September 27, 2007 3:31 PM PDT

On Capitol Hill, Google and Microsoft spar over DoubleClick

WASHINGTON--U.S. senators on Thursday injected themselves into a high-stakes dispute between Google and Microsoft over whether the search giant's proposed acquisition of display advertising company DoubleClick presents antitrust or privacy concerns.

But after the hearing, which lasted almost two hours, it was still unclear where most of the senators stood. The top Democrat and top Republican on the Senate panel seemed more interested in asking questions than adopting the common congressional tactic of forcefully arguing on behalf of Google or Microsoft.

Sen. Herb Kohl (D-Wisc.), the subcommittee's chairman, said at the outset that he would approach the topic with an "open mind," and by the time the hearing ended, that apparently hadn't changed.

"Both sides made very powerful arguments," he told reporters following the proceeding. "What the balance is, myself, I'm not sure."

Sen. Orrin Hatch (R-Utah), the committee's ranking member, was equally hard to read. He repeatedly referred to the online advertising sphere as "very interesting" and said he would have additional questions in writing for fans and foes of the merger.

The lack of political grandstanding meant the bulk of the hearing allowed the well-documented and long-standing rivalry between Microsoft and Google to play out yet again--this time, albeit, in a wood-paneled committee room on Capitol Hill. The companies compete in a wealth of markets, including advertising, search, office applications, instant messaging and mapping.

Seated side by side at a long table facing the mostly empty seats of politicians (it wasn't a lack of interest, Kohl claimed afterward, just a "complicated issue" and a "very busy" day for most of the subcommittee's 11 members), Google chief legal officer David Drummond and Microsoft general counsel Brad Smith outlined a now-familiar set of arguments for and against the estimated $3.1 billion deal announced in April.

"We don't have a unique stranglehold on all of the information out on the Internet for online ad purposes. There are other competitors in this space, (such as) Aquantive, that have the same kind of data."
--David Drummond, Google chief legal officer

In contrast to the lackluster participation from politicians, the public turned out in droves, with scores of men and women in suits forming a line snaking down two hallways. After the limited number of seats rapidly filled up, the committee permitted two rows of people to stand at the back of the room.

Much of the back and forth focused on two major issues: whether Google's acquisition of DoubleClick would diminish competition in the online ad space, potentially raising ad rates, and whether the merger would put Google in possession of massive stores of data on Internet users, thereby posing privacy concerns and stifling other ad companies' abilities to target ads as effectively.

Drummond repeatedly said the deal does not pose antitrust concerns because DoubleClick is not a rival to Google but a complementary business. He said that's primarily because DoubleClick is not in the business of buying and selling ads--rather, it simply provides the tools for displaying them--but Google is. Google's primary motive for purchasing DoubleClick is to strengthen its position in display advertising--that is, serving graphical ads--to supplement its already-dominant position in the text-based advertising market, he said, echoing earlier statements by CEO Eric Schmidt.

Repeatedly making comparisons between his company's proposed merger and Microsoft's $6 billion buyout of Net advertising firm Aquantive, Drummond urged Kohl, who was frequently the only senator present at the hearing, to look at the online advertising space more "holistically."

"We don't have a unique stranglehold on all of the information out on the Internet for online ad purposes," Drummond said. "There are other competitors in this space, (such as) Aquantive, that have the same kind of data."

Microsoft general counsel Brad Smith, for his part, said he sharply disagreed with the assertion that Google and DoubleClick don't compete with each other. He displayed for the committee a poster showing a screenshot of the social-networking site Friendster.com and noted that a single page contained ads delivered both by Google's Adsense network and by DoubleClick.

Google has argued that DoubleClick, with its ad-serving technology, provides the same services to its business that shipping companies such as FedEx or UPS do for Amazon.com. Smith countered by arguing that "Google is already Amazon and is already FedEx, and now they're proposing to buy the post office."

