Thursday, April 08, 2010

Senator Calls for Close FTC Scrutiny of Google’s Acquisition of Mobile Ad Provider AdMob

This posting was written by Cheryl Beise, Editor of CCH Guide to Computer Law.

A key U.S. Senator this week urged the Federal Trade Commission to closely scrutinize Google’s proposed acquisition of mobile advertising service provider AdMob. Senator Herb Kohl (Wisconsin), Chairman of the Senate Judiciary Committee’s Subcommittee on Antitrust, Competition Policy, and Consumer Rights, expressed his concerns in an April 6 letter to FTC Chairman Jon Leibowitz. Shortly after Google announced its acquisition of AdMob for $750 million last November, the FTC requested further information.

Senator Kohl pointed out that the deal’s critics argue that the combination would allow Google to “leverage its dominance of PC-based search advertising market into the emerging mobile advertising market.” Google-AdMob’s combined market dominance potentially could result in higher mobile advertising prices and lower revenues for applications developers, Kohl said.

Google and AdMob contend that the mobile advertising market is too nascent to determine if any one transaction will result in dominance. According to Senator Kohl, however, the stakes are too high to avoid protecting competition in an emerging market where revenues are predicted to leap from $416 million in 2009 to $1.56 billion in 2013. “[T]he incipiency of the smart phone advertising market is not in itself a reason for the FTC to desist from taking any necessary action to enforce the antitrust laws or protect competition,” Senator Kohl wrote. Advertising accounted for 97% of Google’s $23.7 billion in revenues in 2009.

Senator Kohl also urged the Commission to ensure that consumers’ privacy would be safeguarded if the deal is approved. “[T]he combined firm will gain access to a treasure trove of data on millions of consumers’ behavior, search and product preferences,” Senator Kohl noted.

Senator Kohl’s letter arrived amidst news reports that FTC lawyers are preparing to challenge the Google-AdMob deal on antitrust grounds. Any action taken by the FTC would need to be cleared by the agency's Bureau of Competition and approved by the FTC Commissioners.

No comments: