Rivals Complain About Google-DoubleClick Deal
The planned merger of two online advertising giants, Google Inc. and DoubleClick Inc., has some rivals calling for regulatory intervention -- but for customers, trust may be of greater concern than antitrust.
The companies said late Friday that Google has agreed to pay US$3.1 billion for DoubleClick, ending speculation that Microsoft Corp. might buy the company.
Far from happy about the deal, Microsoft General Counsel Brad Smith issued a statement Sunday calling for regulators to intervene.
"This merger deserves close scrutiny from regulatory authorities to ensure a competitive online advertising market," he said.
According to one analyst, though, for customers, it's not market share but how much of each customer's business Google and DoubleClick control that should be the main concern.
"The biggest question is not antitrust but trust: whether Google's and DoubleClick's customers will trust a single, large company with the majority of their advertising data," said Nate Elliott, a senior analyst at JupiterResearch, a division of JupiterKagan Inc.
Advertisers and publishers that run the entirety of their online advertising activities through the combination of Google and DoubleClick will be nervous, he said.
While AOL LLC does not depend entirely on Google and DoubleClick, it's not far off, according to Elliott: all AOL search advertising runs through Google, and all its display advertising through DoubleClick, he said.
"I would guess that 75 percent of their advertising revenue would run through DoubleClick-Google," he said.
Microsoft's Smith spoke of such concentration, warning in his statement that the deal will give Google and DoubleClick "unprecedented control" in delivering online advertising, and access to a vast store of consumer information as a result of their respective tracking activities.
Google follows users through cookies and through their user names when they log on to services such as mail or home-page personalization, storing every search they make. DoubleClick tracks visitors through cookies associated with the banner advertisements served up on the Web sites they visit.
Attention from antitrust authorities could hurt Google and DoubleClick, even if regulators did not block the deal, Elliott said.
"It's a dangerous game for them because they will have to point out to nervous customers the alternatives they have," he said.
"There are lots of other companies competing with DoubleClick that are very well funded," including 24/7 Real Media Inc. and Atlas, a division of aQuantive Inc., he said.
Antitrust authorities trying to determine how big a share of the market Google and DoubleClick control must untangle a complex web: before appearing on a surfer's screen, ads can pass through five servers. Although Microsoft doesn't use DoubleClick itself, Elliott said, "A lot of the advertising that runs through Microsoft's platform is also served by DoubleClick."