FTC Clears Google-Ad Mob Deal, Cites Apple As Significant Competition

apple vs droidThe Federal Trade Commission on Friday unanimously cleared Google's $750 million acquisition of mobile ad network AdMob.

Calling the decision "a difficult one," the FTC said it was closing the investigation because of recent developments in the wireless marketplace -- especially Apple's $275 million acquisition of Quattro Wireless last December, followed by its introduction of iAd.

While the commission said in its closing letter that the deal required "close scrutiny," the FTC ultimately found that Apple's entry into the market offers "reason to believe that Apple quickly will become a strong mobile advertising network competitor."

The letter states: "AdMob's success to date on the iPhone platform is unlikely to be an accurate predictor of AdMob's competitive significance going forward, whether AdMob is owned by Google or not."

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AdMob said in a statement that it is "extremely pleased" with the FTC's position. "Our focus is now on working with the team at Google to quickly close the deal," the company said.

Google and AdMob combined would have an industry-leading 21% share of the mobile ad market, with Millennial Media the next-closest rival at 12%, according to an estimate by market research firm IDC. Prior to its acquisition by Apple, Quattro Wireless had an 8% share.

eMarketer estimates that mobile ad spending will amount to $593 million this year, and will balloon to $1.56 billion by 2013.

The advocacy groups Center for Digital Democracy and Consumer Watchdog had opposed the deal on privacy grounds, arguing that it would leave Google with the ability to create "super data profiles" by combining information about users' search activity with AdMob's data about mobile users.

A bipartisan group of five Congress members also questioned whether the deal would compromise consumers' privacy. "Given the vast amount of data on consumers' behavior and preferences that the combined company would control, has the commission assured itself that the deal, if approved, would have sufficient safeguards to protect consumers' privacy?" they asked FTC Chair Jon Leibowitz last month.

Jeff Chester, executive director of the Center for Digital Democracy, said Friday that his organization "will continue to press the commission to ensure mobile privacy is protected, especially in a field dominated by Google and Apple."

Reaction from AdMob rivals to the FTC decision echoed their response when Google first announced the acquisition back in November. They viewed the $750 million deal as a sign that mobile had arrived as an ad medium.

"Google's acquisition of AdMob is a great validation of the mobile advertising space, specifically the focus on in-application, which is the dominant reason for the acquisition," said Michael Chang, CEO of mobile ad network Greystripe.

Greystripe and other AdMob and Google competitors had been sent letters by the FTC asking them to testify in sworn statements about the potential impact of the merger. Whatever qualms they may have expressed in those statements, executives at other ad networks publicly hailed the FTC approving the deal as an endorsement of healthy competition in the mobile ad market.

The FTC and the Justice Department, however, are now reportedly eyeing a possible antitrust investigation into new rules that Apple imposed on application developers that block them from using non-Apple approved tools like Adobe's Flash.

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