The Deal
Sunday, September 21, 
8:03 am

by Cecile Kohrs Lindell in Washington
[Posted on December 20, 2007 - 11:50 AM]

The Federal Trade Commission unconditionally approved online search company Google Inc.'s $3.1 billion purchase of advertising expert DoubleClick Inc. by a 4-1 vote late Wednesday.

Though expected, the approval was still a blow to privacy activists who petitioned to the commissioners to impose privacy safeguards for users of the companies' search engine and online advertising technology.

The merger of the most prominent names in online advertising also generated intense scrutiny from Capitol Hill. But calls for government intervention faced an uphill battle from the beginning because Google and DoubleClick have staked out different sectors of the business and engage in very little direct competition. Google sells text ad space on Web pages generated by its wildly popular search engine. DoubleClick provides the leading technology that allows clients to place banner ads on other companies' Internet sites and collect information from surfers who click on the spots.

Nevertheless, opponents of the merger argued that combining the companies would create such a dominant force in online advertising that consumers would have little way of avoiding the new entity. Joining DoubleClick's database of consumer information collected from ad clicks with Google's record of consumers' past searches will allow the merged company to create "super-profiles" of online users without their permission.

The FTC's announcement Thursday was accompanied by a majority statement authored by Chairwoman Deborah Platt Majoras, who explained the commission found that the deal was "unlikely to substantially lessen competition."

Her authorship of the opinion accentuated the disappointment of the Electronic Privacy Information Center and the Center for Digital Democracy, which had formally asked Majoras to recuse herself on Dec. 12, because her husband, John, is a partner at law firm Jones Day, which represents DoubleClick before the European Commission.

Commissioner Pamela Jones Harbour, the only FTC member who voted against approval, wrote in her 13-page dissent that "if the Commission closes its investigation at this time, without imposing any conditions on the merger, neither the competition nor the privacy interests of consumers will have been adequately addressed."

But later in her statement, she seemed to agree with the majority that a comprehensive approach to privacy issues was a better route, rather than addressing privacy matters piecemeal through the merger approval process.

EPIC and CDD wanted to block the deal or convince the commissioners to impose substantial conditions that would safeguard privacy.

CDD's executive director Jeff Chester said the FTC "sidestepped its responsibility today when it approved the merger of two companies whose new, extended data-collection reach will give it unprecedented access to track our every move throughout the digital landscape. By permitting Google to combine the personal details, gleaned from our searches online and YouTube downloads, with the vast repository of information collected by DoubleClick, the FTC has sanctioned the creation of a new digital data colossus."

In a separate but related matter, the FTC announced Thursday new "online behavioral advertising privacy principles" to guide companies such as Google in how it should handle the vast amounts of data it collects about online consumers.

"The purpose of this proposal is to encourage more meaningful and enforceable self-regulation to address the privacy concerns raised with respect to behavioral advertising," the FTC staff proposal said. "In developing the principles, FTC staff was mindful of the need to maintain vigorous competition in online advertising as well as the importance of accommodating the wide variety of business models that exist in this area."

Behavioral advertising, the agency said, provides benefits to consumers in the form of free content and personalized advertising but adds that this raises concerns because the practice is largely invisible to consumers.

Google announced plans to buy Double-Click April 13, a move that led to a bevy of acquisitions, including spurned DoubleClick suitor Microsoft Corp., which turned to the target's rival, aQuantive Inc., a purchase that cost it nearly $6 billion.

But Microsoft decided not to focus only on its own acquisition and led a charge against the Google-DoubleClick deal in Washington.

But antitrust lawyers have discounted those issues from day one as irrelevant to the FTC's merger review authority. Instead, the FTC's bureau of consumer protection could review the practices of the company if, post-merger, people complain about their private information being used without authorization.

Although many on Capitol Hill asked the FTC to strongly consider the deal's impact on consumer privacy, Democratic Commissioner Jon Leibowitz signaled last month that those concerns wouldn't impact the merger review.

Australian regulators previously approved the deal, but it continues to face a review by the European Commission.


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