The chorus of calls for antitrust review of Google’s $3.1 billion purchase of advertising network operator DoubleClick comes at a very early time in the process.
Opposition To DoubleClick Deal Oddly Timed
Microsoft, AT&T, and Time Warner have all voiced opposition to Google buying DoubleClick in an all-cash $3.1 billion acquisition. Claims have been raised that the agreement would violate antitrust laws, and give Google far too much power in the marketplace.
There may or may not be something material to such claims. But to Dale Hershey, an antitrust attorney with Eckert Seamans, the cacophony of complaints comes very early in the process.
“It’s as though they want to register a higher level of concern,” Hershey told Murdok about the public commentary made by Microsoft and AT&T. Executives from those companies told news outlets of their concerns within 48 hours of the deal being announced.
How the Google purchase of DoubleClick affects market power in online advertising will be the concern for regulators who could decide to look into the acquisition. Hershey said it would be within 30 days of the filing of intent to purchase that either the FTC or Department of Justice could ask for more information.
While basic antitrust law is solidly established, the online ad market is relatively new. We asked which agency, FTC or DOJ, would be more likely to look into the deal. Hershey said that FTC probably has more tech expertise in-house by virtue of their work, but DOJ’s experience with Microsoft and its antitrust issues make it more likely to be the agency that could pursue an inquiry.
A first round of review would take place, with the antitrust regulators looking at topics like ‘who uses the market’ and ‘what effect could there be on prices’. Advertising customers could be consulted with for their opinion of the potential economic impact of the deal.
With online ads being a new market, the first request for information may not be enough for regulators who need to understand the issue better. A second request for information could take place. Hershey said that in other situations, the second request has been a deal-breaker.
Google could argue that competitive angles will exist even after their purchase. Ben Crain, VP of Media for Rapt, gave Murdok his opinion of this:
The larger question is what opportunities this might present for other technology providers. Without a doubt, publishers will be looking for ad serving alternatives and broader monetization solutions. This will be critical in order to thrive, given the analytically driven basis of competition that has emerged. Publishers are increasingly focused on retaining as much control as possible in the display advertising space, rather than ceding control to a ‘channel master’ such as has emerged in search.
If Google and DoubleClick are faced with an antitrust investigation that compels regulators to make that second request, that could potentially kill the deal. Just as Microsoft and AT&T may want to see happen.
