November 13, 2007 9:52 AM PST

EU extends review of Google-DoubleClick merger

European antitrust regulators will conduct a more extensive, second-phase review of Google's pending merger with DoubleClick, the EU announced Tuesday.

As part of the investigation, European regulators will delve in greater detail into whether a merger between search giant Google and online ad titan DoubleClick would harm competition. The regulators will determine whether to let the deal go through as is, let it pass with modifications, or veto the merger. The European Commission, the EU's antitrust watchdog, expects to make a final decision by April 2.

Google CEO Eric Schmidt said the company was "obviously disappointed" in the decision to extend review of the deal.

"We will continue to work with the Commission to demonstrate how our proposed acquisition will benefit publishers, advertisers, and consumers," Schmidt said in a statement. "We seek to avoid further delays that might put us at a disadvantage in competing fully against Microsoft, Yahoo, AOL, and others whose acquisitions in the highly competitive online advertising market have already been approved."

In making the decision to push the $3.1 billion deal into an extended investigation, the Commission cited concerns about the merger's impact on competition in the online advertising space--and potential subsequent harm to consumers--as the driving issue.

"The Commission's initial market investigation indicated that the proposed merger would raise competition concerns in the markets for intermediation and ad serving in online advertising," the European Commission's competition unit said in a statement.

The statement added that the decision to extend the review process "does not prejudge the final result of the investigation."

Over the past 10 years, the Commission has pushed only about 3 percent of its cases into a second-phase review. Of that group, the vast majority are allowed to go through either as the merger plans are originally stated or with some modifications, such as a divestiture of a division or subsidiary.

Last year, 356 cases came before the Commission in which it had to decide whether to approve the deal or move it into a second-phase review. Of that group, 13 cases--or 3.7 percent--were sent on to a second-phase review. The Commission required 6 of those deals to be altered in order to receive approval; 4 were allowed to move forward with no changes. The other 3 cases were pushed into 2007 for a decision.

Google, which announced its DoubleClick $3.1 billion merger agreement in April, is seeking to accelerate its display-ad business by offering a centralized system that gives advertisers and media companies the ability to manage their search and display-ad campaigns.

One competitor, Microsoft, has gone before Congress to testify against the deal, citing antitrust concerns. Redmond, which closed its $6 billion purchase of advertising company Aquantive in August, declined to comment on the EC's decision Tuesday.

Regulators with the U.S. Federal Trade Commission are also reviewing the deal, although their timetable is less clear. Early this month, Commissioner Jon Leibowitz said the agency is working "as expeditiously as possible given the complexity of the deal" and is focusing its analysis on the deal's competition, as opposed to privacy, repercussions.

Reassuring consumers
Consumer privacy advocates, both in the United States and in Europe, have sounded alarms about the deal. They argue that combining the two companies will consolidate too much personal information--for example, about individuals' search histories and Web surfing habits--in one company's hands. Google has maintained that user privacy would not be compromised by the deal.

Jeff Chester, executive director of the Center for Digital Democracy, which opposes the merger, applauded the EU's decision. He said European regulators should prohibit Google from making the buy--or at least subject the company and its "vast treasure trove of consumer data" to "meaningful safeguards."

"Consumers need to be assured that they won't be unfairly treated in terms of pricing and choice when buying online," he said in a statement. "Advertisers will need protections to ensure that online marketing remains both affordable and competitive, especially when using Google."

The Commission's statement did not mention privacy concerns as part of its investigation, only "whether the proposed transaction would significantly impede effective competition within the European Economic Area or any substantial part of it."

In recent years, the European Commission has become a key player in antitrust matters related to questions of monopolies and competition, antitrust attorneys say. Its recent success in its historic antitrust case against Microsoft is a prime example, they note.

The European Commission and U.S. antitrust regulators have generally been in step when it comes to evaluating mergers, say antitrust attorneys. One exception to that was General Electric's megamerger proposal to acquire Honeywell International in 2001.

U.S. antitrust regulators approved the deal, only to see it nixed by the European Commission. The deal needed approval from both sides of the Atlantic; otherwise, it would have been impossible for the merged entity to operate on a global basis. GE and Honeywell eventually withdrew their merger plans, marking the first time the Commission had blocked a merger between two U.S. companies. Google and DoubleClick are both based in the United States.

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8 comments

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This is very bad.
I can see google secretly installing software with shady unethical legal agreements.

EXAMPLE:


By using google.com you agree to accept and have software downloaded to be installed on your pc.
You agree not to modify or reverse engineer our software that records your website visits and keyword keystrokes.
Posted by inachu (963 comments )
Reply Link Flag
Google is becoming too sales driven....you think?
It seems that when I want to find out information about something that Google seems to return results mostly trying to sell me something. I thought that was what froogle.com was for.....

I was trying to find out what SAS dual port drives were all about but Google just returned a bunch of links to people wanting to sell drives. I used Ask.com and was able to find a paper on the technology from Hitachi.

Yes Google is making lots of money selling link position and click throughs but as it stops functioning as a true search engine and just return links to stores it will quickly become my second search engine.
Posted by stlwest (72 comments )
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Bad news for Big Brother Google is good news for consumers -nt
no text
Posted by john55440 (1020 comments )
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EU is stoopid.
EU hatin on another American sucess story. What else is new. Is there a money amount that they go after? Microsoft first, now Google? Why does the EU intervene on every big US corp?
Posted by tcardone05 (44 comments )
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American business no business of EU
Since when do the mergers between two US companies require EU approval? If they don't like it, then that's tough. Their economies have been sinking saved only by loans from the US Federal Reserve. If they are gonna stick their noses where they don't belong, then I say let their economies falter.
Posted by partytildawn-20159620461052270 (38 comments )
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EU has alot of say
Although these are American companies, if EU does not approve the merger, Google cannot do business with doubleclick in Europe and that would prove very very difficult in the internet age. In the past when EU disapproves the merger but FTC does the merger doesn't go on. If you read articles about this, I don't know people bring this up... It actually makes alot of sense. We live in a global economy now. Not like 50 years ago.
Posted by irperez (59 comments )
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How can EU stop this...
If the US government approves it, how can EU stop it when both companies are US companies? Sure, EU can forbid mixing the data in EU, but they can't block the merger.
Posted by hawkeyeaz1 (569 comments )
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We have stake in this merger
Some of you are asking why are the Europeans are interested in this merger.

First, Google has a major office in Dublin and sub-offices in other European countries. Plus,both parties have major customers in Europe, Google with their mapping programs and DoubleClick is one of the biggest Internet advertisers, with many customers like the Guardian newspaper.

Secondly, there is a concern over this merger whether it will sifter competition in the on-line advertising business. Unlike America, where there is concern over customers, in Europe there is concern over competitors, and whether it will lead to a distorted playing-field.

If you thought, it was bad against American companies, think over the European companies who were forced to give back billions of euro worth state aid, like France Télécom, Deutsche Telekom, etc.

You have to remember the famous GE-Honeywell merger, which collapsed with millions of euro were spend on lobbyists (Brussels has the second highest number of lobbyists in the world, after Washington DC), meetings with commissioners, talks with Bush to pressure the European Commission to allow to merger etc. Notably, it forced GE to sack Jack Welch, and ruin his second marriage.

On the European have the American debt, yes we have your debt, but you have some of our debt as well. It's a two-way process.
Posted by eurobloke (19 comments )
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