therefore, not be considered as competitors at the moment.

Even if DoubleClick could become an effective competitor in online intermediation services, it is likely that other competitors would continue to exert sufficient competitive pressure after the merger. The Commission therefore concluded that the elimination of DoubleClick as a potential competitor would not have an adverse impact on competition in the online intermediation advertising services market.

The Commission also analyzed the potential effects of nonhorizontal relationships between Google and DoubleClick, following concerns raised by third parties in the course of the market investigation.

These relationships concern DoubleClick's market position in ad serving, where Google, by controlling DoubleClick's tools, could allegedly raise the cost of ad serving for rival intermediaries, and Google's market position in search advertising and/or online ad intermediation services, where Google could allegedly have required purchasers of search ad space or intermediation to also purchase DoubleClick's tools.

The Commission found that the merged entity would not have the ability to engage in strategies aimed at marginalizing Google's competitors, mainly because of the presence of credible ad-serving alternatives, to which customers (publishers/advertisers/ad networks) can switch--in particular, vertically integrated companies such as Microsoft, Yahoo, and AOL.

The market investigation also found that the merged entity would not have the incentive to close off access for competitors in the ad-serving market, mainly because such strategies would be unlikely to be profitable.

Google's rivals such as Microsoft, as well as privacy groups, were hoping that the Commission, as well as U.S. antitrust regulators, would kill the Google-DoubleClick deal. But the Commission's passage clears the acquisition's last large regulatory hurdle.

Last December, the Federal Trade Commission gave the online-advertising megamerger its blessing.

U.S. regulators noted that Google and DoubleClick are not direct competitors and that the markets within online advertising evolve quickly. As a result, the FTC did not find evidence that competitive harm would arise from the merger.

The decision by the FTC had come after the European Commission determined in November that it would take a deeper look into the proposed merger. Some antitrust experts at the time noted that Google could face a difficult time in Europe, given differences in the way federal and European regulators evaluate mergers.

Opponents of the merger weigh in
"U.S. and European policymakers must reform the antitrust process to reflect the realities of the digital-market era, where competition, data collection, and content creation are seamlessly intertwined," the Center for Digital Democracy, which had presented its opposition to the FTC and the Commission, said in a statement Tuesday. "In today's digital marketplace, the company that controls the most data about consumers, and has the global reach to connect to them, raises both anticompetitive and privacy concerns. An antiquated and piecemeal antitrust approach fails to protect citizens, consumers, and competition."

The organization also cited concerns that the merger would aid Microsoft in its goal to acquire Yahoo. That deal is largely being driven by Microsoft's desire to bolster its online-advertising capabilities.

"Instead of ensuring competition, (the Commission) and the FTC have literally paved the way for the emergence of a global digital duopoly over online advertising," the Center for Digital Democracy stated.

[cmwendy]

Lesson here

If you ain't Microsoft, then the deal gets approved.

Arbitrary and capricious government at its best.

[Vegaman_Dan]

I would disagree

I would believe instead that the EU is merely waiting for all the paperwork to be signed for about one year before crying foul and fining Google $500 million a day or some stupid figure.

It's what they have done before for all the existing antitrust complaints they have. I don't see why they would change their tactics now.

[sadchild]

micro-hoo

we'll see if your words ring true when microsoft ingests yahoo.

it would be a more true statement at this point to say "the deal goes through unless you are sirius and xm".

[fred dunn]

Correct....

You said it all.

[t8]

Think before you speak

If the EU didn't let the deal go ahead, I guess you may have complained about the EU's hatred for American companies.

Anyway the reality is that Google isn't a convicted abusive monopolist. At least not yet anyway.

That is the difference. If Google's history included abuse in the market and toward the consumer, then the EU might think otherwise. But Google is pretty clean in that regard and they actually work well with other companies and even smaller players/websites too.

Microsoft doesn't have a good history that is the real reason why Microsoft is policed so closely.

It isn't a conspiracy. The US government also doesn't have alien beings and UFO's hidden in Area 51.