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The European Commission, which announced last week that it has pushed Google's merger proposal into its more rigorous "second phase" review, tends to follow two lines of investigation--current and future markets--when it looks at the antitrust implications of mergers. American trustbusters, on the other hand, take a narrower view.
For Google, that means its $3.1 billion planned merger is likely to pass antitrust muster in the United States, but faces a much tougher sell in Europe.
"Based on what I've read, this is not an acquisition that will be of great concern to U.S. authorities," said Beth Farmer, an antitrust professor at Pennsylvania State University's Dickinson School of Law. "In my opinion, I think the U.S. will allow it to go through since no one has characterized it as a horizontal merger."
But in Europe, merger proposals largely fall into one of two buckets. One is a non-horizontal merger, in which two companies in compatible but different lines of businesses are seeking to expand into new markets by merging, such as America Online's acquisition of Time Warner. The other type of merger is a horizontal merger, in which two companies in largely identical businesses are seeking to capture a larger bite of the market, as in the Oracle-PeopleSoft merger.
U.S. antitrust regulators have largely focused on challenging only horizontal mergers--to the point that U.S. courts have not ruled on a single non-horizontal merger in three decades. Not so, in Europe.
Both Google and DoubleClick have ad serving businesses: Google's AdSense serves ads to sites in its publisher network, and DoubleClick offers an ad serving and ad management product called Dart for publishers, advertisers, and enterprise customers. But Google's pay-per-click text ads are generated from keyword searches, or based on the context of a Web site, whereas DoubleClick places banner ads on sites.
DoubleClick recently launched an advertising exchange, a marketplace that matches sellers of inventory, like Web site publishers, with buyers, such as advertisers or ad networks. And DoubleClick has a search engine marketing business called Performics.
As part of its second-phase investigation, the European Commission said it will look at the possibility that DoubleClick could have grown into an effective rival to Google in the online ad "intermediation" market. It said it will also investigate whether combining "the leading providers of respectively, on the one hand, online advertising space and intermediation services, and, on the other hand, ad serving technology, could lead to anticompetitive restrictions for competitors operating in these markets and thus harm consumers."
"It's about DoubleClick's toolset and how that plays into Google's business," said Dan Wall, an antitrust attorney for Latham & Watkins who represented Oracle in its successful bid to win court approval for the acquisition of PeopleSoft. "You have a competitor who is potentially locking up something valuable, and the concern is that the tool set won't be available to others."
If a substantial number of Google and DoubleClick customers say they are going to lose choice and be dependent on one main source, then that will cause the Commission to oppose the merger, said Ted Henneberry, a lawyer in the antitrust practice at Heller Ehrman in London who until last year was a member of the Irish Competition Authority.
"The key issue is going to be the extent to which the companies approach the same general market. The Commission will have to wrestle with the issue of are these, for the most part, complementary vehicles, or are they really competing vehicles? Are they really alternatives for advertisers and Web sites?" Henneberry said. However, he noted, if customers say the combination provides one-stop shopping, then that will be in Google's favor.
Although the Commission has rarely blocked a merger outright over the past decade, Google faces challenges, antitrust attorneys say.
"This deal raises very serious concerns. I would not assume it will be permitted," said Thomas Vinje, an antitrust attorney with Clifford Chance in Europe.
European antitrust regulators will issue a decision by April 2 on whether to block or allow the deal to go through. Meanwhile, Google still isn't off the hook in the United States. The Federal Trade Commission notified Google in May that it needed more information to evaluate the DoubleClick merger, as part of its "second request for information." The FTC will render a decision on whether to challenge the merger or allow it to proceed within 30 days after Google has certified it has complied with the FTC's second request. (Google complied with the request on November 14, a company spokesman said.)
See more CNET content tagged:
DoubleClick Inc., ad serving, merger, antitrust, SEM
- Google-Doubleclick
- by aintnorainbowdorothy November 21, 2007 12:45 PM PST
- I really don't know about the person above, how he was put on the 'terrorist' list, nor any of his particulars. I do know that the Google-Doubleclick merger should not be allowed to go forward. Microsoft, since it was deemed a monoply, was stomped on by the jack-booted EU. That means they left out several things that should have been included in various editions of Vista sold in the EU. I don't know what, nor care, happened in Great Britain, the only major country in Europe not to join that goofy group. Google, with the addition of Doubleclick, would be no different. The combination could easily put Ask.com out of business. After all, directing advertisers away from that search engine would be easy with the combination. Microsoft has too much money to be screwed with easily, and could probably get injunction after injunction to put the merger on hold, even if only temporarily. Anti-trust law in the US is a murky area. Google-Double Click might win, but think of the publicity. As for 'Do No Evil', does anyone out there really believe that? I know I don't.
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- Think Again
- by digitalknow December 11, 2007 2:02 AM PST
- Let?s clear up the details:<br /><br />Microsoft recently acquired one of DoubleClick's largest competitors :: AQuantive (AQNT). I find it interesting that you would be concerned about Microsoft's ability to compete in the market with a DoubleClick/Google merger. Without such a merger, guess who wins again? AQuantive not only serves ads but also holds Avenue A Razor fish - a leading online advertising agency. With Microsoft controlling a major ad agency, how will online strategy change for those non Microsoft clients? How can you own an agency that promotes brands other than yours without giving preferential treatment to your corporate brand? The most talented at Razor Fish are allocated to MSFT brands. I would move my ad dollars to an Ogilvy or a small boutique if I were Disney or Mercedes.<br />Also, don?t forget that AQNT also owns DRIVE PM. Search. You have a media property (Microsoft) who purchased an ad server (AQNT ? ATLAS), an ad agency (RAZOR FISH) and a search tool (DRIVE PM). <br /><br />How can you compare this to DCLK/GOOGLE? Google yes is a Microsoft. But what is a DoubleClick? They only have one of the three components of AQNT ? ad serving (DART IS A COMPETITOR TO ATLAS). How did MSFT manage to go through? Makes no sense to me?<br /><br />Microsoft recently acquired one of DoubleClick's largest competitors :: AQuantive (AQNT). I find it interesting that you would be concerned about Microsoft's ability to compete in the market with a DoubleClick/Google merger. Without such a merger, guess who wins again? AQuantive not only serves ads but also holds Avenue A Razor fish - a leading online advertising agency. With Microsoft controlling a major ad agency, how will online strategy change for those non Microsoft clients? How can you own an agency that promotes brands other than yours without giving preferential treatment to your corporate brand? The most talented at Razor Fish are allocated to AQuantive. I would move my ad dollars to an Ogilvy or a small boutique if I were Disney or Mercedes. <br /><br />With regards to Ask, they are still a tier 3 media property and last I checked, they manage to gain a good portion of media share based on advertiser's needs' to diversify. I would be more concerned about Mr. Dillers split and how ask will compete in the future....
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