Consumer Groups Urge FTC To Block Google’s AdMob Acquisition

December 30, 2009 0

Washington — Two consumer groups requested the US Federal Trade Commission (FTC) on Monday to bar the global online search and advertising giant Google’s proposed acquisition of mobile advertising company AdMob, a provider of advertising services for mobile phones, citing potential damage on antitrust grounds and to address privacy issues raised by the deal to users, advertisers and application developers.

In a joint letter, Consumer Watchdog, a consumer advocacy organization, and the Center for Digital Democracy (CDD), an advocate of open access to the Internet urged the FTC to oppose Google’s proposed acquisition of AdMob on anti-trust grounds and said that the planned deal would “substantially lessen competition in the increasingly important mobile advertising market.”

“Google amasses a goldmine of data by tracking consumers’ behavior as they use its search engine and other online services. Adding this information with information accumulated by AdMob would give Google a massive amount of consumer data to exploit for its benefit,” said the emailed letter, which was addressed to FTC Chairman Jon Leibowitz.

The groups also commented that the deal created privacy concerns, which are not normally considered in antitrust analyses. It does not just raises the potential for monopoly that is pressurizing their concerns — mobile marketing could deal more blows to consumer privacy.

The letter comes as the FTC is apparently having its own doubts about the deal — or at least wants to learn more before giving its approval. The agency is seeking additional information in a so-called second request, according to a post on Google’s public policy blog.

The protests comes after Google said last week that the FTC was seeking more information about its proposed 750-million-dollar acquisition of AdMob.

"Instead of acquiring dominance in this increasingly important market through legitimate competition and innovation, Google is buying its way to a preeminent position," the non-profit groups said.

They urged the FTC to use its"statutory and regulatory authority to oppose the merger."

“In addition to the antitrust issues, the phantom of a joint Google/AdMob raises substantial privacy issues that must be addressed by the commission,” the groups said.

“Allowing the expansion of mobile advertising through the combination of these two market leaders without demanding privacy guarantees poses a serious threat to consumers,” they said.

With the lack of a second request, U.S. antitrust regulators normally sanction deals within 30 days. And, if approved, Google’s purchase of privately held AdMob would be its third most pricey acquisition behind the $3.1 billion acquisition of DoubleClick and the $1.65 billion purchase of YouTube.

Paul Feng, a group product manager at Google, said in a blog post last week that Google had received a “second request” for information from the FTC about the acquisition of AdMob.

“While this means we would not be finalizing right away, we are confident that the FTC will conclude that the rapidly growing mobile advertising space will remain highly competitive after this deal closes,” Feng said.

“We will be working closely and cooperatively with (the FTC) as they continue their review,” he added.

“Google has a track record of providing strong privacy protections and tools, like the new Dashboard, for users to take control or opt out of data collection, and it will apply the same approach to privacy following this acquisition,” it said in the statement.

“The mobile arena is the next frontier of the digital revolution,” Consumer Watchdog and the CDD said. “Without vigorous competition and strong privacy guarantees this vital and growing segment of the online economy will be stifled.”

“The mobile Web is still in its infancy stages,” wrote Google’s Susan Wojcicki, vice president of product management, and Vic Gundotra, vice president of engineering, when the deal was first announced. “We believe that great mobile advertising products can encourage even more growth in the mobile ecosystem.”

The FTC could not immediately confirm receipt of the letter.

Google has recently experienced growing regulatory examination as it has grown. The U.S. Department of Justice in September called on a New York court to reject Google’s settlement with book publishers and authors groups that would allow the company to sell digital copies of some books. However, Google expects that AdMob deal will help it more effectively broaden its moneymaking Internet advertising domain into the booming world of mobile devices.

Google did not immediately replied to a request for comment, but the company has said it does not see any regulatory issues with the acquisition. “The rapidly growing mobile advertising space is highly competitive with more than a dozen mobile ad networks,” Feng, said in an official blog post last week.

Last year, Google was forced to abandon a proposed advertising agreement with Yahoo! amid Justice Department anti-trust concerns.