Google/DoubleClick Deal Faces Congressional Inquiry

by Laurie Petersen, Jul 18, 2007, 6:00 AM

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Google's plan to buy DoubleClick for $3.1 billion is under fire for the umpteenth time since it was first announced on Friday the 13th of April. But the tenor of government hearings unfolding in Washington, D.C., has some of the deal's harshest critics now suggesting the merger could face complete derailment.

"At this point, the big question is whether the FTC will block the merger altogether," said Marc Rotenberg, executive director of the Electronic Privacy Information Center. "I think that's a very real possibility."

Rotenberg's comment came on the heels of Rep. Bobby Rush (D-Ill.) announcing he will hold a hearing on the acquisition--probably in the fall. The investigation will address both consumer privacy and anti-competitive issues, a Rush spokesperson said. Rush chairs the House Subcommittee on Commerce, Trade and Consumer Protection, which has jurisdiction over the Federal Trade Commission.

The Senate Judiciary Committee is also expected to schedule its own hearing sometime toward the end of next week.

"Online advertising is a relatively new industry, and policymakers understandably have questions about the acquisitions that Google, Microsoft, Yahoo, AOL and other companies are making in this space," said a Google spokesperson. "We are confident that our acquisition of DoubleClick will benefit consumers, improve privacy, and promote competition, and that it will ultimately be approved by the Federal Trade Commission."

Yahoo this week completed its $680 million deal to buy the 80% of Right Media it did not already own. The Google/DoubleClick deal is the only one for which the FTC has requested additional information.

"We have made inroads," said Jeff Chester, executive director of the Center for Digital Democracy, which joined with EPIC and the U.S. Public Interest Research Group to challenge the deal as an unprecedented assault on consumer privacy. "Our message is clear, that this merger has to be rejected. I think there's a growing groundswell of opposition. This may be the first serious challenge to Google" in the history of its business.

On Monday, Google announced it would shorten the length of time it keeps data-collecting cookies to two years. The European Union complained it was collecting data for too long.

Meanwhile on Tuesday, Precursor President Scott Cleland released a 35-page white paper laying out why in his opinion the deal is a traditional horizontal merger to monopoly that will be blocked by the FTC because it "would lessen competition and harm consumers, advertisers and content providers" and give the combined entity the opportunity and incentive to "corner" the online advertising market by dominating all three sides: users, content providers and advertisers.

The white paper compared the Google/DoubleClick level of market concentration to one single financial services company owning the top 15 Wall Street banks/asset managers; 60% of the hedge fund and private equity industries; The New York and London stock exchanges; data providers Bloomberg and Factset; credit profile providers Experian and Equifax; and 60% of the Federal Reserve's and U.S. Census Bureau's raw market and consumer data.

Cleland also serves as chairman of the nonprofit Netcompetition,org, a consortium funded by telecom, cable and wireless companies to lobby against net-neutrality legislation. Google has a lobbying team fighting on the other side of the issue.

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