Tuesday, November 13, 2007

EC to Investigate Google’s Acquisition of DoubleClick

This posting was written by John W. Arden.

The European Commission will investigate whether Google’s proposed acquisition of DoubleClick would significantly impede effective competition within the European Economic Area, according to a November 13 announcement.

The Commission’s initial market investigation indicated that the proposed merger of the two U.S. firms would raise competitive concerns in the markets for intermediation and ad serving services. The Commission has 90 working days (through April 2, 2008) to make a final decision on the merger. The decision to make an in-depth inquiry does not affect the final result of the investigation.

In particular, the Commission will investigate whether, without the transaction, DoubleClick would have grown into an effective competitor of Google in the market for online ad intermediation.

It will also address whether the merger—which combines the leading providers of online advertising space and intermediation services (Google) and ad service technology (DoubleClick)—could lead to anticompetitive restrictions for competitors operating in these markets, which would harm consumers.

Google operates an Internet search engine that offers search capabilities free of charge and provides online advertising space on its own websites, according to the Commission. It also provides intermediation services to publishers and advertisers for the sale of online advertising space on partner websites through its “AdSense” network.

DoubleClick sells ad serving services, management, and reporting technology worldwide to website publishers and advertisers to ensure that advertisements are posted on relevant websites and to report on the performance of the advertisements.

The merger is currently being reviewed by U.S. Federal Trade Commission. On November 6, the American Antitrust Institute issued a white paper stating that the merger “raises serious competitive issues under several different antitrust theories.” The white paper maintained that “there is a good argument that Google and Double-Click are horizontal competitors in two relevant markets”—the market for distributing or brokering online advertising space of third-party web sites and the market for publisher “ad serving tools.”

Further details on the AAI white paper appear in a November 6 posting on “Trade Regulation Talk.”

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