• by Mark Walsh  @markfwal, March 11, 2010

The picture isn't brightening for Goggle's proposed $750 million acquisition of mobile ad network AdMob. Bloomberg reported Wednesday that the Federal Trade Commission is seeking affidavits from Google advertisers and competitors as part of its investigation of the deal. Legal experts cited in the story said the move indicates the FTC may be preparing to challenge the AdMob acquisition.

The agency already ratcheted up scrutiny of the deal in December when it asked Google for more detailed information about the transaction the search giant and AdMob announced in November. Google has said it doesn't see any regulatory obstacles to the deal because mobile advertising is a fast growing, highly competitive market with more than a dozen mobile ad networks.

Publicly, rival ad networks hailed the announcement of the AdMob acquisition as a validation of the emerging mobile advertising business. But what they're telling regulators may be something different.

Together, Google and AdMob would have the largest share of the U.S. mobile ad market, at 21%, according to an estimate by IDC analyst Karsten, based on 2009 figures. Advocacy groups Consumer Watchdog and Center for Digital Democracy have asked the FTC to block the Google-AdMob deal, arguing it would greatly reduce competition in the mobile ad market and raise significant privacy concerns stemming from the collection of mobile user data.

Long-time Google antagonist Scott Cleland, who also opposes the acquisition, blogged yesterday that the FTC's collection of sworn statements from Google rivals means the agency is now very likely to oppose the deal. Cleland, chairman of Telco industry-backed group Netcompetition.org, argues that seeking signed statements suggests regulators have "moved largely from an investigative phase to largely a prosecution phase."

But the FTC could collect affidavits and still not end up litigating, according to experts interviewed by Bloomberg. In any case, the lengthening investigation slows down Goggle's expansion in mobile advertising -- especially in-application advertising -- as Apple moves ahead with its January acquisition of the smaller Quattro Wireless ad network.