Google wins approval for DoubleClick deal but faces EC challenge

December 20, 2007, 4:25 PM UTC

By Yi-Wyn Yen

The Federal Trade Commission cleared Google’s purchase of DoubleClick Thursday morning, bringing the search giant one step closer to closing the $3.1 billion deal.

After reviewing complaints from Microsoft (MSFT) and AT&T (T) that Google’s acquisition of  DoubleClick, which serves graphical ads, would create a monopolistic ad company, commissioners voted 4-1 in favor of Google. The antitrust regulators argued that despite Google’s (GOOG) powerful hold in paid search and DoubleClick’s dominance serving display ads, there was plenty of room for everyone to compete in the $40 billion online advertising market.

“The FTC’s strong support sends a clear message: this acquisition poses no risk to competition and will benefit consumers,” said Google CEO Eric Schmidt in a statement. “We hope that the European Commission will soon reach the same conclusion.”

Google needed the FTC’s stamp of approval to move forward with its deal, but the real test for the Mountain View-based company is in Brussels. Google remains stuck in a holding pattern while the European Commission reviews antitrust concerns. European regulators have until April 2 to make a decision.

“Google is hardly out of the woods,” said Blair Levin, a tech regulatory analyst with Stifel Nicolaus. “They may face more difficulty in Europe.”

Earlier this week, some European lawmakers said they would press regulators to address privacy concerns in the Google deal. A European Parliament member said a civil liberties committee was planning to host a public hearing to draw attention to how personal information is stored by Google and DoubleClick. “The European Parliament is trying to run political interference and get the Commission to take into account data privacy concerns,” said Juan Delgado, a former antitrust official and research fellow at Bruegel, an independent economic think thank in Brussels. “They can put all the pressure they want, but the European Commission has managed to maintain its independence.”

Google says it will only address regulators’ concerns. “Both the FTC and the European Commission have made it crystal clear that privacy is outside the scope of argument,” said Ben Novick, a Google spokesman based in London. “This is about competition and competition only.”

Google’s European policy team will use similar arguments that helped the company win approval in Washington, according to Novick. He contended that Google and DoubleClick won’t create a monopoly because one company sells ads while the other serves ads. He also said recent ad network deals by Yahoo (YHOO), Microsoft, WPP and AOL (TWX) indicate the online advertising market remains competitive.  “All those acquisitions have gone through straightaway,” Novick said.