December 29, 2009

Consumer Groups Want To Block Google’s AdMob Purchase

Consumer Watchdog and the Center for Digital Democracy pushed for the US Federal Trade Commission (FTC) to block Google's proposed acquisition of the mobile advertising company AdMob (a provider of advertising services for mobile phones) on Monday.

In a joint letter sent to the FTC, both groups urged the FTC to stop Google from acquiring AdMob on the basis of antitrust and privacy related issues. The groups posed that the deal would create privacy concerns and also "substantially lessen competition in the increasingly important mobile advertising market."

The move came after Google said last week that the FTC was seeking more information about its proposed $750,000,000 acquisition of AdMob. The consumer groups urged the FTC to use its "statutory and regulatory authority to oppose the merger." The groups also said that "instead of acquiring dominance in this increasingly important market through legitimate competition and innovation, Google is buying its way to a preeminent position."

Both Consumer Watchdog and the Center for Digital Democracy believe that the Google/AdMob merger would raise considerable privacy issues that must be addressed by the FTC. "Permitting the expansion of mobile advertising through the combination of these two market leaders without requiring privacy guarantees poses a serious threat to consumers," the nonprofit groups said.

Although Google amasses data by tracking behavior of consumers as they use the search engine and other online services, the Internet giant said in a statement that it has "a track record of providing strong privacy protections and tools, like the new Dashboard, for users to take control or opt out of data collection, and it will apply the same approach to privacy following this acquisition."

Google, the No. 1 online search engine, said that the FTC requested additional information about its deal with AdMob last week. In the absence of a second request, antitrust regulators usually approve a deal within 30 days. If approved, the AdMob deal will be Google's third most expensive purchase behind the $3.1 billion acquisition of DoubleClick and the $1.65 billion purchase of YouTube.

Despite concerns that the new acquisition would weaken the competition in the mobile advertising market, Google said in its statement that it was certain that mobile advertising would remain competitive.

According to Paul Feng, a group product manager with at Google, a "second request" for information from the FTC has come in. "While this means we won't be closing right away, we're confident that the FTC will conclude that the rapidly growing mobile advertising space will remain highly competitive after this deal closes," Feng said.

This has not been the first time Google has received scrutiny from US antitrust regulators. Earlier this year, Google was forced to revise its legal settlement with authors and publishers over its digital book-scanning project amid objections from the US Justice Department. Last year, Google was forced to cancel a proposed advertising agreement with Yahoo! amid Justice Department anti-trust concerns.

Google generated roughly $22 billion in revenue in 2008 by selling ads that appear alongside it Internet search results.


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