Washington — In a volte-face of regulatory fortune, Google Inc has won approval from the U.S. Federal Trade Commission for its $750 million acquisition of the mobile advertising company AdMob, after months of investigation and rumor that the Internet search engine was headed for a court fight with government officials over the transaction. The FTC finally said that the deal was unlikely to harm competition.
As recently as last month, F.T.C. staff appeared ready to urge the agency’s five commissioners to object Google’s purchase of the start-up in court, on the basis that it would give Google an unassailable position in the nascent market for ads that appear on mobile phones.
But the commissioners voted 5-0 to approve Google’s $750 million acquisition of AdMob. The FTC mentioned that an increasing competition in mobile advertising, including Apple’s iAd, and said the AdMob purchase “is unlikely to harm competition.” Measuring against Apple reflects the fact that iPhone and Android users browse the web more than other users.
“The decision was a challenging one because the parties (Google and AdMob) currently are the two prominent mobile advertising networks, and the commission was concerned about the loss of head-to-head competition between them,” the FTC said in a statement.
“Although the combination of the two leading mobile advertising networks raised serious antitrust issues, the agency’s concerns ultimately were overshadowed by recent developments in the market. It cited a move by Apple Computer Inc. — the maker of the iPhone — that it is launching its own competing mobile-ad network, as well as “a number of firms” that are developing or acquiring smartphone platforms to compete against Apple’s iPhone and Google’s Android,” the commission said in a statement.
Two consumer groups, Consumer Watchdog and the Center for Digital Democracy, had recommended the FTC to stop the acquisition on antitrust grounds and said the deal also raised privacy concerns.
Google anticipates that AdMob acquisition will help it more successfully expand its lucrative Internet advertising domain into the flourishing world of mobile devices.
“It is a major win for Google and a major loss for the rest of the people in the apps and mobile advertising business,” said Mobile Streams chief executive Simon Buckingham, who has been in the mobile technology arena for 19 years.
“It is a shame. It is pretty much game over at this point.”
David Balto, a higher-ranking fellow at the Center for American Progress, a think tank, and a former antitrust attorney at the F.T.C., said the agency was hampered by the lack of history in the mobile market.
“The market simply did not exist in a significant manner a year or so ago. Thus, the past could not testify as to the future harm of the merger,” Balto said in a statement. “More significantly, the rapid pace of change in the market undermined any coherent story by the F.T.C.”
Google revealed its desire to acquire AdMob last November, plucking the start-up from the grip of Apple, which was also negotiating to buy it.
AdMob founder and Chief Executive Omar Hamoui said he was pleased with the decision and would work with Google to close the deal.
On the official Google blog, vice president of product management Susan Wojcicki said “the decision is great news for the mobile advertising ecosystem as a whole.”
“This benefits mobile developers and publishers who will get better advertising solutions, marketers who will find new ways to reach consumers, and users who will get better ads and more free content.”
Despite an early, small bump in Google’s stock price, it quickly shed the gains to close down 0.62 percent at $472.05 on Nasdaq.