Smith also compared the deal, should it go through, to allowing the New York Stock Exchange and the Nasdaq to combine. "Somebody could build an alternate exchange, but would anybody go there to take their company public?" he asked.

When given a chance to respond, Drummond argued that Smith's statement is "no more true than (the statement that) a company that delivers trucks from, say, the dock to the dealer controls the car or the truck market. It doesn't."

But there were few testy exchanges during the hearing. At one point, Kohl asked Smith whether he was implying that Drummond was not being entirely honest, to which Smith replied, "I'm not going to second-guess his motives," and patted Drummond on the shoulder in a way that suggested he wasn't trying to hurt his rival's feelings.

See more CNET content tagged:
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11 comments

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Pot...Kettle...
When is MS going to learn that it can't keep the sand all to itself in the sandbox????
Posted by `WarpKat (275 comments )
Reply Link Flag
Ditto
How Microsoft can accuse another company of antitrust violations with a straight face is totally beyond me.
Posted by FreddieT (58 comments )
Link Flag
It doesn't matter
who owns DoubleSpam. I'll still block it.
Posted by dvthex (18 comments )
Reply Link Flag
gsmith@caswellsmith.com
For the senators trying to judge the antitrust issues: Doubleclick and Google are indeed direct competitors. Doubleclick resells ad space on web-sites, Google resells ad space on web-sites (Adwords). Corporate advertisers seeking to advertise on the web buy banners and access to Doubleclick's network. Corporate advertisers seeking to advertise on the search engine and content sites buy banners and access to Google's network.
The article states that - Drummond (CEO general counsel) stated that "He said that's primarily because DoubleClick is not in the business of buying and selling ads--rather, it simply provides the tools for displaying them."
Doubleclick's website reads: Coordinates targeted Internet advertising campaigns for advertisers, and provides ad management services, software, and sales for publishers. BTW, this is business of buying and selling ads.
That being said, I do not necessarily believe that this purchase changes Google already dominant position. They already have a monopoly on the small business ad spend. Sounds like the two parties are trying to use analogies that are only confusing the decision makers. Google has been raising its keyword prices and until Microsoft or another firm steps up with a simple search product, will continue to do so. gsmith@caswellsmith.com. Caswellsmith.com is a strategy consulting firm with a new media practice.
Posted by glsmith110 (2 comments )
Reply Link Flag
What did Google and MIcrosoft Expect to Happen Yesterday?
I often wonder if those two Giant Geek companies have come to
the realization yet that a bunch of Senators with a sub-ability to
handle things like Net Neutrality because of a lack of knowledge
would propose to aid in such a debate.

Honestly Microsoft, you run the frickn' OS world. Google, you
run the online world. So with the said, it seems as though this
acquisition of Double Click would only complement Googles
already large presence on the internet.

The truth behind that matter is that in less than five years
companies will start embracing the online powers of Google to
replace that of the "security hole laden" software titles provided
by Microsoft. If anything, Google offers the net users a new level
of security for there information. Security that is constantly
upgraded to better serve that people.

As an IT Consultant that has utilized Googles powers to the
fullest, I would ensure you that the public information is more
secure hanging with Google than with our own Government!

So with the above said the conclusion to this is that Microsoft
will slowly lose ground to Thin Clients utilizing the web for an
OS rather than Windows. This in turn over time would warrant
Windows obsolete.

FYI - It's only advertising!

Justin
Tech01.net
Posted by OneWithTech (196 comments )
Reply Link Flag
You should be ashamed...
As a so-called "IT Consultant" -- where did you get your degree or IT security education -- a crackerjack box - along with the secret decoder ring?

Google AND your government are the biggest threats to security and privacy in the world today.

Do everyone a favor and do some study and research before you make idiotic comments about how secure Google is.

Please DO upload all of your personal documents and files to Google Documents -- they will be happily indexed and kept forever -- just in case the government EVER in the future decides to do some checking up on you.

