Analysis: The FTC clears our acquisition of DoubleClick
Perhaps most importantly, the FTC’s decision publicly affirms what we and numerous independent analysts have been saying for months: our acquisition does not threaten competition in what is a robust, innovative, and quickly evolving online advertising space. In fact, we firmly believe the transaction will increase competition and bring substantial benefits to consumers, web publishers, and online advertisers.
Looking at the FTC's clearance statement, a few key points jump out as noteworthy:
- Transaction was cleared with no conditions. The FTC cleared the acquisition unconditionally, without demanding any changes in or commitments concerning the companies’ business practices. This will allow us to remain flexible as we continue to innovate and provide the best services to our customers and users.
- Google and DoubleClick are not competitors. The FTC stated that its "thorough analysis of the evidence showed that the companies are not direct competitors in any relevant antitrust market." Furthermore, the FTC concluded that the merger would not eliminate beneficial potential competition, writing that "it is unlikely that the elimination of Google as a potential competitor in the third party ad serving markets would have a significant impact on competition." We agree with both of these findings. Google and DoubleClick provide complementary services, and competition between the companies was not necessary to create benefits for consumers. To the contrary, consumers will benefit from the two companies working together and combining our resources.
- Third party ad serving markets are highly competitive. The FTC noted that "the evidence shows that the third party ad serving markets are competitive," and said that "the evidence also shows that firms can and do switch ad serving firms when it is in their self-interest to do so." This is an important finding, because it means that ad serving customers will continue to benefit from innovation and product development by the many players in this space, and that they can always select the ad serving provider that offers them the best services.
- Privacy not a part of the merger review. Though we strongly believe in protecting our users' privacy, the FTC clearance decision reaffirmed the law by noting that privacy concerns played no role in its merger review. This is an important principle, as privacy issues need to be addressed on an industry-wide basis, and not on a company-by-company basis. The FTC wrote, "although such issues may present important policy questions for the Nation, the sole purpose of federal antitrust review of mergers and acquisitions is to identify and remedy transactions that harm competition. Not only does the Commission lack legal authority to require conditions to this merger that do not relate to antitrust, regulating the privacy requirements of just one company could itself pose a serious detriment to competition in this vast and rapidly evolving industry." The FTC also noted, however, "that the evidence does not support a conclusion" that this particular transaction will harm consumer privacy.
- Data combination wouldn't pose problems. The FTC rejected the suggestion from competitors that Google would combine user information with DoubleClick's customers' data to obtain an advantage in the market, writing that the data is owned by DoubleClick’s customers and that "at bottom, the concerns raised by Google’s competitors regarding the integration of these two data sets -- should privacy concerns not prevent such integration -- really amount to a fear that the transaction will lead to Google offering a superior product to its customers." Moreover, "a number of Google’s competitors have at their disposal valuable stores of data not available to Google. For instance, Google’s most significant competitors in the ad intermediation market, Microsoft, Yahoo!, and Time Warner have access to their own unique data stores."
- Advertisers and publishers aren't concerned. The FTC noted that "the clear majority of third parties expressing [competitive] concerns [about the deal] were Google’s current or potential competitors." Additionally, Commissioner Jon Liebowitz noted in his concurring opinion that "my staff and I independently spoke with publishers and advertisers potentially affected by this deal and, somewhat surprisingly, they raised few anticompetitive concerns. In fact, many seem unruffled by the alternatives in the post-merger market." It is telling that while our competitors tried hard to come up with theories of how our customers and partners could be harmed by the deal, those customers and partners themselves did not agree with those theories. In fact, we know that many of these advertisers and publishers are excited about the transaction and look forward to benefiting from it.
But as I said at the outset, perhaps the most important aspect of the clearance decision is its recognition of the fact that both Google and DoubleClick do business in a competitive and rapidly evolving arena. Indeed, as the FTC noted, all of the recent acquisitions that have occurred in the online advertising space have confirmed this. "The entry and expansion of...well-financed competitors has transformed the ad intermediation marketplace over the last six months," the FTC wrote. "All of these firms are vertically integrated, and all appear to be well-positioned to compete vigorously against Google in this new marketplace."
I should also note that, separate from its clearance decision, the FTC this morning released some suggested principles to guide online companies engaging in online advertising. We support the FTC's effort to develop industry-wide standards in this area, and we are studying these proposals carefully.
Receiving clearance from the FTC is of course an important step forward, but it does not mean that we can now close the acquisition. For that, we must also receive clearance from European Commission (EC), which is still conducting its review. We are cooperating fully with the EC and are hopeful that they will soon reach the same conclusion as their U.S. counterparts.
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published @ September 1, 2008