As part of your research, try this link: <a class="jive-link-external" href="http://docs.google.com/File?id=dchrr3kn_5cdc9q3dc" target="_newWindow">http://docs.google.com/File?id=dchrr3kn_5cdc9q3dc</a> -- it shows an image uploaded as part of a Google document that was supposed to be PRIVATE and never accessible to the public at all. After the document was supposedly deleted, and the trash emptied -- the graphic still remains -- and not only that, is COMPLETELY open to the public.

Yes, Mr. IT Consultant -- tell your clients to use Google's services if you want -- but let's hope that your lawyers are better than theirs when confidential information starts turning up in public thanks to your recommendations.
Posted by milette (13 comments )
Link Flag
A Decision--From These Cowards???
You expect anyone in Congress to make a <i>decision</i> about something? They can't even agree on how to end the most destructive, illegal, misguided and costly war of our generation--something that 70% of the voting public has already agreed upon. Larry Craig can't even decide whether or not he's guilty (or homosexual). Why would you expect Congress to take a stand on a corporate takeover or net neutrality or universal health care?

The only thing these dopes can agree on is to condemn an organization of three million members for using its consitutional right to run a newspaper ad. As I mention <a href="http://dailyrevolution.net/?p=714">here</a>, maybe it's time that <i>we</i> wrote some acts of condemnation ourselves--on Congress.
Posted by bdonohue1 (25 comments )
Reply Link Flag
Google a monopoly? What a joke THAT is
and especially coming form MS who for the past 20 years has destroyed the marketplace through monpolistic practices, just about raped the IT industry of trillions in the process, squeeezed that trillions into about 100 billion or so and put it in the pocket of Gates, all through monopolistic practices.

Come on. MS isn't a monopoly but Google is just because no one gives a rat's behind about any of MS's long string of failed online-ad revenue initiatives and failed attempts at search. MS could compete, if it had the competence. Whos' fault is THAT?

Give me a break.
Posted by asdf (241 comments )
Reply Link Flag
What is the difference between Google & Microsoft?
What is the difference between Google &#38; Microsoft?
Nothing, except their stock symbols. They both stand for information control and making as much profit as possible, which means at our expenses.

Switch to AnooX search engine which stands for information openness since Anoox search results are powered by YOU and me And Anoox is also not-profit-motivated. OTN, they are giving 50% of their profit away for support of Universal health care and 50% to what we suggest.
In case, you can check out anoox at: www.anoox.com
and see everything I said above to be the facts.

Simply put, Google, Yahoo &#38; MS are search engines for the benefit of Wall street, Anoox is a search engine for the benefit of the main street,
Go Go Anoox :)
Posted by Info_Max (52 comments )
Reply Link Flag
Microsoft is whining...
Microsoft should stop whine about this. They only trying to shoulder them selves into the add market. I bet they would have wanted to by DoubleClick but missed the opportunity. Microsoft don't think care about the "consumer interest" they are only interested to make money as everybody else so there is nothing else to this then Microsoft trying to block Google from making more money.
Posted by Karl Viklund (51 comments )
Reply Link Flag
The DoubleClick Deal should be blocked
Google is party to a separate investigation where they have wrongfully and unethically utilized their Natural Monopoly in Search to damage US and Foreign Persons as well as engage in anti-competetive business practices.

In no way should this transaction be allowed.

The transaction will of course close and subsequently an action will apear in international court regarding the Global Scope of Google's malfeasance and lack of good corporate governance. Its effect on the International Community and endangering foreign families through Privacy and Intellectual Property Violations.

Google may win the battle but its inability to more rapidly accept wrongdoing and settle disputes will loose it the war.

Ultimately the merger with Double Click dooms both companies in the Global Internet Marketplace as the high risk posed by Google to Global Peoples will result in circumventing technologies and foreign blockade of the Google Internet brand.

Google is the worlds most dangerous company.

Sincerely,


James Reginald Harris, Jr.
Posted by gurfrip (23 comments )
Reply Link Flag
 

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